Capital Wave Forecast: Risk On, and On, and On, And…

Summer’s not officially here yet, but the heat sure is. Markets are sizzling and investors are feeling it.

It’s Risk On, all the way.

Until of course the heat wave investors are enjoying gets dumped on by any number of named storms brewing out on the near horizon.

What storms?

Bella-Bankruptcy, Brad-Breadth, Elanor-Unemployment, Maggie-Mortgage, Ralph-Retail, and Ollie-Overpriced. They’re just tropical depressions according to bullish forecasters. At least they are for now.

So, get your Risk On!

A Tidal Wave of Bankruptcies Could Sink the Stock Market

Thousands of American companies are sliding towards bankruptcy. Many of them are publicly traded companies.

The Federal Reserve’s buying some failing companies’ bonds in an effort to keep them alive.

It’s not going to work.

The coming tidal wave of bankruptcies will overwhelm the Fed’s rescue efforts and could sink the stock market.

Here’s what’s coming our way.

How the Federal Reserve Hijacked Free Markets and Ushered in Socialism

The Federal Reserve’s promised to be the support pillar that holds up America’s capital markets. And they’ve promised to hold up the economy.

Too bad the price America’s paying is our way of life.

Here’s the short story how the Fed hijacked free markets and ushered in socialism, and how to win our freedom back…

We’re Up By Triple-Digits

Permanent damage has been done to the economy. Small businesses have closed their doors and some won’t reopen, and one in four restaurants won’t be reopening after the shutdown. It’s time to reopen, before things get worse. Click here to watch

Looking at Earnings, So Far, Things Don’t Look That Good

Can we talk, about earnings? Let’s.

But, first, listen to what Randall W. Forsyth said to open his column titled Up and Down Wall Street this Saturday in Barron’s. He said, “The good news is the bad news can’t get worse.”

Sadly, it can. That includes earnings.

With more than 90% of S&P 500 companies reporting last week, quarterly earnings look like they’ll be down 13.8% from Q1 2019.

Maybe that’s why markets sold off last week.

The Dow lost 645.90 points on the week, closing down 2.7% at 23,685.42. The S&P 500 closed the week down 2.3%, its worst week since March 20. And the Nasdaq composite closed the week down 1.2%.

What’s interesting, in hindsight, which I’ll get to in a second, is that the Dow dropped 1,083.32 over the first three days of the week, closing Wednesday at 23,247.97, down 516.81, or 2.17% that day.

The hindsight here comes to us courtesy of Sunday’s 60 Minutes show. The big-deal guest interview yesterday was with Jerome Powell, Chairman of the Federal Reserve. Only, Jerome wasn’t on live yesterday. The show was taped from the Fed’s Washington D.C. headquarters on Wednesday, after the Dow dropped more than 1,000 points over the first three days of trading last week.

It’s not normal for the Fed chairman to grant an interview to 60 Minutes, especially in the middle of a crisis. Did the Chairman offer 60 Minutes the interview? Maybe. Because if markets were to continue getting hit Thursday and Friday, they’d be in bad shape come Monday morning, today, and a further route would be entirely possible.

So, why not tee-up an interview on Wednesday to hedge your bets come Monday.

The Bottom Hit and We’re Headed Back Up (Cautiously)

You’ve got to hand it to the individual investors who’ve made money off the lows. It’s not the hedge funds, the mutual funds, the Wall Street bigwigs; it’s the mom-and-pop investors, the passive investors, and the young people who are driving the markets back up. Click here to watch

Banks Are the Economy’s and the Market’s Bellwether: How to Read Them and Play Them

To make money in the stock market investors need to know how bad the recession’s going to be and how the market’s going to react to economic conditions.

One surefire way to gauge what’s going on in the economy and gauge what the market thinks about economic prospects, as well as divine the market’s direction, is by watching bank stocks.

Banks are a bellwether for the economy and the market.

Here’s why banks are a good economic indicator, how to read them, and how to play them…

Look Out Below: The Mortgage Market Is About to Revisit 2008 Crisis Woes Part II

Last Friday, I gave you this warning: The mortgage market is once again in danger, only this time the damage is going to be a lot worse, last a lot longer, and impact the housing market and the economy in worse ways than the 2008 financial crisis did.

I laid out all the details and data in Friday’s article, which you can read here, but today, I want to get into it a little bit more. It’s going to be hard to hear, but it’s absolutely necessary, since it will affect your Total Wealth.

If you thought the worst of the financial crisis was way behind us, you’re about to get a rude awakening.

Mortgage Massacre 2.0 is right around the corner.

Here’s how “forbearance” and “rent strikes” are already impacting the mortgage market and how what’s barreling down on us is going to make 2020 look like 2008 all over again.

A Selloff or A Rebound: Anything Could Happen

The Fed’s sending mixed messages. In a downturn, they only expect things to get worse… and with earnings season upon us, it could get worse before it gets better. Click here to watch

Shah Gilani: We May See More Unemployment, But This Rally is Real

Stocks just want to go up, investors are buying, and there are profits on the table. Beaten down stocks are getting bids, the market is rotating, and we may, finally, be looking at a healthy market. Click here to watch

Investors Open Up Their Wallets as the Economy Opens Up: But V Isn’t the Only Letter in the Alphabet

What a week equity investors had.

The Dow Jones Industrials rose a robust 2.56% last week. The S&P 500 rose a resounding 3.4%. And the never-not-leading Nasdaq Composite skyrocketed 6% higher.

That’s what I call getting it while you can, which is what I advised investors do last week.

While markets look crazy soaring every week, initial unemployment claims rise by an average of 4,100,000 per week; and benchmarks shot even higher last week as the Bureau of Labor Statistics reported 20.5 million jobs were lost in April and the nation’s unemployment rate leapt to 14.7% (wink, wink, BLS admitted it’s likely 5 percentage points higher, but seasonal and other haircutting, face-saving, adjustments wouldn’t let that headline fly), they may be right to pat themselves on the back.

That’s because the “V-shaped” recovery investors expect is self-fulfilling. I’m not talking about the economy’s recovery. I’m talking about the market’s recovery. It’s V-shaped, for sure

Call it confirmation bias.

As investors see more bad news, they see it getting closer to being the worst its going to get and that means we’re closer to turning around and that means buy, buy, buy. They see the economy opening as confirmation we’re on the other side of lockdowns, and stores and businesses opening as a reason to buy, buy, buy. Everything bad to do with the pandemic is behind us is what optimistic investors believe.

That’s confirmation bias in action.

That’s why the market’s experienced a V-shaped recovery.

More importantly, they say better than expected earnings keeps confirming their biases.

It’s all good. Until it isn’t

Look Out Below: The Mortgage Market Is About to Revisit 2008 Crisis Woes

If you thought the worst of the financial crisis was way behind us, you’re about to get a rude awakening.

Mortgage Massacre 2.0 is right around the corner.

Here’s how “forbearance” and “rent strikes” are already impacting the mortgage market and how what’s barreling down on us is going to make 2020 look like 2008 all over again…

The Markets Are Pushing Higher, Despite Unemployment Lows

Things are good so far, and we can thank FOMO and momentum-buying for the bounce we’re seeing off March lows. But then there’s short-buying, and we could be looking at a severe pullback. Click here to watch

Where All the Money’s Going in the Market Is Where You Should be Going Too

According to the Investment Company institute (ICI), year-to-date, investors have taken some $291 billion out of mutual funds and exchange traded funds.

But that’s not the whole story.

The ICI’s numbers represent net flows, meaning there were inflows, but they were dwarfed by outflows.

The story isn’t about net outflows, it’s about where the money went that flowed into the market.

Here’s where most of the money went and why you should follow it…

Big Tech is Leading Us Higher

Big tech, especially the FAANG stocks, has been pushing the markets higher since 2008. Nobody’s going the challenge these tech leaders, and, as long as money pours into these stocks – which it does, and it will – the markets are going higher. Click here to watch