Interest Rates Will Now Rise Sharply – Part I
This is actually the exact pattern that took place after the first real G4 meeting, as I call it when the US Fed lowered rates in 1927 to try to deflect the capital flows back to help Europe. It is ironic that history is repeating this same way once again…
Kansas City Federal Reserve President Esther George stated today that the Fed may need to “reverse” the three rate cuts implemented in 2019 that brought rates down to 1.5% to 1.75%… “We will need to asses whether the 2019 rate cuts prove to be ‘insurance cuts’ that will need to be reversed if headwinds fade.”
The Fed will once again turn to its domestic policy objectives and stop trying to help Europe which is trapped into its negative rate policy. Even Sweden has abandoned negative rates stating they have failed to provide what they were claimed to have accomplished.
I want to remind you that rising interest rates are bullish, not bearish. When the time comes to let you know when and what to buy and sell, we will provide those signals to our members. As money continues to move out of Europe to the USA we will let you know here.
Interest Rates Will Rise Sharply
I wrote about interest rates bottoming to a 5000 year cycle bottom in 2015.
As an investor, here is what to do immediately to prevent your retirement accounts and portfolio.
Read the rest and get our deadly accurate Trade Signals for 2020 by becomeing a member here.
The last three times “THIS” happened, stocks rose at least 30%! – A Bullish Prophecy
Stocks finished the last full trading week of the year at record highs.
Since the most recent trough in the market hit back in early October, the S&P 500 is up 11% and the Dow has gained just under 9%. This rally has certainly caught the attention of investors.
According to the American Association of Individual Investors, 44.1% of investors were feeling bullish for the week ended December 18, up 6.5 percentage points from the prior week and the highest reading of 2019. And a report from Bank of America Global Research earlier this week showed the firm’s clients were net buyers of stocks for the third week in a row.
The newfound enthusiasm for stocks into the end of the year will certainly make some observers nervous, as this bullishness will be seen as a contrarian indicator of what the future holds for this market.
But taking a step back from the market’s recent rally and investors concerned about the November-December push to record highs should find some relative comfort from market history. After all, a major theme earlier this year is that the market had “gone nowhere” for almost two years.
In a note to clients this week, Fundstrat’s Tom Lee highlighted periods similar to the flat, frustrating market of 2018-19. A period during which investors endured a nearly 20% decline while stocks gained a measly 5% during a 20-month period that saw corporate earnings rise in excess of 20%.
History says this current set up is quite bullish.
After long periods of “going nowhere,” the next two years tend to be quite strong for the stock market.
From the 1950s, 1980s, and earlier in the 2010s and found that when the market goes up 5% or less over a 20-month period, returns in the two years ahead tend to be stellar. Taking a composite of these periods implies a 53% return for the S&P 500 over these periods that follow flat markets.
And this points towards returns that could top 25% for the S&P 500 in 2020. With 2020 potentially serving as the mere beginning of this new breakout rally.
Since World War II, the S&P 500 has gained more than 20% in a year 24 times; the following year, stocks finished higher 79% of the time (or 19 times) with the average gain totaling 13%. In 16 of those 19 years, the market gained double-digits.
And so this late-year breakout isn’t something history suggests is cause for concern.
Proven Performance Charts
Over the final days of the 2019, we will post some of the charts of our Wealth Maximizer and Wealth Preserver signals.
Mr. Nespoli, I’ve been a wealth maximizer user for 26 months and I use the evergreen strategy and made more than 114% thus far. I love the signals, but do not appreciate your newsletters and blog updates because you appear too negative. JC Nevada
JC, I am neither a bull or bear when it comes to the InsidersPower newsletter and the Bull & Bear or Members Blog. It is not my duty to be positive or negative, it is simply our responsibility to report the markets accurately and not to mislead. We will leave it up to the Wall Street controlled “news media” to do that. We report the information that is vital to the future direction of the markets based on actions taken by US Fed or events occurring around the globe.
For example, here is a video that was published by CNBC:
Monthly, Weekly, and Daily member trade signals and charts are updated and ready for viewing.
You can also download, read, and share the December issue of InsidersPower.
Capital flows are indicating that there is a high concentration of dollar hoarding taking place in Germany. There remain intense fears over Deutsche Bank which has deep links to the major US banks that are highly involved in derivatives.
There is a rising concern that this time with the culprit being a regulated bank in the EU which has sworn not to bail out banks, that there can be a major contagion that this time impacts the US banks which the Fed cannot control as was the case with AIG.
That was an American insurance company which if it went down, it would have taken Goldman Sachs with it.
The dilemma this time is the Fed cannot bail out Deutsche Bank.
The crisis in liquidity is emerging as players fear a host of scenarios but remember the Lehman and Bear crisis took place in Repo first. For that reason as well, people are hoarding dollar instruments but are reluctant to put them in REPO for fear of default at any moment.
The bank stocks getting hit you will notice are all those with high derivative exposure linked back to Deutsche Bank. That means the leader in this banking risk decline is, of course, Goldman Sachs. The others in order of risk are Citigroup; Morgan Stanley; Bank of America, and JPMorgan Chase. The bank with the LEAST exposure to derivatives is Wells Fargo.
Please, log-in to view your member’s area Wealth Maximizer & Wealth Preserver Trade Signals and download your October InsidersPower newsletter.
The October issue of InsidersPower Newsletter covered the warning of a correction and what is coming for the balance of the year and into 2019. Now let’s take a look at our daily signals issued and when they were issued to help protect our members and their families from quick collapses.
S&P 500 Index
Warning Signal Issued: October 6
Warning Signal Issued: October 6
Russell 2000 Index
Warning Signal Issued: September 24
The Russell 2000 is by far the most common benchmark for funds that identify themselves as “small-cap“.