Sunday, June 28, 2009

NEoWave Warns Stock Market Has Peaked for 2009

NEoWave Institute's Glenn Neely is forecasting the largest vertical drop of the decade for the S&P 500. Neely predicts the stock market will decline 50% in the next 6 months.

Glenn Neely, founder of NEoWave Institute and prominent Elliott Wave analyst, today announces a startling prediction: The S&P 500 is forming a major top in June, which will be followed by a large decline, eventually pushing the stock market to record lows for the decade.

"Technically speaking, according to NEoWave a correction began at last October's low; the March-June rally is the final leg of that correction," Neely explains. "The March-June rally is now ending, allowing the bear market to resume. During the next six months, the S&P will decline 50% or more, breaking well below 500!" Currently, the S&P is hovering around 900.

Glenn Neely is providing this information not as a specific trade recommendation but as a general public service announcement. A prominent Elliott Wave analyst, Neely was recently recognized in Timer Digest's May issue as the #1 stock market timer for the past 12 months.

About Glenn Neely and NEoWave Institute:Glenn Neely, who is internationally regarded as the premier Elliott Wave analyst, founded the Elliott Wave Institute in 1983. In 1990, Neely published his advanced Wave analysis process in his now-classic book, Mastering Elliott Wave. In 2000, Neely changed the name of his research and advisory firm to NEoWave Institute to differentiate his scientific Wave analysis technology from orthodox, subjective Elliott Wave analysis, which is frequently nebulous, inaccurate, and constantly fluid.

This article appear on 16 June 2009.

Sunday, June 21, 2009

Why Stocks Will Collapse This Fall

Written by Graham Summers
Thus far, 2009 has been a virtual repeat of 2008 for financial markets.

So far, both years have had:
  • A Crisis/ Market low in March (Bear Stearns & March collapse to 666)
  • A Government/ Federal Intervention (Bear Stearns & Stimulus Package)
  • Gold testing/ breaching $1,000 in the first quarter (March & February)
  • Stocks rallying into the summer on worsening fundamentals
  • Stocks rallying close to their beginning of the year highs in May/ June
  • Commodities rallying into the Summer on the China story/ inflation concerns
  • Various government figures using the rally to claim that the “worst is over”

Stocks rolling over in earnest in June as fundamentals take hold

Even the charts are similar… except for the fact that 2009 has been like 2008 on steroid (the chart has been rebased to 100).

The Fed claims that it cut interest rates and pumped trillions into the market to lower volatility and return stocks to “normal” trading action. Looking at 2009’s performance compared to 2008, I’d say their efforts have been a complete and utter failure. The stock market has become more volatile with larger swings.

As I’m sure you’ll recall, stocks completely collapsed in the fall of 2008. I think that stocks will suffer a similar fate in 2009. My reasoning is simple:

1) The Fed’s moves have not solved the critical issues facing financial markets
2) The economic and financial fundamentals have worsened dramatically

The primary issue facing the financial markets is system solvency. In extremely simple terms there is too much debt, too many crummy assets, and not enough capital. Debt permeates our entire economy from the consumer level to the federal government. Debt became some out of control that at its peak, people could buy the largest single asset of their lifetime (a house) with no money down.

Since that time, Americans have done the sensible thing: deleveraging by paying off debt ($40 billion in credit cards debt Feb-May) and raising capital (saving their money). The In contrast, the Federal Reserve (the alleged back-stop for the financial markets), has done quite the opposite: issued more debt and spent even more money. Small wonder volatility has worsened.

The other critical issue facing the financial markets is accounting. To this day, no one knows the real value of the assets sitting on the banks’ balance sheets. No one knows if the banks are even solvent (I have my doubts). No one knows what the financial markets would look like without the Fed’s props in place.

To use a metaphor, the Fed has propped up a collapsing home with a few stilts and buttresses. Has the foundation improved? NOPE. Is the structure more stable? Definitely NOT. Do we even know the extent of the rot or damage that needs to be fixed? NOPE again. Have we spent a ton of money on the issue? YEP.

Now, onto issue #2 (economic and financial fundamentals are worsening dramatically). Sentiment and trading patterns may dictate short-term moves, but ultimately the market is driven by earnings. Well, earnings have fallen off a cliff. Consumers are not spending as they used to (they probably won’t ever again).

Year over year, retail sales are the worst seen in the post–WWII period. The last few months have shown the rate of collapse is slowing… but getting horrendous at a slower pace isn’t a sign of a turnaround.

Moreover, unemployment is rising which means even less spending (who goes on shopping binges to celebrate getting fired?). And this is happening at the same time that oil and other commodities are rising (which means operating costs will go up).

In very simple terms, higher costs + lower sales = much, much lower earnings. It’s simple math, but Wall Street analysts don’t seem to get it. Neither do any of the “green shoots” crowd.

So in summation, we have a MORE volatile stock market, rallying even harder on worsening fundamentals, with no real solutions to the structural issues plaguing the financial system.

If this isn’t a recipe for a potential Crash, I don’t know what is.

Good Investing?
Graham Summers

Courtesy From Jesper Lee - Cimb

Tuesday, June 16, 2009

MGM, Genting In Talks On Macau.

KUALA LUMPUR: MGM Mirage Inc, a global casino operator, has held discussions with Genting group on the latter’s possible participation in its Macau operations, as part of their overall talks towards forming a “very powerful” global alliance.

In an email reply to queries from The Edge Financial Daily, MGM public affairs senior vice-president Alan M Feldman said: “We have had specific discussions about Macau but would not rule out Genting’s participation if it made strategic sense for all parties.” Other than Macau, he said the two parties had started discussions on possible marketing relationships, strategic ventures and partnerships globally.

“While discussions between the companies are at a preliminary stage, we have started to consider possible marketing relationships, strategic ventures and partnerships with Genting globally,” he said. Feldman was asked to comment on intense speculation that Genting group, which is also building a casino resort in Singapore, may be buying over MGM’s interest in Macau.

“A relationship with Genting makes strategic sense as both companies have similar operating philosophies. This has great potential to be a very powerful alliance,” he said. MGM, which is listed on the New York Stock Exchange, owns and operates 16 properties in the US. It also has 50% interests in four other properties in Nevada, New Jersey and Illinois in the US, and in Macau.

For the financial year ended Dec 31, 2008, MGM group recorded net revenues of about US$7.2 billion (RM25.2 billion). MGM Grand Macau is a 35-storey, 600-room casino resort, which opened on Dec 18, 2007. The property is owned and operated with its 50% joint venture partner, Pansy Ho, the daughter of Macau casino king Stanley Ho. The Edge weekly in its latest issue reported that unlike the cash-rich Genting group, MGM was on the brink of bankruptcy due mainly to a US$14.4 billion debt burden.

It also ran into problems at its CityCentre project in Las Vegas, a partnership with Dubai World, leading to cost overruns. The report said MGM’s prospects were turning for the better after a fund-raising exercise that would allow it to redeem about US$1 billion in bond papers expiring later this year. Genting’s recent RM349.5 million (US$100 million) acquisition of a 3.2% equity stake in MGM added fuel to the speculation that the cash-rich Genting group was weaving its plan to venture into Macau.

The stake was offered under a US$1 billion equity placement by MGM last month. Also last month, Genting Bhd and its unit Resorts World Bhd completed the subscription of a total of US$100 million worth of senior secured notes issued by MGM.

The notes were part of MGM’s US$1.5 billion fund-raising exercise to help settle its outstanding debts and for general corporate purposes, and were secured by a first-priority lien on substantially all of the assets of the Bellagio Hotel and Casino and the Mirage Hotel and Casino, both located in Las Vegas.

Following that, analysts had speculated that those investments could pave the way for Genting group to acquire a stake in MGM or take over the US casino operator’s investment in MGM Grand Macau.In response to The Edge weekly story, Genting said the group was constantly reviewing and evaluating business and investment opportunities that may arise in the gaming industry, refusing to comment on such speculation.

In the email reply to The Edge Financial Daily, Feldman did not say whether its MGM Grand Macau partner, Pansy Ho, would be agreeable to any equity participation by Genting in the Macau unit. He also did not comment on the New Jersey gaming law enforcement authorities’ call for MGM to cut ties with Ho due to allegations that her father was tied to organised crime.

Interestingly, in earlier reports MGM Macau defended Pansy Ho and disagreed with the authorities’ recommendation that she was an “unsuitable” business partner. It was reported earlier this month that the gaming giant would challenge the regulatory report. It is understood that the final ruling against MGM could force the Las Vegas-based casino giant to choose between abandoning the lucrative gaming market of Macau or walking away from its investment in Atlantic City, New Jersey, where it owns half the Borgata Hotel Casino & Spa, the city’s highest grossing casino.

When contacted by The Edge Financial Daily last week, Genting’s head of strategic investments and corporate affairs Justin Leong declined to comment on Genting’s purchase of the MGM stake and the speculated Macau venture.

Tuesday, June 9, 2009

U.S. Debt Crisis as Treasury Bond Prices Collapsing and Interest Rates Surging

Martin Weiss writes: Just as we’ve been warning, the United States Treasury is the next and largest victim of this great debt crisis. Right now, the Treasury’s finances are collapsing … its bond prices plunging … its interest rates surging.

Indeed, the Treasury’s financial crisis looms so large, it could wreck more havoc on the economy and deliver more pain to average Americans than the subprime mortgage disaster, the housing bust, the banking crisis, and the collapse of General Motors put together … It could create a rising tide of interest rates that wipes out the effects of any stimulus, undermines any recovery, and sabotages any new bailouts …

But unlike GM, Fannie Mae, Citigroup, AIG, and the many others that the U.S. Treasury has bailed out in recent months, there is no institution on the planet big or rich enough to bail out the U.S. Treasury itself. Further, unlike all prior episodes in this great debt crisis, the Treasury’s financial troubles cannot be covered up, papered over, or kicked down the road like an empty tin can.

Already, Treasury bond prices are crashing, and doing so with greater speed that at any time in history. Already, interest rates, which automatically go up when bond prices fall, are surging, with the rate on 10-year U.S. Treasuries nearly DOUBLING in a half year — the most dramatic surge during any recession since the founding of the Republic. And already, the interest rates on 30-year fixed mortgages, auto loans, commercial loans, and other debt are going through the roof.

This Is a Game Changer!

If you’re not paying attention to this new phase of the debt crisis, you’re making a grave error. And if you’re not taking swift action to protect yourself, you’re taking your financial life in your hands. In this issue, I’ll show why it’s going to get worse, why the Federal Reserve is powerless to stop it, how it will impact each major sector of the economy, and what you must do immediately to protect yourself and your family from the inevitable fallout.

Why This Is Just the Beginning of the Treasury’s Crisis. Why It’s Going to Get a Heck of a Lot Worse This Year. And Why It Could Continue for Years Beyond 2009.

It’s widely known that America’s federal deficit is out of control. But so many dire deficit warnings have been issued so often, they now fall mostly on deaf ears. Wall Street pundits roll their eyes. Washington politicians laugh at those who would cry “wolf.”

What they don’t realize is that this time, due to a series of devastating facts they’ve chosen to ignore, the day of reckoning is here:

Fact #1. Sheer size. According to the government’s official estimate, the federal deficit for fiscal year 2009 will be $1.84 trillion, or 13.4 percent of GDP!* It is the worst deficit in U.S. history.

It means the deficit has now exploded to a level which is so far beyond the range of anything we’ve experienced before, it’s impossible to imagine any scenario in which it does not have a devastating impact.

Fact #2. The actual deficit could be much larger. The administration’s $1.84 trillion deficit forecast presupposes a dramatic turnaround in the economy, which, by definition, is virtually impossible with the government running trillion-dollar deficits!

How can the administration possibly predict an economic turnaround when its own Treasury Department is sucking nearly $2 trillion in funds out of credit markets — the same credit markets that derailed the economy late last year?

Similarly, how can the government predict a turnaround when its own borrowing frenzy is already driving up mortgage rates and undermining real estate, the one sector that’s most responsible for the economy’s decline in the first place?

Fact #3. No end in sight. Since the United States declared its independence nearly 233 years ago, the only time the federal deficit approached or exceeded 10 percent of GDP was during major wars — the Civil War, World War I, and World War II. But in each case, the deficit financing began promptly — and ended promptly — with the war.

Unfortunately, that’s not the case this time. Although the U.S. is fighting wars in Iraq and Afghanistan, their cost represents only a small fraction of the budget shortfall. Even if the Iraqi and Afghan wars could be ended tomorrow, America’s great budget crisis would still be just beginning.

Fact #4. Today’s deficits are far worse than those of the Great Depression. America’s first big, multi-year peacetime deficits came in the 1930s. Tax revenues plunged with the sinking economy. And in the years that ensued, government expenditures — mostly for a series of programs to bail out the economy — went through the roof.

But even with a 90 percent collapse in the stock market in 1929-32 and even after three years of double-digit GDP declines that make today’s look mild by comparison, the federal deficit in 1933 was just 3.27 percent of GDP, less than one-fourth of what’s projected for this year.

And subsequently, even when the U.S. government embarked on the most ambitious stimulus and bailout programs of its 150-year history, the biggest single deficit — in 1936 — was 4.76 percent of GDP, only about one-third the size of today’s.

Fact #5. Structural deficits. Our nation’s second encounter with giant peacetime deficits was in the 1980s, but with a big difference: This time, there was no Great Depression. This time, the government’s fiscal woes were mostly structural — deeply ingrained in the bloated size of government and in our society’s dependence on government for much of its sustenance.

And even then, the federal deficit never rose to more than 5.63 percent of GDP, less than HALF its size today. The big difference today: Our current structural deficits are far larger than in the 1980s because the government is now liable for $65 trillion in future payments for Social Security, Medicare, government pension benefits, and other obligations that are now kicking in at a quickening pace.

Fact #6. Massive new commitments. Beyond the $1.84 trillion of red ink projected for 2009 and beyond the trillions more in future obligations, the U.S. government has just assumed responsibility for nearly $14 trillion in new loans, commitments, and guarantees to bail out brokers, banks, insurers, auto makers, and the broader economy.

If just one of these suffers greater-than-expected losses, we could see wave after wave of new demands on the government to honor its guarantees, bloating the deficit far further.

Why the Federal Reserve Can’t Stop Treasury Bonds from Falling

I can assure you, it’s not for lack of trying. In a massive attempt to boost Treasury bond prices launched March 25, the Fed has now bought $145.5 billion in Treasury notes and bonds, the most ever in such a short period of time. But despite all the Fed’s buying, T-bond prices have continued to plunge and interest rates have continued to surge.

Plus, in an even larger effort to support mortgage prices — and to suppress mortgage rates — the Fed has poured a whopping $507 billion into direct purchases of mortgage-backed securities (MBSs). But again, even after spending more than a half trillion dollars to bid them up, mortgage prices have still collapsed and rates have still surged.

In sum, the U.S. Federal Reserve has failed to stop this new phase of the crisis, and one of the key reasons is obvious:

To buy bonds, the Fed must print money. But the more it prints, the more it fans inflation fears and the more it chases away bond investors, who realize they’ll be paid back in cheaper dollars. Some pundits seem to think the Fed can simply print all the money it wants to finance the massive deficits. But in the real world, it doesn’t work that way.

The reason: As I explained last week, the government has not one, but TWO debt problems simultaneously:

A. The NEW debt problem:Massive Treasury borrowings of close to $2 trillion just to fill the gaping holes in the current federal budget.

B. The OLD debt problem: $14.5 trillion in Treasury securities, government agency securities, and MBSs outstanding.

The problem: If just 10 percent of those are dumped on the market, it would trigger the sale of $1.45 trillion worth, easily overwhelming the Fed’s purchases. The dilemma: The main reasons investors sell — fear of inflation and damage to the U.S. government’s credit — are, themselves, fueled by the Fed’s money printing and bond buying. End result: The more the Fed buys bonds, the more it risks triggering massive investor selling. So if you’re counting on the Federal Reserve to bail out the U.S. Treasury Department, forget it.

In the government’s grand balance sheet, printing money does nothing more than shift debts from one government account to another. It does not create wealth. It certainly does not stop bond prices from plunging and interest rates from surging.

Far-Reaching Consequences

Never underestimate the impact of surging rates — especially with near double-digit official unemployment and the worst debt crisis since the Great Depression.

Rising rates in this environment will be pure poison for:

  • The nation’s insurance companies loaded with long-term corporate and government bonds.
  • The nation’s banks counting on low interest rates to raise funds for close to nothing.
  • Utilities that must continually borrow huge amounts of long-term money to finance their massive investments in power plants and facilities.
  • Home prices that can only fall when available credit in the nation is hogged by Uncle Sam’s massive borrowing and when mortgage rates rise.
  • You! Stocks, long-term bonds, and virtually all types of real estate properties are extremely vulnerable to surging interest rates.

Your Action Plan

FIRST: Get the heck away from long-term bonds and shift to shortest term securities.

SECOND: Use the resources provided with my new book, The Ultimate Depression Survival Guide, to find a truly safe bank near you … or to bypass banks entirely.

THIRD: Use any temporary market recoveries as an opportunity to SELL off assets you don’t need, such as investment real estate and vulnerable stocks. Keep your 401(k). But within your 401(k), shift to the safest, shortest term alternative available.

FOURTH: To profit from falling bond prices, consider inverse ETFs designed to rise as Treasury bonds fall.

Good luck and God bless!


* The 13.4 percent of GDP assumes the following: Deficit — the $1.84 trillion projected by the administration; GDP — the 3.3 percent GDP decline proposed by the banking regulators in their bank stress tests. However, the actual deficit in that scenario could be larger.

Thursday, June 4, 2009

Dollar Collapse - Will The Dollar Really Collapse?

If the thought of the US dollar crashing, or devaluing makes you laugh, or shake your head because its just a myth, think again!

I was listening to Ben Bernanke’s (Federal Reserve Chairman) Audio last week. Who in front of Congress blatantly admitted to having no concern for the dollar. He stated his job was to stimulate the economy, (not to mention his own bank account!) Which means print off money and throw it around into the markets and other companies that don’t need it in the first place.

That is only part of the reason why the market has been heading north full steam ahead…. I must be the first one to say here, that if you go back hundreds of years, in any economy and see the consequences of such actions and its not rosey picture.

Let’s take for example South Africa, or what has happened in Zimbabwe recently. The consequences of such actions has already taken place there and many crazy pictures are showing up on the internet. When you have a look at them (see on your right) It’s like some sort of bizarre scene out of a “Gods must be crazy” Film. But the only crazy people are the ones running this show. The governements and media.

In Zimbabwe things are drastic and their country has fully collapsed. Hyperinflation has riddled the country, destroying their currencies and the true gentle spirit nature of it’s people. Check this picture on your right. It’s is a picture of one of the locals racing off to the shops to errrr… buy a loaf of bread! Ah you forgot your wheelbarrow mate! “Oh you couldn’t afford one!…RIGHT!”

Jokes aside, this is a serious situation. It’s sad really!!!! I would not want to be living in a place like this, that’s for sure. The scary thing is that the US and some other countries are about to undergo a massive currency correction, and valuation also. How much?, well….time will tell? But the effect will have dramatic consequences on many families, young and old, rich and poor!


Zimbabwe is only one small portion, that has already felt these effects. What will really matter is how this will affect people psychologically. I know that people are in trouble now financially but when people get DESPERATE, they can sometimes do DESPERATE things.

Anyway….Its kinda hard to explain what is going on without showing some charts. Here is one that will simply BLOW YOUR MIND!. For video refer HERE.

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