Dow in Danger!

by Martin D. Weiss, Ph.D.   05-20-10

By my count, this is at least our SIXTH clear, unambiguous warning of danger in the Dow — sent to you in just the last 60 days!

On March 27, Mike Burnick warned you — right here in Money and Markets — that the big stock market rally of 2009-2010 “could come to a crashing end at any time.”

Also here in Money and Markets, Claus Vogt told you The Stock Market Is Starting to Look Toppy on April 21 … issued A Clear Warning Sign — Global Liquidity Is Drying Up one week later … and then, just in case you missed the first two, told you AGAIN that A Topping Formation Is Taking Shape on May 12.

On the same day, Larry Edelson, Mike Larson, and I held an emergency briefing online, with our FIFTH warning: “A good rule of thumb,” Mike said, “is to sell half of your excess holdings now and then revisit the balance when you get a good rally.” But … “even when you get the rally, it is very easy to forget the crisis. Things may appear to have quieted down, but it’s really going to be just the next calm before an even bigger storm that is coming.” (See transcript in Sovereign Debt Crisis: Emergency Strategy Update.)

Now, here’s our 6th warning …

The Dow’s 1000-point “flash crash” of two weeks ago was NOT a fluke! Nor is today’s 376-point slide in the Dow!

These events are lightning bolts that strike deep into the market’s core … and that help light up the path ahead for anyone willing to look.
In his flash alert to Safe Money readers earlier today, Mike Larson explains it this way:

“Some of the latest economic data has shown a cooling in global demand and a loss of investor confidence. Many early warning signs of credit stress are also flashing yellow. Volatility indices are on the rise … financial institutions are charging each other more to borrow money in the interbank market … and interest rate swap spreads are blowing out in the derivatives arena.

“These are the same kinds of indicators we saw go nuts before the 2008 crash. We’re still nowhere near the widespread panic levels we reached back then, but the trend is what matters and it’s very unsettling.”

These signals all confirm what we’ve been telling you for the last 60 days:

1. The great rally since March of 2009 is — or will soon be — over.

2. Despite its impressive duration and magnitude, that rally was little more than a temporary interlude — an intermission between two phases of a greater bear market.

3. The first phase came in the wake of the great Housing and Debt Crisis of 2008-2009, wiping out as much as HALF of America’s stock values.

4. The second phase has struck with the Great Sovereign Debt Crisis of 2010, and it’s just now getting under way.

Bottom line: If you have followed our recommendations to …

• stay away from vulnerable U.S. stocks …

• hold plenty of cash …

• use intermediate rallies to reduce your exposure even further and …

• hedge your remaining portfolio with inverse ETFs …

Then, you’re in good shape!

If not, what are you waiting for? How many more warnings must we issue? Please don’t delay. Move swiftly to get your money to safety.

A Clear Warning Sign: Global Liquidity Is Drying Up!

by Claus Vogt   04-28-10

In last week’s Money and Markets column I told you the majority of my indicators are signaling that the stock market has probably entered the last phase of its medium-term uptrend, which began in March 2009.

I went over price-to-earnings ratios (based on twelve-months trailing GAAP earnings) and dividend yields. Both metrics are showing a heavily overvalued market.

Today I want to add that “normalized earnings,” which try to even out the impact of the ups and downs in the business cycle, are strongly supporting this message.

Plus, I’d like to give you updates on what I discussed last week and tell you about one more important signal …

Sentiment Indicators Still Euphoric

I reported that mutual fund cash level was an excessively low 3.5 percent in February. Now the March figure is in, and it’s the same as February’s! The only other time we’ve seen fund managers holding such a low level of cash was in the summer of 2007, a short three months before a major stock market high.

Next, I want to give you the latest readings of Investors Intelligence Advisory Sentiment …

The bullish contingent stands at 53.3 percent, up from 51.1 percent just a week ago. Whereas bearish advisors are down to a very low 17.4 percent, well below the 20 percent threshold typically indicating at least short-term danger for the stock market.

Even more bothersome is the most recent ratio of bullish to bearish financial newsletters, currently at 3.06, as shown in the second panel of the chart below. Last week it was 2.7.

This tells us that the short-to medium-term upside potential is very limited.

Source: www.decisionpoint.com

Then I discussed how equity put-call ratios had fallen to levels not seen since 2000, the year of the famous NASDAQ top, when the dot com bubble burst.

Well, as you can see in the second panel of the following chart this ratio is still hovering around that extremely low level. The 10-day average is currently at 0.46, up a meager 0.01 from last week. And the 10-day average of the total CBOE put-call ratio, the third panel of the chart, is still a very low 0.77. Last week’s small market correction did nothing to dampen option speculators’ willingness to bet on further rising stock prices.

Source: www.decisionpoint.com

What’s more …

Liquidity Has Dried Up Globally

There still seems to be a lot of talking about the huge liquidity driving this market higher. And yes, the Fed’s answer to the housing and banking crisis was a historical wave of liquidity with M-2 money supply growth rates of more than 10 percent. But take a look at the chart below to see what has happened since.

Year over year M-2 growth has stalled … growing by a mere 2 percent. That’s a far cry from a huge wave of liquidity. It’s better described as a trickle.

And if you take a global view, the picture is even getting worse!

The so called excess liquidity of the G7 nations, measured as M-1 minus industrial production minus consumer price inflation, has actually declined by 5 percent during the first quarter of the year.

If this global stock market rally was driven by liquidity — and I really think it was — the drying up of global liquidity should be seen as a clear warning sign.

The bull move, which in my opinion was a huge bear market rally that started in March 2009, is already on borrowed time. And I expect the market to top out during the coming months.

评论：全球流动性已经枯竭！道琼斯指数很危险。
尽快离开股市，趁每次反弹卖出，保留现金！剩余的头寸通过反向ETF对冲。

研究称全球银行资金缺口或超1.5万亿美元

2010年05月26日 01:20  

新浪财经讯 北京时间5月26日凌晨消息，据国外媒体昨日报道，瑞士评级公司Independent Credit View周二公布研究报告称，到明年年底以前，全球各银行的资金缺口总额可能超过1.5万亿美元，其中一些银行可能需要政府为其提供支持。

　　Independent Credit View合伙人兼银行业分析师克里斯蒂安·费舍尔(Christian Fischer)称，该公司在这份报告中对全球范围内的58家银行进行了研究，并得出了上述结论。他表示，在这些银行当中，预计爱尔兰联合银行(Allied Irish Banks Plc)、德国商业银行(Commerzbank AG)、爱尔兰银行(Bank of Ireland Plc)和苏格兰皇家银行集团(Royal Bank of Scotland Group Plc)到2011年底的资金缺口最大。

　　费舍尔指出：“如果得不到政府援助或进行债务重组活动的话，这些银行将几乎没有能力筹集到资金”，并预测这些银行“现有股东的价值将被大幅摊薄”。费舍尔预计，爱尔兰联合银行和爱尔兰银行可能需要分别筹集相当于其当前市值681%和536%的资金，这两家银行的信用评级则分别为“BB-”和“B+”，在Independent Credit View追踪的所有银行中处于最低水平。

　　这份研究报告将2011年底的预估资本需求与去年底的资本率进行了对比，并将今年和明年的银行盈利预期考虑在内。分析师预计，全球银行业的贷款和准备金都将有所增长；此外，分析师还预计有形普通股权益资本比率(Tangible Common Equity ratio)将从去年底9%的平均值上升至10%。有形普通股权益资本比率是用于衡量银行的财政状况和资本实力的一项指标。

　　爱尔兰金融监管机构负责人马修·艾尔德尔菲尔德(Matthew Elderfield)此前已经通知爱尔兰联合银行和爱尔兰银行，要求这两家银行在年底以前筹集大约100亿欧元(约合122亿美元)资金，来达到政府最新制定的资本要求，并为未来可能会出现的不良贷款建立准备金。

　　作为一项筹资29亿欧元(约合36亿美元)计划的一部分内容，目前爱尔兰银行正在发售新股；与此同时，爱尔兰联合银行则称其将在波兰和美国市场上发售股票，试图藉此筹集大约74亿欧元(约合91亿美元)的新资金。爱尔兰银行指出，Independent Credit View的研究报告没有将该行曾向爱尔兰国家资产管理局(National Asset Management Agency)转移贷款这一因素考虑在内。(文武)