From The Desk of Peter Grandich

Posted by on February 11, 2016 - 11:38 pm

Welcome to 'Should've, Would've, Could've', the investment hindsight show.

Before I share my latest financial markets assessments, please note:

We’ve seen a tremendous increase in the number of visitors to this blog. Because of this, I want to make sure non-clients are fully aware of who and what I am (and what I am not).Please make sure you’ve read the following:

Having said that, I again remind everyone I left the soothsayer racket awhile ago.  Ironically, in this, my fourth decade in and around Wall Street, I’ve had perhaps the best stretch of accuracy on numerous markets (proving that God does indeed have a sense of humor!).

General Observation – Perhaps to the point of ad nauseam for some, I’ve made certain statements over and over again. I’ve also noted how these comments likely drive more business away from me than they bring to me. But as I’ve said for some time now, there are only two types of people:

  • Those who say what they think;
  • Those who say what they think you want to hear…because it sells!

The financial services industry is full of the latter. I take great pride in being among the small minority in the former.

Like it or not, I spent 2015 trying to prepare as many people as I could for what I felt was the coming worst economic, social and political era in America’s (and the world’s) history.  I ended 2015 by penning this commentary, “2016: Time To Pay The Piper.”  I encourage those who have yet to read it to do so ASAP!

I’ve pleaded for all who would listen, to read and fully appreciate my “Seven Deadly Sins on Matters of Finance.”  In just these early weeks of 2016, I have seen many investors pay a dear price for not recognizing these sins.

I remind all that none of us know the future.  At the very best, some of us may guess better than others. And for the love of God, please appreciate this old SNK skit when it comes to listening to the “Talking Heads” on financial networks and throughout the media.

And finally to those non-clients reading this, if this financial advisor reminds you of yours, I’m here to see if we can help you.

U.S. Stock Market – While the “Talking Heads” blame China and the price of oil for the big slide in worldwide equity prices, it’s of course much more than just that.  Among those ad nauseam comments of mine was the belief that the Fed’s QE programs failed starting at QE 1. The wealth effect they had hoped to create over a broad spectrum stayed mostly on Wall Street and never made it to Main Street. This gave a false sense of a strong economy, but Central Bankers around the world are only now starting to see the price they have caused their citizens to pay going forward for creating all this cheap money. I have often said history has shown a debt problem has never been solved by creating more debt. Just look to Japan over the last 25 years and have some idea what’s in store for America.

The market is deeply oversold and with what looked like the PPT (Plunge Protection Team) all over it towards the end of trading today, we can see a short countertrend rally Friday into next week. But IMHO, this is just the first inning of what shall end up as the worst bear market in decades (and which most financial advisors have never seen or their firm’s production requirements will not be able to be met in such a bearish environment).

U.S. Bonds – I’ve called Treasuries the far lesser of two evils when compared to equities. That has certainly been the case, and I don’t see any reason for that to change any time soon. I do want to point out (yes again) correctly foreseeing the carnage that has occurred in the high-yield (junk) market. There’s still a ways to go there.

I also continue to believe the next crisis will be related to the accident waiting to happen in the auto-loan business and the selling of those loans to investors (similar to what happened in the latter stages of the mortgage bubble).

Gold – Again, with recalling repeated comments of mine, what happened to the boatload of forecasts, articles and “wakes” that were held for the death of gold throughout 2015? There were literally 100 negative articles for every bullish one (if you could find a gold bull still alive).

Just before gold took off, I noted the record short position and again said unless they could soon get gold below $1,000, perhaps one of the greatest short squeezes in gold’s history was likely. I think the combination of a short squeeze and the realization gold is perhaps one of the very few classes of assets that is not only not way overvalued, but seriously undervalued, has helped lead to the run-up.  It’s very overbought and knowing how widely it is hated by paper-lovers and all members of the “Don’t Worry, Be Happy” crowd which makes up the financial services industry, a profit-taking period is likely for the very near-term.  It would be healthy, but may be short-lived given the circumstances in the world today.

Oil – The Fat Lady hasn’t sung yet for the end of this atrocious bear market, but she’s now entered the parking lot. Her entrance into the arena and to the microphone may be sooner than later. It’s very hard to find bulls anymore and we already witnessed more wrong than right forecasters make statements like “oil will never see above $44 in my lifetime.” This kind of action is clearly seen in the latter stages of bear markets. I think the time for preparing a shopping list for oil-related plays has come. Ideally, a break below today’s low (we turned near the close on yet another rumor OPEC cut in production) and the equity market seeing a break below current support, could be the signal for the Fat Lady to hit the mike and start belting out, “Buy, Buy, Buy!”

U.S. Dollar – In what seems like the entire world’s race to debase their currencies, the U.S. Dollar’s run up on a perceive sharp rise in U.S. interest rates, has hit a major bump in the road. I believe it’s far more than a bump but picking currencies now feels like picking the least ugly versus the prettiest.

And finally, it took me 28 years, but I finally was able to thank the man who first called me the “Wall Street Whiz Kid”: Mr. Steve Crowley, formerly the Business Editor for ABC’s Good Morning America.

He interviewed me this past January and you can here it here.


Posted in: Matters of Finance
Website powered by Resolution Promotions.