With oil below $45 and the stock market struggling, today one of the greats in the business sent King World News a fantastic piece discussing why high flying stocks are getting hit as the tide is finally going out, plus a bonus Q&A that covers precious metals, miners and much more.
By Bill Fleckenstein President Of Fleckenstein Capital
August 6 (King World News) – Despite all the heroic efforts to prop up its stock market by every conceivable measure, China leaked a little bit again last night, and I can't imagine anyone there feels particularly good about that state of affairs. Europe was a nonevent today, but our market wasted little time turning negative after yesterday's semi-failed ramp-o-rama attempt. The momentum sector struggled today, as a couple of favorites were hammered for 10% to 20%, namely, Tesla, Keurig Green Mountain, and Shutterstock….
Continue reading the Bill Fleckenstein piece below…
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"We Had Our Swim Suits On When We Started"
Slowly, the beneficiaries of mindless buying by momentum investors are starting to crumble, and there are only a few left. Said differently, only a small handful of names are holding up the entire tape. Meanwhile, economic weakness is pervasive around the world, and getting worse at the margin, setting the stage for a stock market rout in the coming months.
The reason for that weakness is some of the unintended consequences of central bank policies, combined with the fact that the main goal of money printing, creating economic activity, doesn't work. The process has now gone on long enough to where the consequences are causing problems and the growth is sputtering. You couldn't spell "failed policies" out any clearer if you wanted to. All that remains is for all the believers in these policies to wake up and smell the coffee, and begin to have to deal with what that will mean to their economic futures and their portfolios.
That Sinking Feeling
As for the market action, by late morning the Nasdaq had lost about 1% and change, with the Dow and the S&P only off 0.5%, and the weakness pretty much uniform across the board, with a few exceptions. From there the indices slid some more, then bounced, but the Nasdaq still lost 1.75%, as the Dow/S&P only fell 0.75%.
Away from stocks, green paper was modestly weaker, oil lost another 1%, fixed income predictably enjoyed the troubles elsewhere, and the metals were modestly higher, gaining something shy of 0.5%.
Included below are two 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: Yesterday felt like a puke in the miners…NGD, PAAS, TAHO, etc all were crushed along with everything else in the sector. Today we are seeing a nice rebound. one can only hope.
Answer from Fleck: "It was a puke. We have had many. "Puking" isn't a great indicator, as much as it seems like it ought to be."
Question: Hi William,
Please don't post this. My father last night asked me to write to you and ask you what is going on with Gold and all commodities. He said in all his life in investing he has never seen such a one sided trade and so extreme.
We all have lost plenty of money over this. You cut back, get back in, nothing works. I'm scared, everyone is scared. Let's face it, nobody want's to lose money. I think you should and would appreciate a very thorough write up in your wrap about this never ending debacle in the metals giving your best feeling to why and when you think it will be over. Calm people down. I totally believe in you and have all my faith in you and know your going to be right in the end. A little hope in the meantime would help.
Thanks sincerely.
Answer from Fleck: "There is no reason not to post this. No one knows who you or your dad are, and others feel the same way I am sure.
The problem is, I don't know the answer. I think about the question literally all the time, but I can't come up with a satisfactory explanation. I too have never seen anything so lopsided in my investment career of 36 years, and I don't recall reading about such a period on the downside in all the many books I have read.
The same sort of viewpoint was at work on the upside in the 1990s stock bubble, and then later in the real estate bubble. But on the downside usually value stops a decline that has gotten this carried away, and when sentiment turns this rabidly hostile, the market would turn.
However, as your dad noted, nothing has worked. I can only say it is just crowd psychology on the downside, and I just don't see how it can get much more extreme. Gold is hated, miners even more so. They could double and not be too expensive based on gold in the ground. Psychology plays a big roll.
It will change and change in a huge way. The Fed can't deliver on its promises, and I believe we are so close to when that will be clear. Hang in there." ***KWN has now released the incredible audio interview with the top trends forecaster in the world, Gerald Celente, where he discusses his prediction for a global stock market crash and panic in 2015, as well as giving the KWN listeners a peak at the just released Summer Trends Journal, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***To subscribe to Bill Fleckenstein's fascinating Daily Thoughts CLICK HERE.
***ALSO RELEASED: Richard Russell – Buy Physical Silver Ahead Of The Coming Chaos CLICK HERE.
***KWN has also now released the incredible audio interview with Rick Rule, where he gives KWN listeners an incredible opportunity to have a free portfolio analysis done by Rick Rule himself. There is no cost or obligation to have one of the greats in the business do this for you and all listeners around the world can take advantage of this by having Rick Rule analyze their portfolios absolutely free. Rule made it very easy for listeners and the instructions are in the audio interview. Rule also discussed the gold and silver markets as well as what to expect from key global markets, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
If you are interested in purchasing physical gold and silver for delivery you can call Steve Quayle or his staff at (406)586-4842, or you can email them at tyler@safetrek.com or info@sqmetals.com
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The audio interviews with Bill Fleckenstein, Dr. Paul Craig Roberts, Robert Arnott, Eric Sprott, John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Gerald Celente, Andrew Maguire, Michael Pento, Rick Rule, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.
