.Latest Schultz Shock: a 'bank holiday'
NEW YORK (MarketWatch) -- The top-performing letter that predicted the Crash of 2008 now predicts a confiscatory Franklin D. Roosevelt-style "bank holiday." But it's surprisingly sanguine about stocks -- in the (very) short term.
The Harry Schultz Letter (HSL) was my pick for Letter of the Year in 2008 because it really did predict what it rightly called a coming "financial tsunami." But its performance in 2008 was still terrible, albeit arguably for technical reasons. ( See Dec. 28, 2008, column.)
Now HSL has bounced back big-time. ( See April 13 column.) Over the year to date through May, it's up a remarkable 81.7% by Hulbert Financial Digest count, compared to 4.1% for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
Of course, simple arithmetic dictates that doesn't make up for 2008 -- over the past 12 months, HSL is still down 48.19% versus negative 32.63% for the total return Wilshire 5000. In fact, the damage inflicted by 2008 was so great that HSL is also under water over the past three years, down an annualized 14.89% against a drop of 8.18% annualized for the total return Wilshire 5000.
Still, over the past five years, the letter has achieved an annualized gain of 9.19%, compared to negative 1.26% annualized for the total return Wilshire 5000. This reflects its success in catching the post-millennium hard-asset bull market that caused me to name it Letter of the Year, for more conventional reasons, in 2005. ( See Dec. 29, 2005, column.)
And over the past 10 years, the letter still shows an annualized gain of 3.65%, against negative 0.86% annualized for the total return Wilshire.
In its current issue, HSL reports rumors that "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120-150 days."
Yes, yes, it's paranoid. But paranoids have enemies -- and the Crash of 2008 really did happen.
HSL's suspicion: "Another FDR-style 'bank holiday' of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it)."
HSL is still sticking with its 20-year "V" formation forecast, but emphasizes that within the current 10-year downtrend phase there will be rallies that will "last 1-2 years." It attributes its current success to "successfully trading almost daily, especially in commodity stocks (coal/potash/energy/ fertilizer/gold). Take profits constantly and rebuy on mini pullbacks. Prefer non-U.S. dollar companies; many such companies are listed in U.S. & Canada or Australia."
HSL says: "The world is staggering today between stagflation and net deflation right now; it varies widely around globe. Net deflation is a maybe 35% risk, due to toxics and/or deepening depression. Bit more likely, we'll slowly creep up to a dangerous 4.5% inflation on average, medium-term. But the wild card is the currency risk, which has a 50% (?) chance of boiling over and causing literally overnight (i.e. 24 hours) mega inflation in the asset markets."
Nevertheless, in the very short term, HSL's charting leads it to say: "we MAY not get a new bear market decline that many bears are predicting. Likewise, DJIA & S&P500 may build a Head-and Shoulders right shoulder."
HSL's currently recommended allocation:
• 35%-45% Government notes, bills and bonds. (Not U.S.)
• 8%-10% Stocks (non-golds).
• 10%-30% Commodities, via futures, commodity stocks and/or physical assets.
• 35%-45% Gold stocks and bullion.
• 0-5% Bear stock protection via inverse ETFs like ProShares UltraShort QQQ /quotes/comstock/13*!qid/quotes/nls/qid (QID 32.24, +0.07, +0.21%) ; ProShares UltraShort Dow30 /quotes/comstock/13*!dxd/quotes/nls/dxd (DXD 48.10, +0.15, +0.31%) ("Use to trade/hedge market downturns only.")
MarketWatch
Are they talking about confiscating the gold.
Something tells me we wont be getting private rooms
The Harry Schultz Letter (HSL) was my pick for Letter of the Year in 2008 because it really did predict what it rightly called a coming "financial tsunami." But its performance in 2008 was still terrible, albeit arguably for technical reasons. ( See Dec. 28, 2008, column.)
Now HSL has bounced back big-time. ( See April 13 column.) Over the year to date through May, it's up a remarkable 81.7% by Hulbert Financial Digest count, compared to 4.1% for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
Of course, simple arithmetic dictates that doesn't make up for 2008 -- over the past 12 months, HSL is still down 48.19% versus negative 32.63% for the total return Wilshire 5000. In fact, the damage inflicted by 2008 was so great that HSL is also under water over the past three years, down an annualized 14.89% against a drop of 8.18% annualized for the total return Wilshire 5000.
Still, over the past five years, the letter has achieved an annualized gain of 9.19%, compared to negative 1.26% annualized for the total return Wilshire 5000. This reflects its success in catching the post-millennium hard-asset bull market that caused me to name it Letter of the Year, for more conventional reasons, in 2005. ( See Dec. 29, 2005, column.)
And over the past 10 years, the letter still shows an annualized gain of 3.65%, against negative 0.86% annualized for the total return Wilshire.
In its current issue, HSL reports rumors that "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120-150 days."
Yes, yes, it's paranoid. But paranoids have enemies -- and the Crash of 2008 really did happen.
HSL's suspicion: "Another FDR-style 'bank holiday' of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it)."
HSL is still sticking with its 20-year "V" formation forecast, but emphasizes that within the current 10-year downtrend phase there will be rallies that will "last 1-2 years." It attributes its current success to "successfully trading almost daily, especially in commodity stocks (coal/potash/energy/ fertilizer/gold). Take profits constantly and rebuy on mini pullbacks. Prefer non-U.S. dollar companies; many such companies are listed in U.S. & Canada or Australia."
HSL says: "The world is staggering today between stagflation and net deflation right now; it varies widely around globe. Net deflation is a maybe 35% risk, due to toxics and/or deepening depression. Bit more likely, we'll slowly creep up to a dangerous 4.5% inflation on average, medium-term. But the wild card is the currency risk, which has a 50% (?) chance of boiling over and causing literally overnight (i.e. 24 hours) mega inflation in the asset markets."
Nevertheless, in the very short term, HSL's charting leads it to say: "we MAY not get a new bear market decline that many bears are predicting. Likewise, DJIA & S&P500 may build a Head-and Shoulders right shoulder."
HSL's currently recommended allocation:
• 35%-45% Government notes, bills and bonds. (Not U.S.)
• 8%-10% Stocks (non-golds).
• 10%-30% Commodities, via futures, commodity stocks and/or physical assets.
• 35%-45% Gold stocks and bullion.
• 0-5% Bear stock protection via inverse ETFs like ProShares UltraShort QQQ /quotes/comstock/13*!qid/quotes/nls/qid (QID 32.24, +0.07, +0.21%) ; ProShares UltraShort Dow30 /quotes/comstock/13*!dxd/quotes/nls/dxd (DXD 48.10, +0.15, +0.31%) ("Use to trade/hedge market downturns only.")
MarketWatch
Are they talking about confiscating the gold.
Something tells me we wont be getting private rooms
posted by madtom at 9:26 PM
8 Comments:
What does it matter? MJ is dead!
A pop culture death orgy is underway, a perfect way to end America as we knew it.
If this is right and embassies are secretly dumping dollars, we are in for a world of shit. Every day I think things can't get any more bizarre, but somehow they do.
Sort of shines a new light on that report that the 134 billion in bonds was Japan dumping US debt. I mean if I was Japan and the US embassy there was dumping, wouldn't you run to dump yours too?
One of the biggest treasury bond dealers ( a very privileged and sought after position--or was) today gave up its 'license', without comment. Speculation is that they could not sell treasuries and were stuck with 'inventory' they couldn't unload at a profit. Or, even worse, they see a train wreck on the horizon and see that dealing in US treasury bonds is a soon to be losing proposition.
http://market-ticker.org/archives/1167-SEVERELY-Bearish-Treasury-Development.html
SEVERELY Bearish Treasury Development
From Marketwatch:
NEW YORK (MarketWatch) -- Dresdner Kleinwort Securities has withdrawn from the Federal Reserve's primary U.S. government security dealers, the U.S. central bank said Friday.
The change is net neutral in terms of numbers as a new dealer just came online, but in general this is a major net negative for the Treasury market.
Why? Because being a primary dealer is, in general a license to print money. You get to field customer orders for Treasuries and make your spread, and you have a privileged trading position with The Fed.
There's only one fly in the ointment, and that is that the position comes with a requirement that you bid. This is distinct from most other nations where no such system exists, and essentially guarantees that there can never be a "failed" Treasury auction.
There was no reason cited for the withdrawal but one can surmise that the issue is that they're stuffed to the gills with Treasuries and are finding it difficult or impossible to earn their spread, think there is a material safety risk in their participation (e.g. getting stuck long with a deteriorating position), or both.
Either way there is no possible means to read this as bullish. While the issue may be with their liquidity demands and thus not reflect severely on the Treasury market with the issuance that has gone on this year and will for the foreseeable future I wouldn't take that bet.
The "Chosen" or "Protected" dealers will of course never withdraw but if the changes made to reporting of indirect bid are in fact concealing deteriorating demand and these folks have detected a potential problem in the offing we are fixing to get a severe spanking in our government debt issuance in the near future.
Beware.
Market Ticker
I posted it here, because to tell you the truth, I have no idea what it says...
Even as the House raced toward a Fourth of July recess, Republicans unwittingly gave Democrats more time to whip their members Friday by calling for a series of amendments to an unrelated spending bill. When the Republicans realized what was happening, they quickly tried to withdraw the amendments, but the Democrats wouldn't let them.
Politico
Useless
I tried
The Reps know that the energy bill will never pass the Senate. I will bet that the leadership wanted to make a show of trying to stop the vote, but secretly glad it passed. It will make some really nice ads against Dem incumbents in rural states that voted 'yeah'. There is some really strange stuff in that bill.
That article is related to the bond smuggling, and the possible dumping of dollars by the State Dept. Something bad this ways comes--- at least it sure is starting to smell that way.
"Something bad this ways comes"
That much I gathered, but, maybe, someone is doing this on purpose, "head them off at the pass". It could put another notch on O's belt.
We may know shortly..
I bet you would like to 'put a notch on O's belt'. Not that there's anything wrong with that......
Post a Comment
<< Home