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Bill Gross: Interest rates are going higher this year

From Bloomberg: 

Bill Gross, the former manager of the world’s largest bond fund, said the U.S. Federal Reserve will raise interest rates late in 2015 to end distortions that six years of near-zero borrowing costs have brought to financial markets.

Any increase by the Fed will be slow to avoid startling markets that have gotten used to cheap money, and caution will prevail for a long time, Gross wrote in an investment outlook for Janus Capital Group Inc., where he runs the $1.4 billion Janus Global Unconstrained Bond Fund.

The former chief investment officer of Pacific Investment Management Co., who left that firm in September to join Janus, likened financial markets to the board game Monopoly, in which a bank, much like the Fed, supplies money to players who invest it in properties. Gross said the Fed realizes that for the game to function, players need incentives to invest.

“Capitalism depends on hope – rational hope that an investor gets his or her money back with an attractive return,” he wrote. “Without it, capitalism morphs and breaks down at the margin. The global economy in January of 2015 is at just that point with its zero percent interest rates.”

Gross, 70, has previously said that falling oil prices and a strong dollar constrain the Fed from raising rates until late this year, “if at all.”


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Article source: http://thecrux.com/bill-gross-the-fed-will-raise-rates-this-year/

The easy way to know when a bear market has started

From Brian Hunt and Ben Morris, DailyWealth Trader:

Recently, we shared a common sense plan for staying long stocks as the market trends higher… while having an exit plan in place in case a bear market begins.

Since some market analysts say a bear market is around the corner, we know this is a big concern for many investors.

But how do you know when a bear market has actually arrived?

The number one thing that would lead us to think a bear market has officially arrived is something called “lower highs and lower lows.”

Markets don’t move in smooth, straight lines. They move in stair steps. A bull market tends to take a few steps higher… then a step or two lower. The steps forward are larger than the steps backward, and this produces price gains over time.

You can see a series of “higher highs and higher lows” in the two-year chart of the SP 500 below:

A bear market works the opposite way. In a bear market, the market tends to take a few steps lower… then a step or two higher. The steps lower are larger than the steps higher, and this produces losses over time.

You can see a series of “lower highs and lower lows” in the chart of the SP 500 from late 1999 through late 2002:

Now, let’s look at the current state of the market…

There are two

Article source: http://thecrux.com/how-youll-know-when-a-bear-market-has-arrived/

Deflation has officially arrived in Europe

From Bloomberg: 

Mario Draghi’s deflation challenge was underlined on Friday with prices plunging at a pace last seen in the depths of the recession in 2009.

The annual inflation rate fell to minus 0.6 percent, matching the biggest decline in prices in the history of the single currency, according to data published by Eurostat. The drop exceeded economists’ estimates for a 0.5 percent slump. Unemployment fell to 11.4 percent in December, a separate report showed.

Sinking prices combined with stubbornly high unemployment led the European Central Bank president to announce a 1.1 trillion-euro ($1.2 trillion) stimulus plan last week that centered on government-bond purchases. Even though the size of the program exceeded economists’ forecasts, it’s still unclear whether it will be enough to return inflation to the Frankfurt-based central bank’s goal of just under 2 percent.

The data “provides strong justification for the ECB’s recent decision to embrace QE,” said Teunis Brosens, an economist at ING Groep NV in Amsterdam. “The key number to watch in the coming months is core inflation. Any further falls may raise concerns that QE has come too late to stave off deflation.”

Core inflation in the euro region slowed to 0.6 percent in January from 0.7 percent in December. That’s the lowest since the euro was introduced in 1999.

The euro rose 0.4 percent against the dollar before erasing gains, and traded at $1.1306 at 2 p.m. Frankfurt time.

Spain, Germany

In Spain, prices declined 1.5 percent in January from a year earlier.

Article source: http://thecrux.com/deflation-has-officially-arrived-in-europe/

Porter Stansberry: We’re headed for a “complete collapse”

From Sean Goldsmith in The Stansberry Digest: 

Today’s Digest may scare you… And that’s a good thing.

[This week], we told you one of our greatest fears is coming true… Global currencies are collapsing as central banks continue to drown their economies in debt. Commodities are plunging as global growth slows and the dollar strengthens. Meanwhile, volatility is returning to the market.

Plus, Switzerland’s central bank – the Swiss National Bank – unpegged the franc from the euro, causing a huge swing in the currency. As we noted yesterday, we’ve seen massive moves in most major currencies. Crude oil has fallen 60% from its peak. Copper and iron ore are both at multiyear lows.

And there are plenty of “black swans” lurking…

We could see Venezuela default as oil prices plunge and inflation takes hold. We could see Greece leave the euro. The situation in Russia could further deteriorate. We could see major defaults in the energy sector. We could see a highly leveraged hedge fund blow up – like Long Term Capital Management during the last Russian crisis in 1998. (More on that later.)

To be clear, we’re not saying the world is ending. The overall trend is up in this market. But it’s getting long in the tooth. The market has gone up for six years in a row. If it closes up in 2015, that will be an unprecedented seven straight years of stocks rising… something the market has never done before,

Article source: http://thecrux.com/porter-stansberry-i-am-as-bearish-as-ive-ever-been-in-my-entire-life/

Russia and oil: What history says could be coming next

From Marin Katusa, Chief Energy Investment Strategist, Casey Research:

Just after I signed the publishing agreement for my first book, The Colder War, I realized how much research I was going to end up doing, specifically in areas that I never thought would be so integral to my subject area: energy and mining. Along the way, I came across some fascinating events that were completely out of my area of expertise but gave me a better sense for the unintended consequences in an historical perspective of the events that led to where we are today.

One epic event that really stood out for me, which I will discuss today, is the bloodiest battle of all time, to my knowledge. Over 2 million soldiers and civilians died in this one battle that lasted 199 days from start to finish. (If you know of one particular battle—not a war—that had more deaths, please e-mail me at [email protected].)

What was the catalyst for the bloodiest and most horrible battle of all time? Oil. Before I get into why it was, I want to present the events that led up to this epic battle.

In 1939, Hitler and Stalin signed the German-Soviet Nonaggression Pact. Hitler focused on Western Europe and on defeating France by the mid-1940s, he became rattled by Soviet expansion in the East, which by this time included the occupation of the Baltic states (now Estonia, Latvia, and Lithuania) by the Soviets.

The Day That Changed

Article source: http://thecrux.com/a-story-about-russia-and-oil-youve-never-heard/

50-year chart says the market could be topping right now

From Chris Kimble at Kimble Charting Solutions:

CLICK ON CHART TO ENLARGE

This chart is the Dow “Quarterly” dating back to 1965. I applied Fibonacci to the Dow’s 2000 high and 2002 quarterly lows and then applied Fibonacci extension levels.

The Dow stopped on a dime in 2007, as it hit the 161% Fibonacci extension level at (1).

Now, the Dow is hitting the Fibonacci 261% Fibonacci extension level at (2). While at this level, a long-term resistance line comes into play that ties in the 1987 highs and the 2002 lows.

Joe Friday, just the facts… This is not your typical resistance level and the Dow could put in a peak at this combo!

A reminder, this is a quarterly chart… it will take time to prove or disprove if this Fibonacci extension level will impact the Dow.


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Article source: http://thecrux.com/50-year-chart-says-stocks-could-be-peaking-right-now/

Silver Price to Drop for Record 4th Year, Gold Steady Says LBMA 2015 Forecast

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Article source: https://www.bullionvault.com/gold-news/silver-gold-013020152

This “divergence” says the market could be headed to new highs again

From Tom McClellan’s Chart in Focus: 

The news out of the European Central Bank on Jan. 22 helped to lift the major averages higher. The DJIA and SP500 have not yet made it back up to the level of their December 2014 highs, but the Dow Jones Utility Average has already pushed to a higher high. That promises more upside movement for the rest of the market.

It is not surprising that utilities stocks tend to move up and down in sympathy with all of the rest of the stocks. They are subject to many of the same forces of liquidity, and returns chasing. In spite of that general tendency, we do see differences in behavior sometimes, and those differences are worth paying attention to.

If the DJIA makes a higher high but the DJU makes a lower high, that sort of divergence usually leads to a selloff for the broader market. It is as if the utilities stocks can act as a canary in the coalmine, sniffing out liquidity problems ahead of time.

That is not the situation we are seeing now, though. With the DJU already up to a higher high, and leading the industrials higher, we are at least several days away from possibly having a bearish divergence, and that would only come into play after the DJIA has made a higher high. And this strength is to be expected now, as we are

Article source: http://thecrux.com/trader-alert-this-divergence-says-stocks-could-be-headed-to-new-highs-again/

The simple way to know when a bear market has arrived

From Brian Hunt and Ben Morris, DailyWealth Trader:

Recently, we shared a common sense plan for staying long stocks as the market trends higher… while having an exit plan in place in case a bear market begins.

Since some market analysts say a bear market is around the corner, we know this is a big concern for many investors.

But how do you know when a bear market has actually arrived?

The number one thing that would lead us to think a bear market has officially arrived is something called “lower highs and lower lows.”

Markets don’t move in smooth, straight lines. They move in stair steps. A bull market tends to take a few steps higher… then a step or two lower. The steps forward are larger than the steps backward, and this produces price gains over time.

You can see a series of “higher highs and higher lows” in the two-year chart of the SP 500 below:

A bear market works the opposite way. In a bear market, the market tends to take a few steps lower… then a step or two higher. The steps lower are larger than the steps higher, and this produces losses over time.

You can see a series of “lower highs and lower lows” in the chart of the SP 500 from late 1999 through late 2002:

Now, let’s look at the current state of the market…

There are two

Article source: http://thecrux.com/how-youll-know-when-a-bear-market-has-arrived/

Silver prices set for a shining performance

A week from tomorrow the resources sector of the UAE will assemble in the Almas Towers of the Dubai Multi Commodities Centre for its annual conference. The mood should be pretty upbeat, at least among precious metal traders and investors.

As goes January, so goes the rest of the year. That is what silver investors will be hoping after the best start to the year since 1983, with prices up 15 per cent in the first three weeks of this year. By contrast, equities have been struggling. Yet the silver price is still far away from its all-time high of US$50 an ounce set back in 1980.

Silver prices move in tandem with gold and are leveraged to the upside, and vice versa. The three-year correction in precious-metal prices has taken the silver-to-gold price ratio to above 70, a historically high level, leaving considerable room for silver price outperformance as gold moves back up.

And gold prices certainly have been going up so far this year, particularly since the Swiss National Bank decided to de-peg its franc from the euro. That sent the gold price surging from $1,220 to $1,305 an ounce. But if this year proves to be a good one for gold prices, it will be a great one for silver given the established link between price movements in the two monetary metals.

Gold prices should gain from the money printing by global central banks, so the trillion-euro in quantitative easing from the European Central Bank ought to put prices on steroids,

Article source: http://www.thenational.ae/business/personal-finance/silver-prices-set-for-a-shining-performance