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By Tony Sagami Stock buybacks are always a good thing… right? That’s what the mass media has trained investors to believe, but there are times when stock buybacks are a horrible strategy.Let’s take a look at Herbalife, which has had very visible news items as billionaires like Carl Icahn, George Soros, Daniel Loeb, and Bill Ackman publicly debate the future of the company.Herbalife shares have lost more than half their value in 2014 because of a Federal Trade Commission investigation and a big drop in profits. 50% is a huge haircut, but I believe Herbalife is poised for even more pain. Rapidly Disappearing Profits Herbalife recently reported its third-quarter results and they were just awful. Herbalife earned $0.13 per share in Q3, but that was a whopping 92% decline from the $1.32 it earned last year. That’s awful, but Herbalife says business will be even worse going forward. The Wall … Continue reading →
Tuesday November 25, 2014 14:08 Clif Droke Last month kicked off a new long-term Kress cycle. The Kress cycle, which answers to the Kondratief wave of inflation/deflation, is responsible for the overall climate of economic and financial market conditions in the U.S. This long-term cycle also influences the course of central bank monetary policy by creating the conditions which the Federal Reserve must tailor its policy response to. The final 10-12 percent of the 120-year cycle is characterized by deflation. For the last 14 years or so the financial system has indeed struggled with periodic episodes of deflation, and these episodes have often taken the form of ripples in the global economy. The final 12 percent of the 120-year cycle began in 2000, a year of major transition for the U.S. equity market and the economy. That year witnessed the end of the great 1990s bull market and the start … Continue reading →
By Dennis Miller Is it even possible today to retire rich? The short answer is “yes.” We all know people who have done just that. Watching your neighbors Bob and Betty Rich live the good life well into their 90s only tells you it’s possible, not whether you’re prepared to do it too. So let’s forget about the Riches and focus on you. The first question you should ask yourself is: “Do I have enough money for the duration?” Or, if you’re still in your 30s, 40s or 50s: “Am I on track to save enough?” You might not know, but there’s a straightforward way to find out. Miller’s Money Chief Analyst Andrey Dashkov built a Retirement Income Calculator you can download to run your own up-to-date, customized projections. The second question is: “Do I have an investment strategy in place that will make my hard-earned wealth last?” For the generation before us, “100 … Continue reading →
Posted on November 24, 2014 by Bob Loukas We’re at the point in the equity bull market Cycle that every piece of news is construed as positive for the equity markets. In many cases, the news even appears to accentuate positive possibilities. The speculative nature of the current advance has by now captured the vast majority of market participants; the media and the pundits are no exception. For example, the markets were pushed higher last week by several news events, even though the headlines hit the same themes that have been recycled for the past 3 years, and that are almost certainly, by now, fully discounted in prices. The news events included Japan calling off next year’s planned sales tax increase, China surprising with an interest rate decrease, and the ECB announcing that they will be buying assets. These are all related to the tired narrative that central banks and related authorities can … Continue reading →
Posted Monday, 24 November By: David Stockman Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nose bleed 20X their reported LTM earnings. And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e. inflated EPS owing to massive buybacks) would be decidedly less exuberant. In truth, nothing has changed about the precarious state of the world since yesterday. Except….. except the Great Bloviator at the ECB … Continue reading →
Monday November 24, 2014 15:42 Richard (Rick) Mills As a general rule, the most successful man in life is the man who has the best information HUI/Gold Ratio, National Inflation Association When the HGR is rising, gold stocks are outperforming gold. Conversely when the HGR is falling, gold is outperforming gold stocks. Since 1996, the HUI/Gold ratio has averaged 0.363. The all time low HUI/Gold ratio was set on November 17, 2000 when it bottomed at 0.135. The HGR closed Wednesday November 20th at .148. The above data tells me gold mining stocks are extremely undervalued and way oversold compared to the price of gold. Can I make some money off that bit of knowledge, am I looking at a potentially profitable investment into a few well chosen gold company’s, do I wait a bit or pull the trigger now? Let’s investigate further and look at a couple of charts (the … Continue reading →
Source: Brian Sylvester of The Gold Report (11/24/14) Florian Siegfried, head of precious metals and mining investments with Zurich-based AgaNola, says there are small signs—fewer equities participating in the recent rally, greater spreads in the high-yield market—that the sentiment toward gold is changing. But we will have to wait to see if a trend forms. In the meantime, Siegfried believes all-paper M&A will gain pace, with a focus on companies that are making money at current gold prices while still trading at multiyear lows. In this interview with The Gold Report, Siegfried suggests playing it safe with some small producers and tiny developers. The Gold Report: When we talked in the summer, gold had found a floor at around $1,280/ounce ($1,280/oz). Where is the new floor? Florian Siegfried: With a floor of $1,280/oz in August, the question was will it hold or not. Obviously, it did not. There could be even more downward pressure. The support level could … Continue reading →
By Nick Giambruno That was how the slow and careful rapprochement between Russia and China has been described by Eric Margolis, one of my favorite geopolitical writers. US shenanigans in Eastern Europe and the East China Sea—fomenting so-called colored revolutions in Ukraine and Georgia (both on Russia’s periphery) and egging on China’s neighbors to make aggressive territorial claims—have pushed the Russian bear and Chinese dragon together. In May, the two uneasy neighbors reached a de facto alliance represented by a 20-year, $400 billion deal for Russia to supply China with natural gas. A Russia/China alliance shifts the Earth’s geopolitical axis. Historians may look back at the energy deal as the moment the post-Cold War era and the US’s singular position came to an end. The Russia/China team is now a consequential economic and military counterweight to the US. It will operate as an attractant for every country and every … Continue reading →
November 20, 2014 Since 1999 the gold price has moved in concert with the growth in the U.S. Federal Reserve Balance Sheet including the recent correction in both during the past three years. Accordingly, the following objective analysis forecasts the gold price out to 2016 based solely on historical Central Bank data. The above introductory comments are edited excerpts from an article* by Vronsky (gold-eagle.com) entitled Gold Price Forecast Per US Federal Reserve Balance Sheet. The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and theFREE Market Intelligence Report newsletter (register here; sample here). This paragraph must be included in any article re-posting to avoid copyright infringement. Vronsky goes on to say in further edited excerpts: The chart below estimates two balance sheet growth rates from 2012-2016 (when Obama leaves the Presidency): Adding $40 Billion per month…equating to a Compound Annual Growth Rate (CAGR) = 14.8% Adding $85 Billion … Continue reading →