Archive for December, 2019

Take Last Decade’s Milestones as a Warning for the Dangers Ahead

0 | By Shah Gilani

Philosopher George Santayana said, “Those who can’t remember the past are condemned to repeat it.”

That’s maybe truer now as we enter a new decade and look back at the decade we’re leaving.

From 2010 through 2019, something monumental happened every year, even sometimes some things, that rocked financial worlds and are harbingers of what we’ll see this decade.

Here are the big financial events of each year, why they’re significant, and what they might portend…

Capital Wave Forecast: The Fake Manufacturing Recession Narrative Is Scaring Investors: Don’t Buy into It

0 | By Shah Gilani

If you think the current “manufacturing recession” in the United States is going to sink the economy and the stock market, you’re not alone.

That’s exactly what some major media outlets are trying to plant in your head right now.

Consumers and investors are being inundated with bad news about manufacturing… and a lot of them are scared.

A New York Times headline from this summer 2019 pushed the idea that a manufacturing recession will infect the economy by saying, “U.S. manufacturing slowed in August in latest sign of economic weakness.”

The Los Angeles Times got on-board shortly after in October announcing, “Manufacturing is now officially in recession, despite Trump’s vow to boost economy.”

CBS upped the fearmongering stating the manufacturing recession as a fact and making it sound viral saying, “U.S. manufacturing is in a recession. What does that mean for the rest of the country?”

Back in July PolitiFact quoted a candidate for president as an expert with the statement, “Elizabeth Warren says manufacturing is in recession…”

Then in October CNN, the media source of all Breaking News, trumpeted, “US Manufacturing Looks Weak. That’s a Problem.”

Even Bloomberg Business got on the naysaying train in October suggesting, “Manufacturing in Recession Might Spread to U.S. Economy.”

And MSN, the blatant basher of good news, claimed, “US manufacturing in ‘technical recession’.”

The problem is that it’s all fake news…

Goldman Sachs’s 1MDB Costs Could Knock It Out of Banking Deals Around the World

1 | By Shah Gilani

We talked about this on Tuesday, and now there’s more news out about Goldman Sachs’s potential hit for its part in the 1MDB global scandal.

While Goldman and the U.S. Justice Department are reportedly negotiating a $2 billion fine and criminal rap for its Asian-based banker’s part in the sensational multi-billion scandal and theft of assets from a Malaysian sovereign wealth fund, Malaysia’s attorney general said last week he’s going after the bank for $8 billion to $9 billion.

Anything close to a $10 billion hit to Goldman would be devastating.

But, it wouldn’t be as bad as pleading guilty to criminal charges

Goldman Sachs Is Handsomely Rewarded for Criminal Activity… Again

1 | By Shah Gilani

The Goldman Sachs Group Inc. (GS)’s stock hit a 52-week high last week, reaching $232.19. It’s now less than 18% from the all-time high of $273.38 it registered in March 2018.

When a stock’s making new highs, it’s usually a reflection that the underlying company’s doing well.

But not Goldman Sachs.

Its stock’s going up; despite it being bad (as in a bad actor, bad as in criminal).

That’s right. Goldman Sachs is once again facing a criminal investigation and potentially massive fines.

The story is complicated, salacious, and fantastic – as in you can’t believe this actually happened and it’s bound to be a hit movie soon.

In a nutshell, Goldman Sachs helped raise $6.5 billion for what was supposed to be a kind-of, sort-of Malaysian sovereign wealth fund.

Only it wasn’t anything like that…

Capital Wave Forecast: Even If the Fed’s Been Duped Doesn’t Mean Stocks Will Crash Just Yet

1 | By Shah Gilani

Rumors of the Federal Reserve’s demise – in part because it was “duped” by the biggest bank in the U.S. – have been greatly exaggerated, though headlines would have us believe otherwise.

MarketWatch titled its piece back in April, “The Federal Reserve Has Lost Control of the Financial Markets.”

The Wall Street Journal asked in June, “Has the Fed Lost Its Mojo?”

Also, in June, the Mises Institute declared, “The Fed Has Lost Control.”

A few months later in September CNBC reported, “Fed loses control of its own interest rate as it cuts rates – ‘This just doesn’t look good’.”

Not only has there been no let up, fearmongering headlines are being ratcheted up.

The New York Times declared, “Fed Jumps into Market to Push Down Rates, a First Since the Financial Crisis.”

In mid-November Politico warned, “Fed’s push into funding market stirs fear of widening role.”

And a few days ago, on December 18th, The Economist, with a graphic of a fire extinguisher in the shape of a dollar sign poised over rising flames cautioned, “Despite the Fed’s efforts, the repo market risks more turbulence.”

It’s a frightening fact that repos (repurchase agreements), short-term borrowing facilities traded in the fed funds market, where banks and other systemically important financial players borrow from each other, blew up in September, right under the Fed’s none.

It’s even more frightening that the “turn” of the year is expected to put exponentially more pressure on repo rates than what the fed funds market saw in September and spiking rates could force banks, hedge funds, institutions, traders, active and passive investors to sell and have to continue selling as margin calls force asset prices lower and lower.

Once again it looks like we’re looking over the edge of an abyss at potentially huge market loses.

But the truth is The Fed hasn’t lost anything. At least not yet.

Maybe the Fed was duped by the biggest bank in the United States into restarting quantitative easing (QE). Or maybe it saw what was happening and let it happen to scare the hell out of banks and overleveraged hedge funds. No-one knows the truth there and the Fed’s never going to tell.

But, the “Fed’s lost control” narrative is fake news.

Sure, one hand came off the tiller, but they still have control of the ship. At least for now.

What’s really going on will only sharpen the horns of what investors (wrongly) believe is a long-in-the-tooth bull market

The “Repocalypse” Could Sink the Stock Market Before the Year Ends

0 | By Shah Gilani

It’s out there, that out-of-left-field thing, that exogenous event, that black swan, that thing that could implode the stock market.

Only, it’s not out there, it’s right here.

And it’s got a name: “repocalypse.”

What the smartest, biggest traders in the world are afraid of is an apocalypse in the fed funds market for repurchase agreements (repos); hence, the name is repocalypse.

They’re petrified that extraordinary year-end borrowing by banks and overleveraged hedge funds to meet reserve requirements and settle year-end accounting demands could cause repo borrowing rates to explode and sink the fed funds market, the very plumbing that the financial system lives and dies by.

And that would sink the stock market in about a New York minute.

Here’s what the Federal Reserve’s trying to paper over, what media outlets don’t understand, what’s really happening in the fed funds market, and how a repocalypse could knock the stuffing out of stocks…

It’s a Good Time to Buy a Little Stock Market Insurance

0 | By Shah Gilani

The stock market – whichever major benchmark of “the stock market” you may follow, be it the Dow Jones Industrials Average, the Nasdaq Composite, or the S&P 500 – has been on a crazy bull run.

Me? I’m still a raging bull.

But if there’s a cheap way to buy insurance on the market faltering, I’m buying it.

No, I don’t think the market’s going to crash. It’s not even done going higher. In fact, I believe it’s going at least another 10% higher, maybe more.

It’s just that I like buying cheap insurance when I can. I may never need it, you may never need it; still, that doesn’t stop us from buying insurance on our cars, homes, or other investments, does it?

Here’s what constitutes cheap insurance and why right now may be a good time to pick some up.

Capital Wave Forecast: The Fake Recession and Why It’s Not Too Late to Make a Killing in This Bull Market

2 | By Shah Gilani

There’s a recession coming, that’s a given. But it’s not here. In fact, there’s not one in sight, even on the horizon.

But that’s not what you’re hearing from an overwhelming number of mainstream media and financial news outlets.

According to them, the next great recession is bubbling up and about to spill out of the containment towers built up around it.

Investors not participating in the roaring bull market are being cautioned that it’s too late.

Even worse, investors sitting on spectacular gains amassed over the almost 11-year bull market are being targeted with sell recommendations.

Purveyors of the recession narrative want investors on the sidelines to be afraid. Moreover, they want investors who’ve amassed fortunes to sell their stocks and profit from the recession they say is imminent by selling stocks short.

“Say it ain’t so.”

The truth is there’s no recession in sight and the stock market is going higher, a lot higher.

And every moment you wait to jump in, you’re missing out on profits.

Here’s what the recession narrative’s all about, who’s behind it, how the economy’s really doing, where the markets are going and why, and how to make 25%, 50%, 100% and more, over and over, as markets head higher…

I’m Not the Kind of Guy to Say I Told You So, But If I Was…

0 | By Shah Gilani

Believe me, I’m not the kind of guy to say, “I told you so,” but if I was, I’d sure be saying it now.

That’s because…

I’ve been telling you, my Wall Street Insights & Indictments readers, not to sell short this supposedly long-in-the-tooth bull market, not to believe naysayers, and to get on board with the still rising market.

I’ve been unequivocally bullish and predicting more and more all-time market highs in my Capital Wave Forecast, which you also get for free right here every Monday.

I’ve been inundating my paid subscription newsletter subscribers with specific reasons why markets are going higher and recommending new positions regularly, lately two or three at a time.

I’ve been right. You should be making money on this latest leg up in the market like my subscribers are.

So, yeah, I’m saying it, “I told you so!”

Now, I’ve got to tell you about something very big in store

Why Paul Volcker, The Greatest Central Banker Ever, Will Be Missed

1 | By Shah Gilani

Nowadays, I don’t give much credit to the Federal Reserve due to all its dirty tricks on markets, but today one of its best leaders deserves respect.

On Sunday, November 8, 2019, Paul Adolph Volcker Jr., the greatest central banker ever, succumbed to prostate cancer at the age of 92.

“Tall Paul,” as the 6’7″ living legend was known, will be missed by everyone who knew how tall he stood facing blistering political pressure, Wall Street criticism, and millions of Americans who once blamed him for the country’s economic misery and the 10.8% unemployment rate that he presided over in 1983, which cost so many of them their jobs.

But his plain-speaking smarts, resolve, unquestionable honesty, and integrity always shined through and eventually turned every one of his detractors into admirers, if not apostles.

I am, and have been for decades, a Paul Volcker fan. Here’s why the man is an idol