Posts by The Trend Letter

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Headlines – September 29/17

  • The Dow and S&P on track for sixth straight monthly gain. Read story
  • Mumbai railway station stampede kills 22 amid monsoon rains. Read story
  • Hurricanes weighed on consumer spending as inflation barely rose. Read story
  • Euro area inflation stuck too low as ECB debates stimulus. Read story
  • South Korea bans all new cryptocurrency sales. Read story
  • Hulbert: September saw this rare, and bullish trifecta. Read story
  • WikiLeaks’ Assange offers evidence that Russia narrative is false, in exchange for pardon. Read story
  • Catalan police warn of public disorder if polling stations closed. Read story
  • US to ‘pull staff form Cuba over sonic attacks.’ Read story
  • International flight ban into Iragi’s Kurdish region after independence vote. Read story
  • French PM: “When someone leaves the country because of the wealth tax…collectively all French lose.” Read story
  • VW Dieselgate bill hit $30 billion after yet another charge. Read story
  • Whole Food’s CEO says Amazon saved them from its own pretentiousness. Read story .
  • Taco Bell launches fashion line. Read story
  • Third teen joins race for Kansas governor. Read story
  • On the lighter side. Check it out!

Stay tuned!

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Headlines – September 28/17

  • Wall Sr opens slightly lower on hurricane data. Read story
  • US economic growth revised higher to 3.1% annual rate. Read story
  • Treasuries extend sell-off on Trump’s tax plan. Read story
  • Oil gains as US supplies shrink, stoking rebalancing optimism. Read story
  • Gold is on track for worst month of 2017. Read story
  • US dollar index stalls after striking one-month high. Read story
  • A major check-in systems crash is disrupting airports worldwide. Read story
  • China shuts down all North Korean companies. Read story
  • FBI Director: terrorist drones are ‘coming imminently.’ Read story
  • Trump lifts aid obstacle for Puerto Rico. Read story
  • Janet Yellen can’t help retirees. Read story
  • A Model 3 failure could lead to ‘moment of panic’ for Tesla: Bernstein. Read story
  • Google finance is going away – here is what will remain. Read story
  • Legalized pot windfall for McDonald’s, Taco Bell? Read story
  • US Navy returns to compasses, pencils to help avoid collisions at sea.. Read story
  • Playboy founder Hugh Hefner dead at 91. Read story
  • On the lighter side. Check it out!

Stay tuned!

Buy_Sell

New Buy & Sell signals

For over 15 years we have been publishing The Trend Letter, and in that time span we have made hundreds of recommendation to subscribers, and many of those recommendations have made subscribes huge gains.

In the past few weeks, our models have triggered 4 new Buy signals, all designed to position our subscribers to be prepared for the changes ahead. In addition to the new Buy signals over the last few weeks, we anticipate that many new Buy & Sell signals will be triggered soon.

For years we have talked about and warned how we were approaching a global Sovereign Debt Crisis. As we near 2018, we are getting much closer to this crisis kicking in.

We have seen yields on Sovereign bonds from as high as 20% in the mid 1980’s, to just a year ago seeing over $12 trillion invested in government bonds yielding less than 0%. Instead of receiving 20% per year for lending the government their money as they would have received in the 1980’s, these investors were willing to pay the government each year to take their money. And many of these bond holders were willing to give the government their money for periods of 7 years or longer, and pay the government for the privilege.

The reality in all this is that every government has been following the same plan, run up massive deficits, promise lots of free things to the poor and middle class, and then issue huge amounts of debt to pay for these promises. But the deficits keep growing, so governments then raise every tax and fee they can find. But even that isn’t enough to cover the massive debt loads.

The reality is that most governments have borrowed much more than they will ever be able to pay back, and the result will be a global wide Sovereign Debt Default, and it will financially destroy most of the citizens.

Even those who think they are immune because they do not invest in bonds or much else. will be affected. If you have a pension plan, you will be affected. If you expect Social Security, you will be affected. The global bond markets are huge, and when investors realize how at risk those government bonds are, and all try to head for the exits at the same time, many will be crushed.

Socialism is the art of spending other people’s money. All we hear from politicians today is that the “rich” are not paying their fair share. They keep blaming anyone who has been successful, calling them tax cheaters. In Canada, during the last election, the Liberal party promised to cut taxes for small business. Now that they have been in power for two years, they are going after small businesses, saying they are cheating the system. They say they are doing this to protect the middle class, even though most small business owners are middle class.

Those in power never look in the mirror and realize  that borrowing and spending far more money than you can ever possibly pay back is a very bad strategy. Instead they look for a scapegoat, and the scapegoats today are anyone with a reasonable income.

In 2009, we warned that we were heading for a class war, where those retired and collecting a pension would be attacked by those younger people having to pay for those pension plans. It is neither the fault of the retired seniors, or the younger workers. The real culprits are the politicians and bureaucrats who led us down this unsustainable path.

Today we hear calls for “free” education and “free” guaranteed income to all. We wonder where that money will come from. For years these policy makers knew what was coming, but instead of tackling the situation when it was manageable, they simply “kicked the can” down the road, leaving it for the next administration to deal with it. And of course, the next administration did the exact same thing.

It didn’t matter which political party was in power in the US, as both the Republicans and Democrats did the same thing. The pace of overspending  ramped up with Bush and Obama. In fact, Obama racked up more debt than all other presidents combined. With Trump’s promises of massive spending, this trend is not likely to end anytime soon.

Here is a chart showing how the ‘official” US federal debt has grown dramatically over the past 16 years.  The total ‘official’ US debt today is $20.17 trillion! To put that number into perspective, it equates to $61,913 per citizen, or $167,309 per taxpayer.

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This situation is not going to be solved without a lot of pain for a lot of people. Governments are now getting very desperate for cash, and the mantra they are all now chanting is “tax the rich.” It is going to get violent and very ugly. It will not be limited to one country or one continent…it will be global.

Those who understand what is happening and how to follow the global flow of capital will be able to position themselves to not only survive this global financial crisis, but to actually prosper from it.

We are following these developments very closely and have a plan to get our subscribers through this crisis, so that they remain in good financial shape once the worst is over. New Buy and sell signals will be issued soon.

If you would like to join our growing list of subscribers, and receive all of our Buy and Sell signals. at a 38% discount, click here. Note that all subscriptions come with a 90-day, money-back guarantee.

Stay tuned!

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Headlines – September 26/17

  • Euro slide deepens as stocks drift; Gold retreats. Read story
  • North Korea bolsters defenses after flight by US bombers as rhetoric escalates. Read story
  • Water and food scarce as Puerto Rico emerges after storm. Read story
  • Turkey’s Erdogan warns Iraqi Kurds must ‘give up or go hungry.’ Read story
  • Oil near 26-month high as Turkey threatens to choke Kurdish exports. Read story
  • Mexico is three-day countdown to search for earthquake survivors. Read story
  • North Korea may be mining Bitcoin in addition to hacking it. Read story
  • US spy chief dismisses ‘unsubstantiated’ surveillance concerns. Read story
  • Anthony Weiner gets 21-months in federal prison. Read story
  • Milllennial investors are either very confident…or very cocky. Read story
  • Panicked passengers fle London tube station after ‘bag explode” Read story
  • Home prices in 20 US cities increase more than forecast. Read story
  • Ivanka Trump’s first big White House win. Read story
  • Why robot traders haven’t replace all the humans at the New York Stock Exchange – yet. Read story
  • On the lighter side. Check it out!H
Interest_rates

As the Fed unwinds, what is the impact on interest rates?

As expected, the US Fed announced on Wednesday that it would start slowly reducing its massive $4.47 trillion balance sheet.

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Starting in October, the Fed will end its practice of fully reinvesting the principal payments of maturing bonds into new bonds, and instead allow $10 billion in holdings to roll off, meaning they will not re-invest that money into new bond purchases.  Those amounts will increase by another $10 billion each quarter, until they reach their maximum target of $50 billion per month.

The Fed has gone to great pains to plot out its moves so that it doesn’t unnerve markets. It has emphasized that the reversal of its controversial bond-buying program is supposed to be a boring, gradual process. Fed chair Janet Yellen has expressed hope that it will “just run quietly in the background” in the coming years. Philadelphia Fed President Patrick Harker has gone so far to compare the process to watching paint dry.

Given the large size of the Fed’s debt holdings, in the absence of Fed bond buying for reinvestment, the market will need to find private sector investors to fill the void. Consequently, there should be some upward pressure on yields, especially since the Fed will also likely continue to raise short-term interest rates as long as we continue to see improving economic growth.

If inflation actually gets past the targeted 2%, then growth and inflation, combined with the Fed balance sheet reduction, should give interest rates a boost.

Geopolitical events, such as North Korea tensions, can certainly send ‘safe-haven’ capital into bonds temporarily, but longer-term we should see pressure on bonds, which will push yields higher.

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Mortgage rates may feel the impact more than the Treasury market. The Fed holds about $1.75 trillion in Mortgage Backed Securities (MBS), which is almost 40% of the outstanding securities issued by Fannie Mae and Freddie Mac. Until the Fed began hinting at reducing its balance sheet, MBS yields were only about 1% above Treasury yields of similar maturity. The yield difference has begun to widen recently, and as the Fed pulls back from the market, mortgage rates should move higher.

Stay tuned!

ote: We sent out a trade recommendation on Tuesday to subscribers of The Trend Letter to take advantage of rising bond yields.

If you would like to  subscribe to The Trend Letter to receive all of our BUY & SELL signals, and receive a 38% discount off the regular rate, CLICK HERE

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Headlines September 21/17

  • US stocks off slightly after Fed keeps rate path. Read story
  • SEC reveals it was hacked, information may have been used for illegal stock trades. Read story
  • Puerto Rico may be without power for months. Read story
  • Bank of Japan member demands more stimulus. Read story
  • Under NDP plan taxpayers will pay $ millions to political parties. Read story
  • Nestle makes billions bottling water it pays next to nothing for. Read story
  • Road to electric car paradise paved with handouts. Read story
  • Think you can win an argument with a robot? Watch this. Read story
  • S&P cuts China rating, citing risk from debt growth. Read story
  • Google sign $1.1 bln HTC smartphone deal. Read story
  • America needs Amazon more than Amazon needs America. Read story
  • Three bond market lessons from Toys “R” Us debt drama. Read story
  • Yes, Bill Gates regrets Ctrl+Alt+Delete. Read story
  • What is at stake for Uber in US bribery probe. Read story
  • On the lighter side. Check it out!

Stay tuned!

Toysrus

Is Toys “R” Us just the next cockroach?

Toys ‘R’ Us has filed for bankruptcy protection in the US and Canada as it attempts to restructure its debts.

We have been highlighting for over a year now how big box retailers are on a death watch as online monsters such Amazon continue to wipe out the competition. While loss of market share is certainly a part of the problem for Toys “R” Us, it is their massive debt load that was the final nail in the coffin.

Investors need to be very wary of heavily indebted companies who will need to re-finance over the next few years. Toys “R” Us had more than $1.5 billion of debt scheduled to mature over the next two years. But they are not alone, as we can see on the following chart, the amount of junk rated debt maturing is rising dramatically. From 2016 to 2020, the total junk rated debt maturing is over $1.3 trillion.

Junk Debt

These heavily indebted companies will be competing with each other to find financing, and with the very real potential for rising interest rates. There is never just one cockroach, and we suspect that Toys “R” Us is simply just the next of many bankruptcies to surface.

We strongly suggest staying away from purchasing junk bonds, you will very likely get burned.

Stay tuned!

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Trudeau’s tax grab now after small business

Starting a new business can be a gut wrenching proposition, given the fact that most small businesses will not survive. In fact, according to the US Bureau of Labor, most businesses do not survive more than five years, and only one-third of new businesses last ten years.

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According to a report from Babson College, the reason most businesses fail is due to lack of profits or financial funding. A main issue is under-funding at the outset of starting a business, as entrepreneurs often underestimate the amount of money required to fund operations. At the same time, they frequently overestimate how quickly their products and services will catch on.

Despite the odds being stacked against them, these entrepreneurs invest tens and often hundreds of thousands of dollars of their own and borrowed money, to make their dream come true. Most of these entrepreneurs work ridiculous hours, and do not receive benefits afforded to many employees in the public and private sector. These people sacrifice a great deal, none more than income security.

There is no pension plan, dental plan, or medical plan coverage that their more traditionally employed counterparts enjoy. There is certainly no sick pay, and very few of these entrepreneurs enjoy any vacation time trying to get their business up and running.

Without similar benefits, small business owners have to pay out of pocket for such essential services while also attempting to save for retirement. They also have to pay for the day to day running of their businesses, including operating costs, advertising, overhead, and supplies.

Small businesses are the biggest employers in Canada and the US, by a long shot. The Government of Canada’s own statistic s show that 70.5% of private sector jobs are provided by small businesses.

To meet their election campaign goals of growing the economy and providing jobs for the ‘Middle Class’, you would think that the bureaucrats and politicians would encourage these entrepreneurs to expand their businesses and create more jobs.

Because they do not get the same benefits that most salaried employees receive, these small business owners rely on the minor advantages afforded to them by our current tax system in order to stay afloat.

Well, in Canada, the Trudeau government wants to close those minor advantages for small business owners. They say it is to level the playing field and to protect the ‘Middle Class.’ The reality is that this is yet another government tax grab.

Most of these small businesses are in the ‘Middle Class’ and by cutting off these tax breaks, the government is sending a very negative message to entrepreneurs.

Socialism is the art of spending other people’s money. Trudeau’s government is racking up massive deficits and debt loads, and now they are on the hunt for more money. With this ill advised attack on the people that create over 70% of the jobs in Canada, Trudeau risks killing the economy, just as it starts to recover.

Stay tuned!

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Headlines – September 12/17

  • S&P opens at record high as Irma weakens; Apple in focus. Read story
  • Irma’s death toll rises; residents start to return to Florida coast. Read story
  • Oil trades near $48 as OPEC said to discuss extending cuts again. Read story
  • Trump plans aggressive road show to promote tax relief. Read story
  • Home Capital shareholders overwhelmingly reject Warren Buffet proposal. Read story
  • What to expect at Apple’s biggest event in years. Read story
  • We rely on the internet during a crisis, so what if the next crisis threatens the internet? Read story
  • Snowden: “There is still hope – even for me.” Read story
  • British PM May asks Trump to intervene in Boeing’s Bombardier challenge. Read story
  • North Korea slapped with new sanctions. Read story
  • China banks fear North Korea sanctions. Read story
  • Houston mayor proposes 9% property tax hike. Read story
  • Will taxing robots like they’re humans save people’s jobs? Read story
  • All the many things the media got totally wrong about the original iPhone. Read story
  • Face reading AI will be able to detect your politics and IQ professor says. Read story
  • On the lighter side. Check it out!
Congress

US debt tops $20 trillion!

The US federal government racked up $318 billion in new debt Friday, putting it over the $20 trillion mark for the first time in U.S. history, according to new Treasury Department numbers. Congratulations Washington, we knew you could do it!

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