U.S. Treasuries

About That QE4…

By Monday, October 20, 2014
Another Round of Money Printing Coming SoonIt’s widely expected that at the end of this month, the Federal Reserve will end its third round of quantitative easing (that began in September of 2012). This is QE3, where the Federal Reserve was printing $85.0 billion of new money every month and using it to buy U.S. Treasuries and mortgage-backed securities (MBS). In the beginning of 2014, the Fed started reducing the amount of money it was printing .

If the Economy Is Improving, Why Are Investors Pricing in a Slowdown?

By Monday, August 11, 2014
U.S. Economy Slowing Down Here in 2014The Bureau of Economic Analysis (BEA) surprised even the most optimistic of economists when it reported the U.S. economy grew at an annual rate of four percent in the second quarter of 2014. On the surface, the number—four percent growth—sounds great. But how serious should we take that gross domestic product (GDP) figure? Firstly, I’d like to start by pointing out that the BEA often revises its GDP numbers downward. .

The Question Everyone Is Asking This Morning

By Friday, August 1, 2014
Stocks Turn Negative for 2014; Likely to Get WorseYesterday, the Dow Jones Industrial Average fell 317 points, while the NASDAQ Composite Index fell 93 points—respective losses of about two percent per index. This morning, stock market futures are down again. As a reader of Profit Confidential, this “rout” we are now in should come as no surprise. I have been writing for months how overpriced the stock market has become, how the stock market has become one .

Why Prices Will Rise Exponentially Over the Next 10 Years

By Tuesday, May 6, 2014
Social Security Health Care Costs Double 2014Something just doesn’t make sense here… In 2013, the U.S. budget deficit came down to $680 billion. Finally, after four consecutive years of annual budget deficits of more than $1.0 trillion, the government got its annual “hole” under the trillion-dollar level, and it seemed as though we were headed in the right direction. But stop. The government is now reversing its track… According to the Congressional Budget Office (CBO), the .

What a Loan Officer Would Say to the U.S. Government

By Monday, March 31, 2014
Does the Size of Our National Debt Really Matter AnymoreFor a moment, consider yourself a loan officer at a major bank. Would you approve a loan for a customer who says they earn $1,000 a month, spend $1,300 a month, and don’t have a job? They also tell you they have unpaid debts of $17,000. I don’t think anyone would authorize that kind of loan because the chances of getting the money back are next to zero. The individual .

Why Is the U.S. Dollar Collapsing in Value All of a Sudden?

By Thursday, March 27, 2014
Whey the Fed May Need to Reverse its Decision to Cut Back on Money PrintingWhen news first broke from the Federal Reserve that it would slow down the pace of its quantitative easing program, the consensus was that the U.S. dollar would start to rise in value as the Fed would be printing fewer new dollars and actually eliminating all new paper money printing by the end of 2014. But the opposite has happened. Below, I present the chart of the U.S. Dollar Index, .

Bond Market: Something Wicked Cometh This Way

By Tuesday, March 4, 2014
Bond Investors to Face Severe Losses in 2014The bond market is in trouble. As we all know, the Federal Reserve has been the biggest driver of bonds since the financial crisis. The central bank lowered its benchmark interest rate to near zero, then started quantitative easing, all of which resulted in the bond market soaring as yields collapsed to multi-decade lows. The chart below will show you what’s happened to the U.S. bond market since the mid-1970s. .

Reckless New Fad: Companies Raise Money to Buy Back Stock, Pay Dividends

By Monday, March 3, 2014
The Tale of Share Buybacks Few TellLast Thursday, the CEO of DIRECTV (NASDAQ/DTV) said “…we are pleased to announce a share repurchase program of $3.5 billion. This repurchase program reflects our strong balance sheet and confidence in continued strong DIRECTV revenue, earnings and free cash flow growth, as well as our belief that our stock is far below our intrinsic value.” (Source: “DIRECTV Announces Fourth Quarter and Full Year 2013 Results,” DIRECTV, February 20, 2014.) DIRECTV .

First Cyprus, Then Poland, Now These Savings Accounts to Get Confiscated Next

By Friday, February 14, 2014
What Happened in Cyprus, Then in Poland, to Happen Next in the EU CountriesThe savings of 500 million individuals living in the European Union are on the line. Let me explain: We all know Cyprus, one of the smallest countries in the eurozone and part of the European Union, went through what many feared. To save itself from default and pay down its out-of-control national debt, the government imposed a one-off capital levy on the bank accounts of individuals in that country. If .

Why I Fell Asleep Last Night During the State of the Union

By Wednesday, January 29, 2014
The Borrower of Last ResortLast night started out like every other State of the Union address I’ve seen… The President told us all the good stuff about the U.S. economy, like how American corporate profits are at a record high, how the stock market is at record highs, how millions of new jobs have been created since the Credit Crisis of 2008, how the housing market is turning around, and on and on. Like .
Sep. 5, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter) $1014.15
Trailing 12-month Price/earnings multiple (Most Recent Quarter)

17.44

Dow Jones Industrial Average Dividend Yield 2.62%
10-year U.S. Treasury Yield 2.19%

Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.

Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.

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From: Michael Lombardi, MBA
Subject: Golden Opportunity for Stock Market Investors

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