Archive for March, 2016

One Trade to Profit from Online Lending’s Latest Headwind

1 | By Shah Gilani

For several months now, I’ve been telling you about the dangers of online lending, also known as peer 2 peer lending.

Back in December, I told you that you’d be better off borrowing from online lenders than investing in their stock.

And I was right.

Since then, online lenders have seen their stock prices pummeled by various market forces – however, things could soon get much worse…

Right now, the Supreme Court is giving serious consideration to a case that could undo decades of precedent… and absolutely crush online lenders.

Today, I’m going to tell you why the case could represent a landmark in finance… and more importantly, I’ll give you a trade that can deliver profits no matter how the court ultimately rules.

But before we do that, I need to give you a short history lesson on how we got here.

Let’s do it…

This Rally Is an Illusion: Two Market “Magic Tricks” Pushing Stocks Higher

10 | By Shah Gilani

Stocks have been on a tear. After looking weak in February, when the bottom could have fallen out, stocks have soared close to 13% in a matter of weeks, we’re finally here: positive for the year, above the market’s important moving averages, above resistance, and just plain sitting pretty.

So why does it all feel like a magic trick? Why isn’t the market giving investors any solid feelings? Why is everyone so nervous?

The reason it’s hard to get a handle on the market is because the old free market is gone. The free market isn’t free any more.

There are two major forces manipulating markets right now – but it’s nothing more than smoke and mirrors designed to push stocks higher and give the illusion of healthy markets.

I’ll tell you what’s going on, who’s responsible, and what you need to do now.

Let’s get started…

To continue reading click here.

Here’s Who’s Really Behind Wall Street’s $2.4 Trillion Buyback Scam

20 | By Shah Gilani

So far in the first quarter of 2016, companies have spent a combined $146 billion buying back their own shares, already surpassing the total for the entire first quarter a year ago. According to research from Bloomberg, that number could hit $165 billion.

Some of the biggest companies in markets are using buybacks to boost the value of their own shares, including:

  • FedEx Corp. (NYSE:FDX) – Announced $3.25 billion in new buybacks (on top of the $8 billion it’s already spent since September 2014).
  • General Motors Co. (NYSE:GM) – Expanded announced buybacks from $5 billion to $9 billion (ending in 2017).
  • Schlumberger Ltd. (NYSE:SLB): Authorized $10 billion in new buybacks (after cutting 10,000 jobs in Q4 2015).
  • Wells Fargo Co. (NYSE:WFC): Expanded its buyback plan to as much as $17 billion.

If you’ve got exposure to any of these companies, it might be time to rethink your investments…

I’ve already told you that stock buybacks represent one of the most insidious bits of financial engineering in the markets – executives that authorize these lavish buybacks can claim that they’re doing so to return money to shareholders when what they’re really doing is lining their own pockets.

But analysts and other market watchers are finally starting to take notice… because right now, the gap between investor capital in the markets and corporate money in the markets that’s being used on buybacks is wider than it’s ever been.

It’s not an overstatement to say that the majority of interest in stocks is from companies buying up their own shares. In fact, Liz Ann Sonders, chief investment strategist at Charles Schwab, recently told Business Insider, “On a cumulative basis there has not been a dollar added to the US stock market since the end of the financial crisis by retail investors and pension funds.”

You read that right – the bull market that’s raged since the end of the financial crisis was, by one measure, due entirely to buybacks.

This is unsustainable. Someone needs to fix this mess, and soon.

Unfortunately, the very people who could fix it aren’t going to lift a finger…

How This New “Fear Gauge” Could Fix the VIX

4 | By Shah Gilani

Volatility has gripped the markets for much of 2016, with wild up-and-down swings roiling markets and giving way to fear (and near-panic) among investors.

If you follow the stock market, you know what the VIX is. It’s the volatility index. It’s also known as the “fear index” or “fear gauge” because increased volatility is almost always accompanied by a surge of fear.

But here’s something you may not know: the VIX is about to face some competition – and with good reason.

Yesterday, Bats Global Markets, the second largest exchange operator in the U.S., and T3 Index, an Australian developer of index products, introduced their own version of the fear gauge with the announcement of their Spikes (SPYIX) product.

Today, I want to take a closer look at what traders mean when they talk about volatility, show you exactly what the VIX is and what it does (and doesn’t do), and tell you why now is the perfect time for a new, more modern approach to how we track volatility.

Let’s get to it…

Brace Yourself Now for the $220B “Sovereign Wealth” Wave

4 | By Shah Gilani

Oil and stocks are married, for better or worse. Too bad lately it looks more like for worse.

With the price of Brent Crude around $37 a barrel and West Texas Intermediate (WTI) around $33.50 a barrel, oil producing countries’ budgets are slipping into a deep well.

That’s pretty well known. But here’s the secret.

To keep growing deficits from overwhelming their economies, every oil exporter with a national fund, also known as a sovereign wealth fund (SWF), is selling portfolio assets. There are eight of these countries, and they’re big names (click here to see). 

Unless oil jumps considerably higher, sovereign wealth funds will be forced to sell hundreds of billions of dollars’ worth of equities in 2016.

That constant selling pressure will dampen global equities for all of 2016 if oil stays at depressed levels.

And if oil goes down…