By Bert Dohmen
June 1, 2013
To buy stocks right
now is to bet on the willingness of the major
central banks (that is, Europe, the Federal
Reserve, Japan, and China) to create as much money
as possible to prevent a stock market and economic
Prudent analysts say the ratio
of a country’s debt to its GDP is already too high for many
countries. Our view is that no one knows what is too high.
Whether debt is 100% or 260%
(Japan) of GDP, who says the central banks can’t double it?
Who is to say that in a market crisis, the Fed or BOJ in Japan
can’t double their monthly infusions? In fact, we consider
that ratio somewhat artificial and perhaps meaningless. GDP
measures total economic activity. What does it have to do with
the government’s debt? The government doesn’t produce the GDP.
It’s comparing apples and oranges. It would be more
relevant to compare governmental debt to tax receipts.
Before the Greenspan/Bernanke
era, the current rate of money creation would have been
unthinkable. But anything and everything is possible now.
Imagine, the Fed is now buying from 70%-80% of all Treasury
securities sold to finance the deficit. There is no reason
it can’t go to 100% or higher. We are not saying it is good or
prudent, just that there is no limit… until no one wants to
accept your currency.
Believing that at some point the
central banks will “get religion” and reverse their
questionable policies is like believing in Santa Claus.
History shows that the worse the conditions become, the
greater the policy errors of governments. Just read about the
German hyperinflation of the early 1920s, or Zimbabwe, or
China, or John Law in France. To have a sense of history now
is to be ahead of the pack.
By Bert Dohmen
May 4, 2013
Over the next several months, we will see some
disappointments in reported corporate sales and
earnings. Those stocks will suffer. Will the stock
market care? So far it hasn’t.
earnings are down 2% year-over-year, yet the stock market rose
to new all-time highs. The S&P 500 is selling at a P/E of
15.5. With operating earnings declining over the past year and
the economy now apparently in a weak spell, stocks are no
longer cheap. However, Wall Street doesn’t advertise the
“operating earnings,” and uses “reported earnings,” which are
better. Operating P/E ratios are not such bargains.
have stocks like Linked In, Amazon, Google, etc. selling at
P/E ratios reminiscent of 1998-1999. But they are still
rising. It’s a signal that there is a lot of speculative
capital available for stock because it has nowhere else to go.
Eventually, the ending won’t be pretty, similar to the year
2000. But for now, big profits can still be made.
essential thing is to have an advisor who uses technical
analysis to catch the tops. And that is what we have done
consistently for the past 35 years.
believe that there will be some type of economic recovery
later this year, then buying select stocks will still pay off.
Our technical indicators are positive on a many stocks.
you must be willing to sit through some periods of volatility.
Nothing goes up in a straight line. If you buy stocks now, you
have the Federal Reserve, the European Central Bank (ECB), the
Bank of Japan, and China’s central bank on your side. They are
basically providing an insurance that the markets will not
have a big decline. That’s a very good guarantee…until
eventually it doesn’t work anymore. But for now, it’s the best
guarantee investors could ever hope for.
hopes that its $85 billion per month monetary injection will
eventually help to produce a stronger economy. Right now that
liquidity goes into speculation, such as real estate and
WAR ON GOLD
By Bert Dohmen
April 18, 2013
We are now seeing a
‘war on gold.’ For the past several months we have
been mentioning that the gold bullion banks and
the central banks were putting lots of downward
pressure on paper gold so as to discourage those
who thought that gold was better than paper money.
Although we have been bullish on
gold for the long term (i.e. 5 or more years), we turned
bearish on the intermediate term. In our Feb. 15 issue
of our WELLINGTON LETTER, we wrote:
In the longer term, gold has
broken the 200-day m.a., which by definition says it’s in a
bear market now. A rally now would not necessarily mean a new
uptrend. There is a lot of resistance to overcome on any
upmove. To look at a chart objectively, pretend you don’t know
what it is. Then ask yourself: would you buy it or sell it?
That’s the way to keep your emotions out. Now that all
indications have turned bearish, the big hedge funds are known
to have significantly reduced their positions and the big
bullion banks are easily manipulating the price downward.
Because there are so many individual investors in gold, we
could see a further, self-feeding decline.
We were especially bearish on
the gold and silver mining stocks. However, we did not think
that gold would plunge $250 in three days as it has done.
We view this as an orchestrated
campaign to discourage people who think that gold may be a
better asset than paper currencies. After an $84 per ounce
loss on Friday, most of it after the London trading closed,
gold plummeted $155 on Monday.
Last week, the Establishment
issued a warning about what was ahead. First Goldman Sachs
(GS) gave a ‘sell signal’ on gold. GS said: “We believe a
sharp rebound in gold prices is unlikely. The fall in prices
could end up being faster and larger than our forecast, as
aggregate speculative net long positions across Comex futures
and gold ETFs remain near record highs.”
GS gave a six- to
twelve-month target of $1,490 and $1,390. GS is not an
impartial observer. They are heavily involved in precious
metals trading for their own account. Such warnings from GS
are usually given before the event and too often ignored by
the general public. They are not forecasting; they’re
telling you what the agenda is.
In our trading service, SMARTE
TRADER, we sold the mining stocks short about two weeks
To read more
articles go down the page to: ARTICLES OF INTEREST .
MARKET FORCASTS 2011-2012
Market Calls late 2011
Bert Dohmen's Market
Bert Dohmen's Market
Bert Dohmen Market Calls: 2008-2009
Bert Dohmen Market Calls: 2007-2008
These signals are incredible, especially considering that the DOW
JONES INDUSTRIALS AVERAGE plunged 35% during the same time. Here you
can clearly see the superiority of our services.
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Whether the markets
SOAR or CRASH, you can
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ARTICLES OF INTEREST
RIGHT ON SCHEDULE—A CORRECTION!
(excerpted from the March 31 Wellington Letter)
Our attempt at
Pop the champagne corks,
dance in the street, celebrate the record high S&P!
Well, it’s only by a fraction,
but it is still a new high. The S&P 500 closed at 1569, about
five points above the previous all-time high set on Oct. 9,
2007. Long-time subscribers will remember that at that time we
gave a “sell” signal just two trading days later. Those who
believed that a new high was bullish had a bad surprise, as it
was followed by the 2008 crisis.
Last Friday’s new high was made
on the last trading day of the month and the quarter. Big
hedge funds had every reason to support the market going into
the close today in order to maximize their performance fees. Next week we should get a better idea whether a pullback or
market correction will be allowed.
As you know, there are many
clues that the rally of the last three months involved a bit
of engineering. We have discussed the role of the PPT (the
President’s Working Group on the Financial Markets), which has
the authority to produce “orderly markets.” We believe that
there has been mission creep and that the mission now is to
produce a rising market. Just notice that almost each day, the
DJI is up 40-60 points, even on days when the market tumbled
early in the morning based on adverse news.
Additionally, since May 6, 2011,
HFT (high-frequency trading) operations have no longer acted
to knock the market down, even on a daily basis. On that day,
the DJI tumbled almost 1,000 points in less than an hour. The
regulators at first blamed it on a “fat finger,” that is, some
clerk with a fat finger pressing the wrong key on a computer.
That excuse was laughable.
THE ILLUSIVE TOP—PART II
By Bert Dohmen.
The market has been defying all
the technical rules, as well as market history, and could
continue to so. We have never had the Federal Reserve pursuing
such an aggressive attitude.
Steve Forbes said, “We are in
uncharted waters now.” He is so right.
Eventually, when inflation
starts rising, the Fed will have to start withdrawing
stimulus. At the first sign of that, it will be a race to the
exits in the investment markets. There is no painless way to
exit from this, contrary to what Bernanke thinks.
The earnings growth of US listed
companies in Q4 was down from one year before. Yet the stock
market had a great Q1 this year. What happened to the theory
that the market reflects earnings growth? Analysts who did
their homework have stayed very cautious, because of the
dismal numbers. However, if you didn’t look at all the
technical flaws in the markets, disregarded the negatives, and
bet on a better future, then you would have been bullish.
The Optimist’s View
The bears make a good point: the
last time the DJI was at this level, unemployment was around
4% and the economy was humming. Now unemployment is 7.7%, the
number of unemployed is at a record high, etc.
The only problem with that
argument is that liquidity trumps all those economic factors.
Money is much more relevant.
The massive monetary creation by
the Fed is producing the fuel for the rally. Unless you think
that will stop, the market should rise until Bernanke leaves,
though with periodic market corrections. We all know that this
cannot end well. But the day of reckoning may still be a long
time in the future.
The pessimists have given too
much credence to the reality of the unsustainable debt
globally and not enough importance to the power of infinite
money creation by the central banks.
The Illusive Rally Top
By Bert Dohmen.
1. Several important
things happened during January to give the market
up move a little more life:
2. The big battle about raising
the debt ceiling has been postponed. The Republicans have
chosen to retreat for now and delay D-day until May.
Japan embarked on a massive
reflation program, designed to plunge the value of the yen,
increase the sales of large Japanese firms abroad, and boost
the stock market. It wants to create inflation where there
is none. This has big international implications.
3. The Fed has made it known that
its stimulus in 2014 may be 40% bigger than the one in
2013, $1.4 trillion.
4. The implementation of the new
Basel III requirements for banks was postponed. These would
have required large global banks to post higher reserves on
a number of debt classifications, which banks were just
unable to do. They either would have had to sell billions of
dollars of stock or sell big units of their firms,. Neither
was possible in the current environment. This had been a
great concern. Now it’s removed.
The Basel III is one of those
complicated, small items that the average person didn’t even
want to know about. But it presented huge problems for banks
that were not able to sell assets fast enough to be in
It was very much like the
“mark-to-market” rule that helped to precipitate the global
crisis starting in 2007. It required banks to write down the
value of assets (such as long-term bonds) to market value,
even if the banks intended to hold them until maturity. Banks’
loans had to be written down, even though the borrowers were
current in their payments. It was a ridiculous rule.
In 2007, I wrote that the rule
would cause a banking crisis. The regulators didn’t understand
that. When finally (in March 2009) the Congress told the FASB
to rescind the rule, saying “or we will do it for you,” the
bottom in the market crash was in place. That’s how important
it was. Yet probably only 1 out of 1000 investors was aware of
it. (Read about this in our book, Financial Apocalypse,
where we have our real-time analysis on this and other events
The stock market indices
continue to float upwards, totally ignoring any negatives in
the U.S. or abroad. Nothing seems to matter—chaos in Egypt,
Syria, Iran’s nuclear “accident,” negative U.S. GDP growth,
etc. As you know, I don’t believe that this is market forces
at work; instead, it is
Ben Bernanke’s Fed making
sure that confidence stays as high as the S&P index even while
GDP growth stutters into negative territory. But that may come
to an end…very soon.
As I have written in the
Wellington Letter, my view is that “the President’s
Working Group on the Financial Markets,” which has the
official mission to “preserve orderly markets,” has
changed its mission slightly. Now it appears to be “to assure
that there is no meaningful market decline.” It is allowed to
manipulate the markets via the stock index futures.
So, the question is, what is the
agenda, and will the Fed allow a much needed correction?
(read the entire article at this
“Six Reasons Why I STILL
Wouldn't Own APPLE Stock”
By Bert Dohmen. January 25,2013
prescient view on Apple as featured on FORBES.COM)
Dec. 5, I wrote an article entitled
Seven Reasons Why I Wouldn’t Own Apple Stock Now;
judging by some of the comments to the article, it
was like attacking the Pope.
When emotions on
a stock get that high, you know it’s a bubble.
I’ve been asked
by investors to give my current views. I look at stocks
unemotionally. I don’t care much about the widgets a company
makes. I focus on what management is doing. The most important
factor in producing a major trend change in the price of a
stock, outside of economic conditions, is a change in the
Apple (AAPL) was
made the most successful company ever by Steve Jobs. When he
left, a new management took over. As an investor, you have to
adjust to such an important change.
Here is the
recent history of my observations:
As early as
late August 2012, I wrote on twitter.com that the boom in
Apple was coming to an end because the new CEO had shown a
trend of “disappointment.” Every new product since then was
less than expected. Steve Jobs always delivered more than
Apple hit its
all-time high of $705 on Sept. 21. Six days later, I wrote
on twitter that my downside target was $520. That seemed
outrageous, but it was hit about three weeks later on Nov.
On that day, I
predicted a rally to $581. The rally actually hit $589, just
a bit higher. Thereafter, I predicted that the next
decline would go to $422.
Here are my
six reasons why I still wouldn’t own Apple stock.
(for the entire article, please
go to forbes.com. Link: http://onforb.es/W4mZ9r
CHINA RECOVERY or JUST A BOUNCE?
By Bert Dohmen. January 2013
China’s manufacturing picked up
for the third straight month in November. We had predicted a
short-term improvement, as the Communist Party Congress needed
some good news while appointing a new government.
The “official” PMI (from the
government) rose to 50.6 in November from 50.2 in October and
49.8 in September. That’s a seven-month high. However, it was
below expectations. This PMI measures the large firms, the
SOEs, which are mostly governmentally owned. A reading below
50 indicates an economic contraction. We don’t think the
governmental number is reliable.
An analyst with the Development
Research Center of the State Council said the report indicates
that “companies have finished cutting inventories, which
points to further expansion in coming months.”
We prefer the HSBC private
sector PMI, which focuses on SMEs (small and medium-sized
enterprises). It gained only slightly but at least got above
50 for the first time in 13 months, which means anemic
expansion. The bulls say this signals a coming recovery. We
believe it’s just a normal counter-trend bounce.
Let’s look at some of the
Chinese steel prices have
declined sharply this year, as shown by the chart. This is
painful for the cities whose steel mills are major employers.
Therefore, everything is done to give the appearance that all
is well in the steel business.
Seven Reasons Why I Wouldn't Own Apple Stock
written for Forbes.com By Bert Dohmen
I loved Apple’s products, its
marketing, and thought the Apple stores were sheer genius,
especially with the “Genius Bar.” I always asked, why doesn’t
Microsoft, with all its
billions of dollars, do this? Well, MSFT finally started
imitating Apple, with limited success. Too little, too late.
I turned bearish on Apple stock
for various reasons in late August this year. (See my postings
on Twitter.com.) In our advisory services, such as the
Wellington Letter, I started warning that soon we would see
“buyer exhaustion.” Was there any money manager who didn’t own
the stock? When everyone is in, the smallest hint of
disappointment can turn into a selling binge.
On September 21, the stock hit
an all-time high of $705. That was the “exhaustion” point.
Thereafter, I concluded that an important top could be in
place and that a meaningful decline was ahead.
My downside target was $520,
which seemed crazy when the stock was at $700. My reasons:
rest of the article on Forbes.com, please go to this link:
RESOLVING THE “FISCAL CLIFF” RESOLVE
THE “ECONOMIC CLIFF?”
Excerpt from the
Wellington Letter November 13,2012
Our work strongly
suggests that the incomprehensible, low-volume
market rally in late summer was clearly
manipulated. It defied all fundamentals, logic,
and technicals. We wrote that eventually reality
would have to erase the huge divergence between
market action and economic fundamentals, not only
in the US, but globally. With the election, and
the elimination of any hope of economic
improvement, the bearish trends should now fully
exert themselves. It won’t be pleasant for the
The leading and most beloved
stocks—Apple, Google, and Amazon—look absolutely dismal (see
the CHARTIST section). These were the leaders to the upside,
and they will now lead to the downside.
It will be similar to early
2008. There will be periodic rallies based on renewed hopes,
but they will quickly fade away. Eventually, there could be
another full-blown crisis similar to the one in late 2008.
This creates great opportunities
for well-informed traders and investors. Our clients had the
chance to make great profits during the 2008-2009, and we aim
to repeat that. We can’t change the global situation, but at
least we can take steps to protect ourselves.
(After the election) we advised
taking positions in the inverse ETFs that are geared to rise
in price as the index or sector declines. Investors who are
not very experienced, as well as those who intend to stay with
their positions for a long time, should stick to the
Analyst Tony Boeckh, who headed
up the excellent Bank Credit Analyst publication for many
years, calculates that a total of $US20.1 TRILLION has been
spent by the governments and central banks of the US, Japan,
Europe and China between 2008 and 2012: $US13.1 TRILLION in
budget deficits and $US7 TRILLION in central bank asset
purchases. The size of this reflation is without precedent. He
says this has been responsible for avoiding another Great
Depression and 20-year bear market.
Excerpt from the
Wellington Letter November 7,2012
All the beneficiaries of a
change in the Washington leadership we outlined in our last
issue should now be shunned. The opposite side of the trades
makes more sense.
(specific recommendations deleted out of fairness to
Don’t be fooled by any political
promises about “cooperation” and “reaching across the aisle.”
If you didn’t like the last four years, you will the next four
even less. Expect higher taxes, higher usage fees, much bigger
federal government, less freedom, greater economic misery for
most people, and global recession. These trends will produce
even more poverty, much bigger social programs (making people
depend on government), much greater federal deficits,
necessitating even more money creation by the Fed.
The turmoil in Europe is
starting up again with violent riots in Greece as the
parliament considers more austerity and higher taxes. The head
of the European central bank (ECB), Mario Draghi, said today
that Germany’s economy is now approaching recession.
The September economic numbers
out of Europe are terrible. Germany’s factory orders
fell 3.3% month over month in September, the most in a year,
following a 0.8% decline in August. That’s a pattern of
Draghi also said today that
debt-related “difficulties” are “starting to affect the German
economy.” The EU has now substantially downgraded next year’s
growth to 0.1%. That’s a political forecast. The reality is a
The Eurozone economy in
September had the sharpest decline in economic activity,
Markit.com. In France, the president initiated a hike in
the sales tax. The question is whether Greece will get the
next loan. We say it will. For the EU, a loan is cheaper and
easier than a default.
France’s sales tax will increase
in January 2014 to 20% from 19.6%. Its restaurant sales tax
will rise to 10% from 7%.
In Japan, the sales tax will
double to 10%. The last time they did this, the recovery
aborted and the country plunged immediately into deep
In China, corporate earnings
excluding financials fell 18.2% from a year ago. The
party congress starts on Nov. 8, when the Communist Party
leadership will install Xi Jinping.
most important election in 80 years
Excerpt from the
Wellington Letter October 31, 2012
The major indices have floated
mostly upward for several months without any evidence of
buying pressure but with an absence of selling. It almost
appears that money managers, even those who think the market
has severe headwinds, don’t want to sell as long as the market
When fundamentals such as
declining earnings, deteriorating economic conditions, and
especially volume trends don’t seem to support an upmove, it’s
a time to be very cautious. When the selling finally starts
and the uptrend is broken, it can unleash a lot of selling,
especially in all the institutional favorites.
The big unknown is the election.
Let’s look at the fundamental background for the next several
months, the bullish and the bearish side.
A change in the White House:
1. New, workable policies,
cooperation with Congress, effective planning, a true CEO in
2. An end to anti-business
3. A revitalization of
entrepreneurial spirit. Businesspeople would start hiring and
No change in the White House:
1. The anticipatory buying of
stocks over the past several months would be reversed. Stocks
would probably be dumped. Buying would dry up.
2. The “financial cliff”
that would raise tax rates by 43% on the middle class and
higher income earners. Some estimates are for a severe plunge
in the economy.
3. All hopes for an
economic recovery would be shattered as a continuation of the
policies of the past four years would probably be followed.
The next four years would be worse as the entire globe would
go into recession/depression.
4. No hope that the USA
could be the engine to pull the globe—primarily Europe and
China—out of the ditch. Global recessions!
Therefore, the election is
absolutely critical for the nation, the world, for businesses,
and for people who are looking for decent jobs. It may be the
most important election since the 1930s.
IS THE EMPLOYMENT NUMBER
October 5, 2012, by
The U.S. unemployment rate
announced today plunged below 8%, from 8.1% to 7.8%.
Economists had expected a rise to 8.2%. When 2 plus 2 doesn’t
add up to 4, there is great skepticism. Many observers ask,
has Washington adopted the Chinese method of producing
economic growth: pressure the statisticians?
Do you smell a rotten fish
somewhere? In China, the party bosses tell the statisticians
the number they want, and magically, that’s the economic
number they get. The big job creator, our president, now has the lowest unemployment rate since he took office.
However, only 114,000 jobs were added in September versus a
revised 142,000 in August. So, it actually worsened.
Now get this: The “household
survey” showed a phenomenal gain of 873,000 in employment, the biggest since June 1983. However, 582,000 of these were
part- time positions. How do they get that number? The
government calls about 60,000 households and asks if people
have worked the last month. If I were asked, I might ask,
“what do you consider work? How many hours? For pay, or
without compensation, etc? Does it count if I do something for
We wonder what the specific
question on the phone was? Like, “if you worked a few hours
for your father in law, like helping him move a couch or mow
the lawn, that counts as part time work.” (Believe it or
not, it does! Furthermore, if one person had 5 part time jobs
during the month, that’s counted as five new jobs. Apparently,
it’s counted as a job even if there is no compensation.)
EUROPE, THE FED, and the GLOBAL MONEY MACHINE
By Bert Dohmen , September 23, 2012
problem in Europe is that ECB president Mario
Draghi said that if Spain or other countries want
the ECB to buy those sovereign bonds in the market
place, Spain will have to formally ask the ECB and
its emergency fund for assistance. That is a tough
thing to do for proud European governments. Spain
will probably wait until things get much more
serious before putting in a formal request.
Draghi said last month when he
made his statement to scare the short sellers: “Within our
mandate, the ECB is ready to do whatever it takes to preserve
the euro. And believe me, it will be enough,”
Well, this is more a threat than
a plan. Germany isn’t that easy to roll over. It’s again the
battle of the politicians, in this case the Germans, and the
central bankers. If the bankers don’t get their way, then they
will let things deteriorate into another serious crisis in
order to get everyone on board of a money printing agenda.
How will all this end? That’s a
question most politicians around the world, except for
Germany, are not asking. We say “every action produces a
reaction.” That is how the universe functions.
Currently, the major central
banks are producing massive amounts of money out of thin air
in order to pile new debt on top of the old debt, which
is already too high to service. In 50 years, people will
wonder: how could they ever think that this would work?
It’s the ultimate human folly.
These actions will eventually bring about a huge reaction. The
current fiat money system, which has absolutely no limits
imposed on it, will result in people refusing to accept the
paper money. That is what history teaches, but central bankers
like to forget.
over-indebtedness of governments has resulted in them taking
more gold or silver content out of coins, until no one would
accept their currency and the citizens started using the
unadulterated coins of the neighboring countries. That
resulted in penalties, including death, for anyone using the
other coins. Eventually, the governments with diluted
currencies fell. In today’s world, governments have totally
(not just partially) eliminated gold and silver and have given
us pieces of paper with ink on it.
A GREAT BUYING OPPORTUNITY?
By Bert Dohmen , August 31, 2012
We receive many questions about where gold is
headed from investors who claim to have the long-term view but then get
emotional about every bounce or drop. If you are truly a gold investor, you will
say, “I will look at it in five years, not in between.”
Often it’s very good to read back issues of the
WELLINGTON LETTER. Here is what we wrote in January 19 this year. Even if you
read it at that time, it would be good to reread it, because it is just as valid
One concern about mining stocks is that it is
getting harder and harder to find new deposits and that it takes 10 years to get
a mine into operations. However, that represents great opportunities for
companies that have proven reserves and are in operation. It also means that the
demand/supply relationship for gold is bullish because of growing scarcity.
No matter what happens over the short term, we
believe the long term trend is very bullish for gold. But it’s always a very
volatile ride and many investors are shaken out during the inevitable
corrections and then don’t get back in.
The miners have been underperforming the metals.
There are always some fundamental concerns. Early this year it was that their
costs of mining were rising faster than the price of the gold. Another concern
is that many of the underdeveloped countries where the mines are located may
confiscate the mines. These are all valid.
On the other hand, the leverage of the miners is
tremendous in a bull market. Even if gold has a steady, unspectacular rise,
profits will rise nicely. Look at them as operating companies making a product
which is in limited supply that cannot be created out of thin air by the central
banks of the world. And that enables them to increase dividends very nicely.
The Financial Post of Canada reported in
November that dividend payments from miners increased 75% in 2011, compared
with a 26% increase in 2010. Analysts forecast that 2012 will see another 26%
increase in distributions. In today’s markets, where every money manager is
looking for income, that’s very meaningful.
We like the miners at this point because they have
a lot of catching up to do. In 2011 gold was up, while the mining stocks were
down double-digits. The sector is still not popular with institutions, although
the interest is increasing.
of another EUROPEAN “FIX”
By Bert Dohmen , June 30, 2012
The big news came on the last day of June out of
Europe, where the 27 EU members met. The announcement of a plan to have a plan
scared the short sellers in the various markets, helped along by the Fed’s PPT
(Plunge Protection Team) in cooperation with the various HFT operations. The
global markets staged a big, one day surge. The sustainability of this rally is
a big question mark once the big traders start analyzing what was done—and not
Germany’s Angela Merkel capitulated, partially,
but also got part of what she wanted, namely an EU regulator watching over the
banking system in the EU. Contrary to some reports, Merkel did not give up her
opposition to the Eurobond idea.
Participants consider the agreement on direct
recapitalization of Spanish banks as the most important achievement. However, it
depends on the creation of a European bank authority.
French President François Hollande said that this
would not be achieved before year-end. EU Financial Services Commissioner
Michel Barnie named the same timeline. Will the markets wait that long? Any plan
that is eventually assembled will have to be ratified by the legislature of the
The fact that this time they addressed short-term
bailout measures instead of the usual long-term goals indicates that the crisis
was close to a very serious situation. We have reported on the huge withdrawals
of deposits from the European banks. The report on Friday reflects desperation,
as can be seen by Merkel partially caving in....
DOWN THE HATCHES”
Bert Dohmen (excerpt from the Wellington Letter)
Written May 30,2012
global stock markets have now entered bear
markets, although that is still refuted by most
analysts. This presents great opportunities for
short sellers or those who buy inverse ETFs.
call it the “dead zone.” This year it may be the
“death zone.” It’s the period in the stock market
from May to October which actually would have lost
you money, cumulative, over the last sixty years,
while the period from November to April would have
produced excellent stock market profits, over 14%
compounded annually. Our work shows that this year
the death zone may be exactly that for the bulls.
bears who follow our advice should have exceptional
opportunities, just as in 2008
If you followed
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for the Wellington Letter for the next 100 years. And that’s
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