Oil: Bottom or Fake Out?

Exclusively on DohmenCapital.com

Oil recently had a nice three day rally of about 20%. Suddenly the “gloom and doom” about this complex vanished and analysts were quick to conclude that a bottom in oil had been made. I say, “not so fast.”

Oil (light crude index) had a 59% decline ($63) going into the low of January 28. A $9 rally is just a bounce from the low, probably maneuvered by the high frequency trading operations to squeeze the overwhelming number of shorts. It worked.

The Art Of Detecting Market Turns

Trying to predict market trends over the near-term is like detective work. You have to decipher the clues of the markets, assessing a change in the demand/supply equation. Advanced technical analysis tools are instrumental.

I look for a variety of clues. Let me give you a few, explaining the action of Dec. 16, an extremely volatile day, and perhaps a short-term turning point. On that day, the markets had extremely high volatility, which often occurs on a turn.

Japan In Recession: Warnings Of A Global Financial Crisis

The major central banks have pursued a “zero interest rate policy” known as ZIRP, since the financial crisis of 2008-2009. More than $10.5 trillion of artificial credit were created. Has this unprecedented policy, never before seen in history, caused sustainable economic recoveries?

The evidence says: “No way.”

No recession, not even the Great Depression, has seen such anemic economic growth. Looking at it scientifically, instead of as an economist, we must ask, “Have central bank efforts to ‘stimulate’ actually done the opposite?” Has ZIRP actually contributed to global deflation?

Carry Trade: The Multi-Trillion Dollar Hidden Market

The dollar is soaring. The U.S. stock market is making new highs. U.S. T-bond yields are declining, causing T-bond prices to rise while all the experts say they are too overvalued. European government bonds actually yield less than U.S. Treasuries, which makes no sense because the U.S. bonds are considered much safer. Many analysts confess that they are mystified.

What is the driving force for these moves? The “carry trade.”

What is the carry trade?

China: After The Credit Crisis Comes The Economic Crisis

Posted on Forbes.com

China is now experiencing a monumental credit crisis. Loans are basically not available because confidence in repayment has vanished.

This is how the last global crisis started in 2007. I warned about it in my 2007 book, Prelude to Meltdown. The warnings were ignored in 2007, and my observations in this article will probably also be ignored by most people. “Denial” is always a defense mechanism, but not very useful.

What’s Ahead?

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.

Operating 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.