Earnings Report Time

Hi and Good morning to you all,

In previous posts we’ve devoted a reasonable amount of time and effort to providing stock tips and general advice towards increasing ones wealth.

Near the end of April, in a recommendation for ASML, I mentioned how I had made money on the acquisition of Cymer, Inc. by ASML in 2013. It was among the sexiest plays as it delivered premiums for better than those around at the time.  A week later when my prediction became reality I said,  “all of that hard toil has been amassing incomes and growth for a wide range of companies across a broad spectrum of market sectors.”

Time To Crow

Now, of course, the earnings season is upon us and publicly traded companies are revealing their results, such is their obligation.  It may have come as a surprise to you, but when I perused the morning media over here in Asia and saw the CNBC report on ASML, I didn’t need to check the price of ASML to realize my prediction was accurate.]

Please don’t get carried away with the idea that I may have some kind of secret deal going on with ASML where I plug their stock like some super cool, popular beat combo, tearing up the hit parade.

Do kids still say hit parade? I’m pretty sure they don’t say popular beat combo, Not even sure they say cool anymore.

Anyway,

I think  you get my drift, theres almost a million ASML shares traded daily on average, year on year.

If I had that much control well….

I simply used the stock as a means to give solid investment advice to the legions that follow and I might as well use it here as its been so relevant in the finance news and my recent posts.

Using this security as a shining example, It will come as no surprise that equity investments are horribly, dangerously overpriced!

The Dow has delivered consistently for years now and ample fruit has been there for the picking.

INDICATOR

The bond market has been as flat as my friend Tracey’s singing voice for the last six months which is one of many direct reactions to the low interest rates.

The Federal Reserve is sitting on tons of loans:

which they would prefer to offload and the way to unwind those liabilities is to raise the rates!

CORRECTION

So, low rates pump markets and kill bonds, the banks don’t mind that at all as things are all going their way.

Happy days?

Well… for every action theres got to be a reaction and if the gold market is anything to go by a quick glance at this 100 year chart:

http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

clearly shows that from 1929 to 1935 we saw 200% increase, post war things got much better and there was a steady decline until the 70’s when unions were crippling commerce. In 1981 we saw Reagan take over and things began to improve for whatever reason and the chart shows high gold prices. In the affluent Clinton administration gold was low.

Kicking The Can

Its all reflected in the gold chart and we are now heading for a market correction as Stephanie Landsman for Bloomberg writes on the advice from seasoned investor and former fund manager David Tice:

“The market has tended to go down about every seven years. It went down in 1987, 1994, 2001 and 2008,” Tice told CNBC’s “Trading Nation” on Friday. “During these periods after the declines, it rallies like crazy. But now bad things are about to happen again.”

“The catalyst is we’re 93 months into an economic recovery. We have the [Federal Reserve] starting to tighten. We have banks actually starting to tighten,” he said. Tice pointed out the economy is not doing very well, with the gross domestic product growing by an anemic 0.7 percent in the first quarter.

“The bears are always early. I’ve certainly always been early,” said Tice. “Policymakers end up doing what they think is right in order to kick the can down the road. However, now we have so many issues.”

Tice is a legendary bear I mean he was formerly CEO of a company called Prudent Bear Fund!

…and if you looked up pessimist in the dictionary you’d probably see Dave smiling back at you.

That said, he’s not always wrong in fact he’s got it right plenty of times and is proud to wear the t-shirt to prove it.

Jon Marino writes for CNBC and puts it into perspective

A top advisor to presumptive GOP presidential nominee Donald Trump said on Monday that the party wants to reimplement Glass-Steagall, Depression-era legislation that was designed to prevent big bank “supermarkets,” but which was repealed in 1999.

Glass-Steagall is legislation the U.S. imposed in the wake of the 1929 market crash aimed at limiting the relationships between securities firms and commercial banks, and by extension of that, systemic risk to U.S. markets and the economy. In 1999, legislation was passed that did away with Glass-Steagall, but now, the GOP is ready to bring it back and break up banks.

“We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment,” according to the 2016 Republican Party platform statement.

LITTLE BIT OF POLITICS

We know the banks and the Fed are pretty much joined at the hip and are part of the old guard that has seen many, many administrations come and go. The implementation of such antiquated legislation is simply not going to fly with those boys in Wall Street.

Jon Marino continues:

Calling for the repeal of Gramm-Leach-Bliley, the legislation that in 1999 took Glass-Steagall off the books, is politically expedient on a number of levels for Trump, one banker said.

Political suicide is one way of putting it as all The Fed will do is raise rates, you’ll see a sharp decline in the equity markets and a 500 basis point drop in a short period of time will result in the legislation not going down very well with the fence sitters in the Grand Old Party (Republicans).

The mid term Congressional election in 2 years time will spell the end of any attempt at reelection by the current administration.

SUMMARY

To stay ahead of the curve; the financial curve on New York markets that is, you’ll do well to stay with ETF’s for another two or three months.

Place 25% into gold and take that quarter from non performing equities and watch the news daily.

If thats too much give me a holler and I’ll assist you I’m quite sure of that.

Thanks for your time and patience

Enjoy the remainder of your weekend

The Editor

Global Investing