With oil still trading weak but gold and silver holding firm, one of the greats in the business sent King World News a fantastic piece covering everything from the gold to Warren Buffett and the FOMC, plus a bonus Q&A that includes questions on gold, the Fed, gold shares and much more.
By Bill Fleckenstein President Of Fleckenstein Capital
October 27 (King World News) – Overnight markets were once again nonevents, though for the most part they were lower. The early going here saw the indices slightly red, with no particular theme…
In Volatile Markets, Is Wealth Preservation King?
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Today’s Special: Apple Fretters
Tonight Apple reports and I’m sure it will induce a good deal of motion. Recently, some of the favorite mega-cap stocks have gapped higher, and no doubt the bulls expect Apple to do the same, though that will be a function of how it spins its guidance for the 6s. I don’t think it is debatable that the 6s is tracking worse than expected, and there is virtually no chance it will sell the units people expect, but it’s anyone’s guess when Apple will decide to admit that.
Speaking of Apple, last night another of its suppliers, Knowles Corp., had to lower its fourth-quarter guidance and its stock price was splattered for 15%. So that is two days in a row that Apple suppliers have disappointed the bulls.
Companies In Glass Houses…
In related tech news, Corning lowered expectations, though the stock rallied because naturally the company is going to increase the buyback. The amount of financial engineering that’s been applied to this so-called recovery is truly shocking. When the market and the economy roll over there is going to be a lot of rot exposed.
Turning back to the action, the market weakened a little in the afternoon to close with a small loss. Away from stocks, green paper was mixed, oil lost a couple of percent, and it would appear that the government has decided that now that oil has collapsed it’s a good time to start selling the stash from the SPR to bring in revenues (though sales aren’t slated to start for a couple of years). Only somebody who worked in D.C. would willingly do something like that. As the name implies, the SPR was set up as a strategic reserve and not as a way to finagle the budget from time to time. Turning to fixed income, it was higher, as were the metals.
A Long Shot From the Short End
Tomorrow we have another FOMC meeting, which means more hot air, though they are not liable to say anything new. For those who are keeping score at home, the current odds of a rate hike as predicted by the short end of the yield curve are about 35%, which is probably about 35 points too high.
Is That What Buffett Means By a Margin of Safety?
Lastly, IBM disclosed today that the SEC began looking into its revenue recognition policies last August. Perhaps finally this financial engineering house of cards will be seen for exactly what it really is.
Included below are four questions and answers from today’s Q&A with Bill Fleckenstein. The questions are from his subscribers and they get to read Fleckenstein’s answers every day.
Bonus Q&A
Question: Bill, l think l see a cup and handle set up for gold and miners to break out of a base, but l am old so l “see” lots that never happens. The weed is a solace 🙂
Answer from Fleck: “I don’t really see that as very imminent. Some charts look like maybe that might evolve, but a lot do not, and none seem all those close, at least to me.“
Question: Listening to an NPR show on the economy, it was the usual variety of opinions talked about in a calm way. But the heartlessness of the FED came shining through. Someone who used to be involved with the FED was part of the panel,and towards the end of the show a caller stated that she had worked and saved her whole life and expected to get the normal 5-8% in safe items like CDs and the zero rate policy was destroying her retirement. She also made the point that items like food that are not included in inflation numbers have a lot of inflation.
When talk resumed about rates being raised the FED person said she thought it would not harm investment if they raised .25 basis points. The host then said that would not help the callers problems as a saver. She then responded “it’s better than nothing”. How can anyone be more out of touch with the real lives of people than that? May as well have said let them eat cake.
Answer from Fleck: “It isn’t heartlessness, it is just plain stupidity about never learning from their failed policies.“
Question: Bill, what would you need to see happen, for the economy to see sustainable growth and therefore allow the market to keep going?
Don’t know if you can answer that in a few sentences, but thanks anyway.
Answer from Fleck: “There are many factors that can make stocks go up or down, not just strong growth. To see that you’d have to see economic data improve somewhere, then see it spread. Right now the opposite is happening.“
Question: Funny how a year ago everyone was saying low gas prices were going to be fantastic for consumer spending, yet here we are a year later and the data sucks worst than ever. I wonder sometimes if investors ever stop to verify whether or not the analysts’ and pundits’ previous predictions and forecasts have in fact come to fruition. No question, just an observation as I continue hearing about how awesome low gas prices are going to be for consumer spending.
Answer from Fleck: “Just more bullish spin that didn’t work out.“
***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***The incredible KWN interview with Agnico Eagle CEO, Sean Boyd, has now been released. This is a chance for KWN listeners around the world to hear from one of the top people on the planet in the gold world and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: An Important Update On The Silver Market CLICK HERE.
KWN has also now released the audio interview with the top trends forecaster in the world, Gerald Celente, where he discusses the continued chaos in China, the desperation of Western central planners, what to expect from the gold and silver markets, and what to expect from major markets, CLICK HERE OR ON THE IMAGE BELOW.
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