Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Debt Ceiling

The debt ceiling was constructed to prevent the government from spending more than its set limits. If the debt ceiling was strictly enforced, once a limit is hit, spending would need to be cut to prevent the budget from going over the limit. The problem with the debt ceiling is that whenever the government appears to hit its limit, the politicians from both parties agree to increase the debt ceiling. So in effect, the current government essentially runs with no “hard” debt ceiling.

Why Stocks Likely to Head Higher into the New Year

By for Profit Confidential

retail sectorToday is Cyber Monday, when consumers will flock online and spend over a billion dollars. In 2012, $1.47 billion in sales occurred on this day and the expectations are that the number could swell to $1.68 billion today. (Dengler, P., “Cyber Monday Predictions For 2013,” Business2Community.com, October 28, 2013.) We will also find out today how Black Friday and the key weekend shopping period were for the retail sector. A big surprise and the stock market will reach higher.

The stock market has shown little signs of wanting to slow and is continuing to show bullish investor sentiment and the ability to move higher this month and into 2014.

The S&P 500 is at 1,800 and the DOW Industrial at 16,000. The positive momentum is in place for additional gains. The S&P 500 moving to 2,000 next year, up 11.11%, is realistic depending on what the Federal Reserve does and how the economy behaves. The Dow 20,000 may have to wait a few years. Of course, this is contingent on the five-year bull market holding.

On the charts, technology and small-caps continue to lead the broader stock market higher. The NASDAQ closed above 4,000 for the first time since September 2000, when the index was on the decline after trading at a record 5,132 in March. The buying in technology and growth is not a surprise, as buyers have chased risk and potential this year. The top sectors offering the most sizzle at this time are Internet services, mobile, and social media.

COMPQ Nasdaq Composite Chart

Chart courtesy of www.StockCharts.com

Small-cap stocks continue to lead the pack this year as the economy recovers, albeit … Read More

Nomura Calls for 50% Correction in Global Stock Markets

By for Profit Confidential

Nomura Calls for 50% Correction in Global Stock MarketsI’m getting increasingly nervous about the current stock market and its vulnerability to the downside. We have a fragile economic renewal, weak corporate revenue growth, muted jobs growth, a housing market that’s stalling, an upcoming leadership transition at the Federal Reserve, and the government still needs to hammer out a budget and debt ceiling deal by February. So yes, I’m nervous.

Nomura strategist Bob Janjuah believes global stock markets could fall by 25%–50% in the final three quarters of 2014. (Source: Clinch, M., “Stand by…a hefty drop’s on the way: Nomura’s Janjuah,” CNBC, November 6, 2013.)

While I’m not that bearish, I do believe the chart of the Dow Jones Industrial Average is vulnerable to a six-percent near-term adjustment. (Read “Vulnerable Key Stock Index May Be Signaling Upcoming Buying Opportunity.”) The S&P 500 even looks worse and could see a decline to 800 if the past 15-year pattern pans out. That would be a decline of over 50%, which is what Janjuah is saying.

The chart below shows the current multiyear top and potential decline to the lower support at 800 as reflected by the bottom horizontal line. Also note the declining volume during this most recent multiyear rally, which is considered a negative divergence, based on my technical analysis. I’m not saying the worst is yet to come, but you never know.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

As an investor, you want to make sure you are well aware of the stock market vulnerability.

Given the gains over the past four years, you should look at taking some money off the table. Also look at some of your … Read More

U.S. Credit Rating Downgraded to Same Level as Brazil?

By for Profit Confidential

171013_PC_lombardiThe U.S. government, after winning World War II for the Allies, was very convincing. It told central banks around the world that they should hold the U.S. dollar as their reserve currency instead of gold, based on the idea the U.S. dollar would be backed by gold. Only limited amounts of U.S. dollars could be printed, because the currency was tied to gold bullion. Central banks bought into the idea.

Unfortunately, a few decades down the road, the concept of a U.S. dollar backed by gold was thrown out the window (thank you, President Nixon). Eventually we were introduced to the modern day printing press—printing money out of thin air at the will of the Federal Reserve without the U.S. dollar being tied to any “hard” currency like gold.

Why would anyone agree to this horrible idea?

Back in those days, the U.S. economy was prospering. Our government was in good shape and didn’t have much debt. And the logistics made sense, too, as time passed. Why wouldn’t a central bank have in its reserves the currency of the world’s strongest economy and military? Why wouldn’t a central banker keep U.S. dollars in his vault as opposed to hard-to-carry and hard-to-store gold?

Years have passed since the U.S. dollar “unglued” itself from gold. Things have changed, too. America is not so glorious anymore. Ever-rising debt and the never-ending printing of U.S. dollars have resulted in some countries changing their policy on U.S. dollar-backed reserves. And the fundamental factors that keep the U.S. dollar strong are deteriorating quickly.

The balance sheet of the U.S. economy does not look as good as … Read More

Has the Stock Market Gone Mad?

By for Profit Confidential

Has the Stock Market Gone MadThe stock market…a place where rationality has been thrown out the door in favor of trading for immediate profits…profits based on what the government and Federal Reserve are planning to do next. It’s no longer a place for average investors to make money, as the fundamentals that drive key stock indices higher don’t really matter anymore. The notion has become “If it’s good news, buy! And if it’s bad news, then buy even more!”

We have been witnessing this phenomenon on key stock indices for a while now, and from my experience, such erratic behavior by the stock market usually comes at the end of a long up or down cycle.

Congress had decided to “kick the can” of U.S. debt down the road a little longer. When news broke last Thursday that they were planning to increase the U.S. debt limit for a few weeks and then come back to debate it, key stock indices had the best day of the year. Look at the circled area in the chart below:

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

Hold on a minute!

Why did the S&P 500 jump so much on the Republicans saying they would put in a temporary new U.S. debt ceiling instead of debating it? Isn’t increasing the U.S. debt load bad? After all, we are the biggest debtor in the global economy.

Dear reader, this is the new norm on key stock indices. The bad news, meaning we will have higher U.S. debt, is taken as good news by key stock indices. And assets that should be increasing in value are actually being punished. Case in point: gold … Read More

My Bet: New Fed Chief Loves Printing Presses More Than the Last Guy

By for Profit Confidential

corporate earningsCompanies in key stock indices have started to report their corporate earnings for the third quarter of this year. Not surprising, they are weak and show signs of stress.

According to FactSet, up until October 4, 90 companies in key stock indices like the S&P 500 issued negative guidance about their third-quarter corporate earnings per share. This is the highest number of companies posting negative guidance since the research company started to track earnings guidance back in 2006. (Source: “Earnings Insight,” FactSet, October 4, 2013.)

The corporate earnings growth rate for the S&P 500 is expected to be about three percent in the third quarter, and just like the last quarter, once again, a significant portion of the boost in earnings will come from the financial sector. If you take the financial sector’s corporate earnings out of the equation, earnings growth rates drop down to about 1.7%. Take away all the stock buyback programs public companies have conducted this year, and the earnings growth picture gets really ugly.

I think the smart money is sensing companies are struggling to grow, so they are starting to pull money out of the market.

According to the Investment Company Institute, for the week ended September 25, the long-term U.S. stock mutual funds had a net outflow of $3.8 billion in capital. Similarly, for the week ended October 2, the net outflow continued and increased to $4.12 billion. (Source: Investment Company Institute, October 9, 2013.)

Key stock indices like the S&P 500, Dow Jones Industrial Average, and the NASDAQ have shed some gains recently; they are much lower than their all-time highs posted just … Read More

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Why Stocks Likely to Head Higher into the New Year

By for Profit Confidential

retail sectorToday is Cyber Monday, when consumers will flock online and spend over a billion dollars. In 2012, $1.47 billion in sales occurred on this day and the expectations are that the number could swell to $1.68 billion today. (Dengler, P., “Cyber Monday Predictions For 2013,” Business2Community.com, October 28, 2013.) We will also find out today how Black Friday and the key weekend shopping period were for the retail sector. A big surprise and the stock market will reach higher.

The stock market has shown little signs of wanting to slow and is continuing to show bullish investor sentiment and the ability to move higher this month and into 2014.

The S&P 500 is at 1,800 and the DOW Industrial at 16,000. The positive momentum is in place for additional gains. The S&P 500 moving to 2,000 next year, up 11.11%, is realistic depending on what the Federal Reserve does and how the economy behaves. The Dow 20,000 may have to wait a few years. Of course, this is contingent on the five-year bull market holding.

On the charts, technology and small-caps continue to lead the broader stock market higher. The NASDAQ closed above 4,000 for the first time since September 2000, when the index was on the decline after trading at a record 5,132 in March. The buying in technology and growth is not a surprise, as buyers have chased risk and potential this year. The top sectors offering the most sizzle at this time are Internet services, mobile, and social media.

COMPQ Nasdaq Composite Chart

Chart courtesy of www.StockCharts.com

Small-cap stocks continue to lead the pack this year as the economy recovers, albeit … Read More

Nomura Calls for 50% Correction in Global Stock Markets

By for Profit Confidential

Nomura Calls for 50% Correction in Global Stock MarketsI’m getting increasingly nervous about the current stock market and its vulnerability to the downside. We have a fragile economic renewal, weak corporate revenue growth, muted jobs growth, a housing market that’s stalling, an upcoming leadership transition at the Federal Reserve, and the government still needs to hammer out a budget and debt ceiling deal by February. So yes, I’m nervous.

Nomura strategist Bob Janjuah believes global stock markets could fall by 25%–50% in the final three quarters of 2014. (Source: Clinch, M., “Stand by…a hefty drop’s on the way: Nomura’s Janjuah,” CNBC, November 6, 2013.)

While I’m not that bearish, I do believe the chart of the Dow Jones Industrial Average is vulnerable to a six-percent near-term adjustment. (Read “Vulnerable Key Stock Index May Be Signaling Upcoming Buying Opportunity.”) The S&P 500 even looks worse and could see a decline to 800 if the past 15-year pattern pans out. That would be a decline of over 50%, which is what Janjuah is saying.

The chart below shows the current multiyear top and potential decline to the lower support at 800 as reflected by the bottom horizontal line. Also note the declining volume during this most recent multiyear rally, which is considered a negative divergence, based on my technical analysis. I’m not saying the worst is yet to come, but you never know.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

As an investor, you want to make sure you are well aware of the stock market vulnerability.

Given the gains over the past four years, you should look at taking some money off the table. Also look at some of your … Read More

U.S. Credit Rating Downgraded to Same Level as Brazil?

By for Profit Confidential

171013_PC_lombardiThe U.S. government, after winning World War II for the Allies, was very convincing. It told central banks around the world that they should hold the U.S. dollar as their reserve currency instead of gold, based on the idea the U.S. dollar would be backed by gold. Only limited amounts of U.S. dollars could be printed, because the currency was tied to gold bullion. Central banks bought into the idea.

Unfortunately, a few decades down the road, the concept of a U.S. dollar backed by gold was thrown out the window (thank you, President Nixon). Eventually we were introduced to the modern day printing press—printing money out of thin air at the will of the Federal Reserve without the U.S. dollar being tied to any “hard” currency like gold.

Why would anyone agree to this horrible idea?

Back in those days, the U.S. economy was prospering. Our government was in good shape and didn’t have much debt. And the logistics made sense, too, as time passed. Why wouldn’t a central bank have in its reserves the currency of the world’s strongest economy and military? Why wouldn’t a central banker keep U.S. dollars in his vault as opposed to hard-to-carry and hard-to-store gold?

Years have passed since the U.S. dollar “unglued” itself from gold. Things have changed, too. America is not so glorious anymore. Ever-rising debt and the never-ending printing of U.S. dollars have resulted in some countries changing their policy on U.S. dollar-backed reserves. And the fundamental factors that keep the U.S. dollar strong are deteriorating quickly.

The balance sheet of the U.S. economy does not look as good as … Read More

Has the Stock Market Gone Mad?

By for Profit Confidential

Has the Stock Market Gone MadThe stock market…a place where rationality has been thrown out the door in favor of trading for immediate profits…profits based on what the government and Federal Reserve are planning to do next. It’s no longer a place for average investors to make money, as the fundamentals that drive key stock indices higher don’t really matter anymore. The notion has become “If it’s good news, buy! And if it’s bad news, then buy even more!”

We have been witnessing this phenomenon on key stock indices for a while now, and from my experience, such erratic behavior by the stock market usually comes at the end of a long up or down cycle.

Congress had decided to “kick the can” of U.S. debt down the road a little longer. When news broke last Thursday that they were planning to increase the U.S. debt limit for a few weeks and then come back to debate it, key stock indices had the best day of the year. Look at the circled area in the chart below:

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

Hold on a minute!

Why did the S&P 500 jump so much on the Republicans saying they would put in a temporary new U.S. debt ceiling instead of debating it? Isn’t increasing the U.S. debt load bad? After all, we are the biggest debtor in the global economy.

Dear reader, this is the new norm on key stock indices. The bad news, meaning we will have higher U.S. debt, is taken as good news by key stock indices. And assets that should be increasing in value are actually being punished. Case in point: gold … Read More

My Bet: New Fed Chief Loves Printing Presses More Than the Last Guy

By for Profit Confidential

corporate earningsCompanies in key stock indices have started to report their corporate earnings for the third quarter of this year. Not surprising, they are weak and show signs of stress.

According to FactSet, up until October 4, 90 companies in key stock indices like the S&P 500 issued negative guidance about their third-quarter corporate earnings per share. This is the highest number of companies posting negative guidance since the research company started to track earnings guidance back in 2006. (Source: “Earnings Insight,” FactSet, October 4, 2013.)

The corporate earnings growth rate for the S&P 500 is expected to be about three percent in the third quarter, and just like the last quarter, once again, a significant portion of the boost in earnings will come from the financial sector. If you take the financial sector’s corporate earnings out of the equation, earnings growth rates drop down to about 1.7%. Take away all the stock buyback programs public companies have conducted this year, and the earnings growth picture gets really ugly.

I think the smart money is sensing companies are struggling to grow, so they are starting to pull money out of the market.

According to the Investment Company Institute, for the week ended September 25, the long-term U.S. stock mutual funds had a net outflow of $3.8 billion in capital. Similarly, for the week ended October 2, the net outflow continued and increased to $4.12 billion. (Source: Investment Company Institute, October 9, 2013.)

Key stock indices like the S&P 500, Dow Jones Industrial Average, and the NASDAQ have shed some gains recently; they are much lower than their all-time highs posted just … Read More

Revenue Growth for S&P 500 Hitting a Brick Wall

By for Profit Confidential

In 2010, on average, for every one dollar in sales posted by the S&P 500 companies, $0.135 came from Europe. In 2011, this number declined to $0.11. In 2012, sales from Europe accounted for only $0.097 for every one dollar of sales generated by the S&P 500 companies. (Source: S&P Dow Jones Indices, August 2013.) These statistics should not be taken lightly.

The debt ceiling fiasco and the U.S. government shutdown are front and center now. Europe has been pushed to the back of the stage in spite of the fact that continued troubles there will have a negative impact on the S&P 500 companies.

Even though there has been growing optimism towards Europe, the region’s troubles are staggering. Unemployment in the common currency region of Europe remains ridiculously high. Bad debt is everywhere, and economic uncertainty remains high.

England, one of the biggest economic hubs in Europe, looks to be stalling once again after seeing menial growth. British industrial output declined 1.1% in August. This was the biggest drop since September of 2012. Output in the manufacturing sector fell 1.2% and other sectors, such as pharmaceuticals, electronics, and food and beverages, witnessed a decline as well. (Source: Reuters, October 9, 2013.)

So if Europe is far from being “out of the woods,” where will the S&P 500 companies get sales growth from? Growth in the U.S. economy is almost nonexistent and the Chinese economy is slowing, too.

Europe is an integral part of the global economy. The longer it takes for Europe’s economy to recover, the more scrutiny there will be on the revenues of S&P 500 companies. In … Read More

Revenues Down for This Aluminum Stock; Trouble for Global Economy Ahead?

By for Profit Confidential

Revenues Down for This Aluminum StockWhile the focus is on the government shutdown and debt ceiling, I’m getting ready for the start of another earnings season, to see if America delivers. Of course, the somewhat muted gross domestic product (GDP) growth has me fully expecting to see a drag in revenues across the broad.

Alcoa Inc. (NYSE/AA) starts the third-quarter earnings season when it reports after the markets close tomorrow. The company is a pretty decent indicator for the global economy, as aluminum is used in a broad assortment of industrial and consumer applications around the world.

The company is forecasted to earn $0.06 per diluted share on revenues of $5.71 billion, down 2.1% year-over-year, according to Thomson Financial. For this reporting year, Alcoa is expected to see revenues contract 2.8%, followed by 2.8% growth in 2014. This essentially means zero growth over two years. In my books, that’s not good; this clearly indicates a global economy that’s in trouble.

I don’t even think traders are expecting some miraculous jump in revenues or earnings in the third-quarter earnings season. Wall Street has already downgraded expectations for the earnings season.

Earnings growth for the third-quarter earnings season is estimated at 3.2%, according to a FactSet report dated September 27. (Source: “Earnings Insight,” FactSet Research Systems Inc. web site, September 27, 2013; last accessed October 4, 2013.) The number is well down from the estimate of 6.5% as of June 30.

The financial sector is expected to report the top growth, while the healthcare sector is projected to report the lowest level of growth in the third-quarter earnings season. Of course, should the U.S. government shutdown … Read More

What the Elephant Trying to Get into the Pool Said About Gold

By for Profit Confidential

Elephant Trying to Get into the Pool Said About GoldRecently, Alexandre Gautier, the director of market operations at the central bank of France, was quoted saying, “We have no plan to sell gold.” Meanwhile, the director general of the Italian central bank, Salvatore Rossi, said, “Gold underpins the independence of central banks in their ability to (act) as the ultimate bearer of domestic financial instability.” (Source: “Banca d’italia says gold reserves key to cenback independence,” Reuters, September 30, 2013.)

The central bank of France and Italy are a few of the biggest holders of gold bullion when it comes to their reserves. When they say they don’t plan to sell (by the way, Germany has said the same thing), it should be taken as confirmation gold bullion is still very important to central banks.

We all know how fiat currency started. Some central banks didn’t like the idea of the paper money being linked to gold. They resorted to printing more paper money to pay their bills. And many central banks sold their gold bullion once the U.S. dollar was no longer officially linked to its gold reserves. Now, many central banks are having a “change of heart” when it comes to gold bullion. Central banks of emerging markets are adding to their gold reserves as some countries say they just don’t have enough of the precious metal.

As gold investors, we need to remember central banks will never pre-announce when they are going to buy more gold bullion. They are like an elephant trying to quietly step into a swimming pool. Central banks can cause gold bullion prices to quickly skyrocket if word gets out they are accumulating … Read More

U.S. Dollar: “Reserve” to “Laughing Stock” Currency in Less Than One Century

By for Profit Confidential

280813_PC_lombardiAs we march towards another debt ceiling limit…

The U.S. Treasury Secretary, Jacob J. Lew, wrote a letter to Congress this week stating the U.S. government will hit the debt ceiling by October. He wrote, “…Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent.” (Source: U.S. Department of the Treasury, August 26, 2013.)

Lew added, “Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority. Failure to meet that responsibility would cause irreparable harm to the American economy.” (Source: Ibid.)

Will Congress raise the debt ceiling again? It certainly will!

Since 1960, Congress has raised the debt ceiling 78 times—49 times under Republican presidents and 29 times under Democratic presidents. (Source: U.S. Department of the Treasury web site, last accessed August 27, 2013.)

The debt ceiling, which is set by Congress, puts a restriction on how much the national debt can be increased.

On August 23, 2012, the U.S. national debt stood at $15.97 trillion. Fast-forward one year to August 23, 2013, and our national debt hit $16.73 trillion. (Source: Treasury Direct web site, last accessed August 27, 2013.) This is an increase in the national debt of 4.75% in just one year. Of course, in all 78 times Congress raised the debt ceiling, the new debt ceiling limit was later hit and needed to be raised again.

Our government continues to post an annual budget deficit. For the four fiscal years from 2009 to 2012, the federal government posted … Read More

Market Bias Bullish, but Resistance Won’t Be Easy

By for Profit Confidential

But Resistance Won’t Be EasyIt’s amazing how resilient the stock market has been in spite of the concerns toward the U.S. budgetary cuts and debt ceiling, the eurozone’s economic stalling and debt, and the overall earnings risk.

The New Year has started off with a bang, with small-cap stocks leading the pack, as the Russell 2000 is up 4.5% as of January 17. Small-caps will do well if the economy strengthens.

In technology, the NASDAQ was displaying a bearish death cross, with its 50-day moving average (MA) below its 200-day MA. But, with the recent moves, the NASDAQ is showing a bullish golden cross, as the 50-day MA moved above the 200-day MA, based on my technical analysis. In my view, technology stocks will continue to be a top growth area going forward. (Read “When You Need to Buy Technology Stocks.”

$COMPQ Nasdaq Composite stock market chart

Chart courtesy of www.StockCharts.com

The safer money will be with the blue chips, given the uncertainties, as the Dow is up nearly four percent in January.

The charts are showing promise and potentially more gains to come.

The NASDAQ, Dow, S&P 500, and Russell 2000 are all showing a bullish golden cross on their charts, with the 50-day MA above the 200-day MA.

The overall U.S. stock market is trending higher. About 72.3% of U.S. stocks are above their respective 200-day MAs, versus 60.8% a month earlier. On a short-term basis, 84.1% of U.S. stocks are above their respective 50-day MAs, versus 67.3% a month earlier.

Since breaking 1,400, the S&P 500 has been strong and is within 1.5% of a key level at 1,500.

Take a look at the … Read More

Four Real Economic Threats to Americans in 2013

By for Profit Confidential

Economic Threats Americans 2013We all know the Federal Reserve increased the money supply by trillions of dollars in its effort to boost consumer spending after the credit crisis hit in 2008. Sadly, I feel like the entire stimulus was given to Wall Street on a silver platter, leaving the average American Joe to suffer.

Can you believe that, five years after the credit crisis hit, consumer confidence still hasn’t returned to where it was during the crisis? The Conference Board just reported an up-tick in its Consumer Confidence Index. The Consumer Confidence Index rose to 73.7 in November from 73.1 in October. It was 76.4 in February of 2008—during the crisis. (Source: Conference Board, November 27, 2012.) The index is based on a survey about how optimistic and pessimistic consumers are about current and future economic conditions.

Trillions of dollars thrown at the economy, and we can’t get consumer confidence going? To reiterate, consumer spending goes up when consumer confidence increases. In the United States, consumer spending makes up 70% of the gross domestic product (GDP).

Why is it so difficult to get consumer confidence and ensuing consumer spending to rise? Unfortunately, there are underlying issues that will continue to be obstacles to rising consumer spending.

According to the survey conducted by the Conference Board, 31.5% of respondents still believe business conditions are bad. 38.8% continue to hold on to the view that jobs are difficult to get in the U.S. economy.

The bottom line is that consumer spending can only increase if consumers have money to spend.

But real personal disposable income in America has been decreasing. It fell again in October, … Read More

Four Stocks: One Economic Story

By for Profit Confidential

Last night, two of the biggest retailers in theU.S.increased their estimates of how much money they would make this year. Wal-Mart Stores, Inc. (NYSE/WMT), the world’s largest retailer, has reported that revenue at stores open at least one-year has increased by 4.3%. Interestingly, Wal-Mart’s CEO Charles Holley was quoted as saying that customer surveys show that Wal-Mart’s customers are now more concerned with employment than fuel and food costs.

Don’t Just Look to Europe; U.S. Has Its Own Issues

By for Profit Confidential

Stock markets are battling negative sentiment here. The situation was helped by the crisis in Europe, but you cannot just blame the Europeans, as there is a financial mess of our own here.We have the PIGS (Portugal, Ireland, Greece, and Spain) battling with debt issues in Europe. Spain is not fully there yet, but may inevitably need to find money. These countries are referred to as the PIGS because of their need for financial help.

Stock markets are battling negative sentiment here. The situation was helped by the crisis in Europe, but my economic analysis is that you cannot blame the Europeans, as there is a financial mess of our own here.

The key stock indices are languishing below their respective 50-day moving average (MA) and 200-day MA. The near-term technical picture is bearish and is dangerous at this time without any base or support.

A debt resolution was approved by the Senate and White House. The deal calls for a $2.1-trillion increase in the debt ceiling to around $16.4 trillion, which will allow the country to pay its debt obligations and spend. First of all, this is just adding to a massive debt load. In return, there will be spending cuts of about $2.4 trillion; but over a 10-year period!

The debt increase is not what we needed, but was essential. The government will need to focus on the cost side and implement its own austerity programs with discipline in order to cut the deficit and begin to work to bring down the massive $14.6-trillion national debt. It’s scary looking at the debt load and watching the mounting interest payments.

And in a “what if” scenario, can you imagine the impact of higher interest rates? It would make interest payments much higher and make it that much more difficult to reduce … Read More

Debt Resolution: It Does Not
Mean an Easy Road Ahead

By for Profit Confidential

Stocks have declined for seven straight days to August 1, despite the debt resolution approved by the Senate and White House that’s waiting to be passed by the House of Reps. There was no doubt in my mind and the thinking of many others that it would be approved. Even so, the resolution does not mean Americais home-free. Actually, it’s more like we’re in the land of debt. The deal calls for a $2.1-trillion increase in the debt ceiling to around $16.4 trillion, which will allow the country to pay its debt obligations and spend.

Stock Market: What’s Really Going on Now

By for Profit Confidential

What a day for the market yesterday. Wherever we looked, we saw a sea of deep red. Stocks got chopped. Gold was down. Bonds were down. My dear reader, you’ll read opinions here in PROFIT CONFIDENTIAL that you will not read elsewhere. (Maybe that’s why 30,000 people a month are flocking to us!). Here’s the bottom line as I see it…

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.

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