Market Timing

Posted on January 19, 2021 by Martin Dorman

Market Timing works provided it’s done properly

Market Timing comes down to having the right perspective; one can determine whether a market is topping or bottoming but one can’ determine the prcecise day the market is going to put in a top or a bottom. For example, our call in Oct 2007 was almost perfect. It worked out because we did not attempt to determine the exact day the market would hit an inflexion point.

We are expecting a pullback in the short-term time frames; this might or might not materialise as short-term timing is the most unpredictable period to deal with; if it does transpire risk takers and futures players can buy calls on the Dow, QQQQ’s, OEX and SPX indices; futures players can go long Dow or SP 500 futures contracts. Wait for at least a 600 point pull back from the current level. Market update Oct 16, 2007

This was sent out early on Oct 17^th. The Dow moved up traded as high as 14012 and thus if you subtract 600 points from this level you get 13412. The Dow traded as low as 13407, and thus it traded within our suggested entry range.

Market Timing; offers illusions of wealth To Fools

The only area that has been somewhat tricky to predict has been the very short-term time frame. And indeed this to be expected as markets are nothing but a manifestation of insanity in real-time. As we have stated before stock market timing is at best tricky and at worst a ludicrous to a treacherous endeavour. We look for are signs of bottoming or topping action, and when we see this, we either bail out or start to look for new attractive entry points. For the masses, Market Timing will remain an illusory concept at best. It will offer the allure of wealth but is more likely to send the believers to the dog house.

The key to Market timing is not trying to determine the exact date

Our primary goal in market timing is to just warn our subscribers when we feel the markets are due for a pullback or a run-up.

We also look forward to pullbacks because in almost every case they are overdone, and they usually produce some very attractive buying opportunities. One day we expect that one of these stated pullbacks is going to be rather extreme in nature. Our motto is that disaster is nothing but opportunity waiting to hug or kiss you. Return the favour instead of slamming the door on it.

The word crisis in Chinese is composed of two characters-one represents danger and the other opportunity. Our take on this is that a crisis is dangerous for those who are desperately seeking safety. However, it is lucrative for the astute and patient investor. When one does this one discovers lot’s of lovely hidden gems just waiting to be picked up at incredibly low prices.

A crisis is an opportunity knocking in disguise

One thing most players have to remember today about market timing, is that the markets have become even more wicked and tricky than ever before. And the reason for this is that individuals as a whole today are more evil and treacherous than ever. Bottom seekers have to wait even longer before a bottom formation starts to manifest itself and vice versa. So if you are sitting there desperately waiting for something to happen the chances are that you will lose your patience and bail out before it occurs.

The best thing to do is to understand that nothing goes up or down all the time. Eventually, it will start to stabilise. Your job as an unbiased, objective observer is to sit and wait patiently for this situation to transpire. If you try to force something or push the markets into doing something the only one falling off the cliff will be you. The markets listen to no one, care about no one, respect no one and look to destroy everyone. The market is primarily a reflection of your deepest fears staring you right in the face and most people usually, blink when this happens and or look the other way.

Desperation leads to losses

How many times have you seen traders get desperate or lose their mind or rant and rave when a stock or an index is doing nothing but just moving sideways. Countless times. Market timing? What have they gained other than increasing their blood pressure and overall stress?

We at TI have long decided that to try to time a specific bottom or top is like trying to hit the bull’s eye while being blindfolded. We look for is a bottoming process or a topping process. And then we look for the psychological factors to confirm that we are indeed close to a bottom or top.

We either look for signs of greed or fear and when we see this, we take action. That’s how we were able to buy palladium initially in the 140-180 ranges, Silver bullion in the 4 dollar ranges, Gold in the 300 dollar ranges. We also got into Oil stocks when oil was trading well below 35 dollars a barrel, uranium stocks before the main move up started (here we jumped in and out of several 100% plus winners), and the list goes on. Using this same technique, we warned our subscribers of the housing disaster in late 2005, the Gold top in 2011, the Euro Top in 201, etc.

We looking for Bottoming or Topping signs

Most of the time we did not get in at the exact bottom or top but usually jumped in a bit too early and jumped out a bit too early, but we would rather be in and out early than late, and get killed in the process, market timing is the key. Look at the chaps that refused to listen and held onto their real estate. Today they would give anything to go back to 2004 and 2005 and be able to sell them at or close to the top. Now, these very same geniuses are going to have to wait maybe 9-11 years if not more before prices go back to what they used to be.

You don’t need to be rich to make money, but you do need to have the mindset of the wealthy to do so. What do we mean by this? Usually, wealthy individuals are not desperate to make money; the reason being that they already have enough to live well on, and so anything extra is a bonus.

Riches come to those who seek it & poverty to those who chase it

Because they are relaxed and not in a rush; that’s what needs to be learned by most novice traders. Do not rush, do not push for results, find an opportunity and let opportunity do the work for you. In the interim read a few good books and take the time to study yourself. Point and case when we first recommended palladium in the 140-180 ranges; it did nothing for a long time after we got in.

However, when it finally started to move it moved like a rocket. And in less than one year it had gone from under 180 to over 420 dollars. Was it not better to simply buy and wait after the main investment criteria were fulfilled. It experienced a severe correction, was putting in a bottom formation and most importantly the masses were ignoring it? In fact, almost no one was talking about it in late 2004 to early 2005.

Wealthy Mindset is Key to Success

It’s far more important to have the mindset of the wealthy and to attempt to vault from poverty into riches. Is it the money that makes you happy or the perception that you have money? Look at it this way if you were locked up in some place in a third world country with almost no money to spare and just barely enough food to eat. Would you then not consider yourself rich if you were given a simple job, a car, a house and a computer. The funny thins is that most people already have this and much more; the sad part is that there are a lot of people in these 3^rd world countries who are struggling to survive on under a dollar a day.

Keep in mind the saying that “misery loves company” to which we added “and stupidity simply demands it”. Why don’t we say happiness loves company or intelligence demands it because it’s not true? Individuals usually do not like winners they start to get jealous when someone talks about winning or they feel upset when someone is unusually happy. The reason is simple they are envious because they would like to be like this person. But they do not know how to do this, correction, they do know how but they don’t want to try. Which brings us to another TI saying “life is not bad or good, life just is; it’s our perceptions that oscillate from bad to good”.

Riches just like happiness are a state of mind

It’s in our capacity as humans to change our perceptions and in doing so immensely improve the state of our lives, yet most choose to drivel in sorrow and misery. Opportunity is forever knocking but most people forget to open the door in time, and when they do open it they are usually waving goodbye instead of saying hello.

Every disaster, even painful situations always brings forth incredible opportunities. Most people fail to see it because they have been trained to focus on pain and misery. What is even sadder is that they concentrate on this pain and misery and do nothing to alleviate it. If you are going to focus on this area for heaven’s sake do something about it.

At the very least try to help yourself or those that are close to you but instead most people sit there like donkey’s, wailing and hoping that someone else takes pity on them and tries to help them. In this way, a lifetime is wasted in misery and pain and inadvertently trying to drag in as many other innocent bystanders as possible into this tragedy.

Do not chastise yourself for past mistakes but learn from them

And ask yourself why you did what you did and then write this down in your trading journal. The tragic part of most people’s lives is that they can dedicate so much time preparing themselves for a particular career, etc. However, they spend a tiny amount of time trying to get a better understanding of themselves and how the mass mindset operates. In fact, it can be stated that most people live and die without really knowing who they are and what they want.

People are born happy and usually die miserably as they have forgotten all the very basic tenets of what happiness is all about. Remember the times as a child and young adult when you could laugh at almost anything and life was to some extent a joy. Now look at where most people are; they are sloughing away to pay for things they don’t really need. For example, vacationing at some expensive resort. Just because it has some sand and unlimited food does not mean it’s not a prison. You have physically and mentally restricted your movements and the worst part is that you have done this voluntarily.

Give the Mind a break and take a vacation

How can staying in such a prison truly be a vacation? The masses have found a way to lock themselves up somewhere out of their own will. A vacation is not a place where you lock yourself up but open yourself up to new experiences. A vacation is where you take your mind away also and not just your body. To achieve this you have to give it something new, something to look forward too. For example, visiting a strange country; take in the sights and mingle with the natives. Avoid resorts if possible and spend most of your time outside.

When on vacation spend as little time as possible at the Hotel

You should only use the hotel to shower and for a good nights sleep. For the most part you should be out and about, interacting with the people, taking in the new sights, savouring the new food. If you do this not only will you have a real vacation but you will immediately open your mind to new possibilities. And that is what investing is all about, the opening of the mind to new possibilities.

Go back to that moment in time when as a child you experienced unadulterated fun or pleasure. Ask yourself what made the moment wonderful. In most cases, it was simple things that money could never buy. Perhaps it was a lovely picnic or a drive down in the countryside on a nice sunny day with a loved one or even just alone. Or maybe trying some new tasty dish, spending time with good friends and so on. Now notice that as an older adult if and when you have one of these moments of happiness how touched you are by them. You incredibly good when it happens and when it’s over you long for it again. However, you never try to dig down to ask yourself what was it that brought it about in the first place.

Be yourself and live in the moment

The answer is very simple; when you stop acting, stop pretending and just allow yourself to be who you really are without the disguises, the masks, the pretences and so forth you put yourself into a position where a ray of light can finally break through the gloom. It’s not hard to have a good time it’s just hard to see that it’s so easy to do so. This brings us to another TI saying; “life’s simplicity is what makes it so complex” stop trying to learn how to live a better life and just start to. Tomorrow begins today for tomorrow never really comes. Was not today the tomorrow you worried so desperately about yesterday.

Would it not have been better if today could have been the tomorrow you smiled about and looked forward to yesterday? We could speak at length on this topic and probably fill a book with all the points we could make on it; sadly we do not have the time to undertake such a massive endeavour on such short notice. The main thing to remember is that happiness is a state of mind. And as my late father Solon Palha used to say “happiness is a mind in peace and hell a mind in pieces”.

Psychology is one of the oldest sciences out there

It’s just that for a long time it existed under different names the primary one being philosophy. As they say history repeats itself over and over again and the past is actually a window into the future. One good book that should be compulsory reading for all traders is a book titled “Michel de Montaigne – The complete essays”. You can pick this up for as little as 10 dollars from Amazon. This Gentleman was born in the 1500’s and his writings display an incredible.

Posted courtesy of TacticalInvestor.com

Stock market timing

Posted on January 18, 2021 by Imogen Durant

Stock Market Timing works if done properly

Many individuals and experts state that market timing is impossible. The answer to this question is yes and no. We all know there are seasons in a year and we know roughly when winter, summer, fall, and spring will begin. No one can predict the exact time the one season will transition into the next. The same rationale applies to market timing.

If you are trying to predict the exact market turning points, then you might get it right once or twice, but overall your record will be dismal, it is an exercise in futility for the most part and best reserved for those who seem to have a deep desire to take on large losses.

Everyone, in general, knows when winter, fall, spring or summer will roughly begin. However, no one can predict the exact date summer will transition into fall. The same methodology can be applied to timing the markets. Instead of trying to identify the precise Market top or bottom, we look for signs of bottoming and topping action in the market, which would correlate to spotting changes in the weather. This data, in turn, facilitates the process of determining how close one season is from transitioning to the next. Adopting this approach makes market timing a distinct and achievable feat.

Perhaps the first thing for humans to learn would be simple money management skills. After all, you cannot run without learning to crawl and walk.Researchers have demonstrated that humans are no better than monkey’s when it comes to managing money (Kahneman, Santos et al.). Kahneman asserts in his book, Thinking Fast & Slow that monkeys with dart board are actually better than humans trying to manage money on wall street.

Interesting quotes from a Stock market Timing Book

“People who spend their time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options.”

“The idea that the future is unpredictable is undermined every day by the ease with which the past is explained…Our tendency to construct and believe coherent narratives of the past makes it difficult for us to accept the limits of our forecasting ability. Everything makes sense in hindsight; a fact financial pundits exploit every evening as they offer convincing accounts of the day’s events. And we cannot suppress the powerful intuition that what makes sense in hindsight today was predictable yesterday. The illusion that we understand the past fosters overconfidence in our ability to predict the future.”

For stock market timing to work, avoid the talking heads

In general, we tend to agree with what he has to say in regards to stock market timing, and it’s, for this reason, we hardly listen to the talking heads. When one understands that the markets are nothing but a cesspool of emotions, the importance of understanding the mass mindset takes on a new meaning. The most important tool in our opinion is mass psychology as it can help one pinpoint the emotional state of the masses. The focus should be on identifying what the masses are doing or going to do, and only then should the technical structure of the markets be examined. It is the masses that drive the markets and not the markets that drive the masses. Understanding what the masses are doing is, therefore, imperative if one hopes to succeed in the markets. History clearly indicates that the masses are always on the wrong side of the equation as they either get in too late or overstay their welcome.

Why have so many failed when it comes to timing the Stock markets?

The reason most individuals fail is that they take a backward approach to the problem. The stock market is treated as a separate entity. They try to find out what the market is doing, and then they attempt to determine what the crowd is doing or will do. When in fact, what they should be doing is looking at the crowd and then using this information to decide how the stock market will react.

A market soars to new highs or crashes to new lows because of the way the masses are interpreting the situation. How can you predict something if you are not looking at the source? Human beings are the most illogical of all animals. Despite having the power of reason and logic, they are the only creatures on this planet that will go out of their way to make sure they are in harm’s way.

Technical Analysis (TA) is useful in spotting Symptoms of the Disease

Technical Analysis alone is not useful when it comes to stock market timing. It is useful in spotting the symptoms of the disease, but it does not identify the cause. To determine the cause, one needs to deal with the main driving force behind the market; emotions are the main driving forces in the market.

If we had to choose between TA and Mass Psychology, we would accept mass psychology. There is no standalone tool more powerful than understanding Mass behavioural patterns, at least as far as we are concerned. But we do not have to choose as we have the option of combining the best elements of TA with Mass Psychology.

Mass Psychology the Missing Ingredient to Stock Market Timing

Understanding the Modus Operandi of the masses is key to being a successful trader, and we feel that it is probably the most important piece of knowledge when it comes to investing and trading.

To answer the question we put forward at the beginning; yes we believe that market timing does work when conducted in the proper manner. Trying to time the exact bottom or top should be out of the equation.

Mass Psychology helps to keep you on the right side of the markets

Utilizing the most fundamental tenets of mass psychology, one could have easily sidestepped the dot.com bubble, the housing bubble, etc. At the same time, one could have jumped into the markets when everyone was panicking, examples are the crash of 1987, 2003, 2007, etc., on each of these occasions, the sentiment was either euphoric or extremely bearish. When feelings move to the extreme zones, the opportunity is usually in the air.

Would you have got out right at the top or opened positions at the absolute bottom? The answer is a resounding no. However, you would have walked away with solid profits and would have had the opportunity to purchase quality stocks at rock bottom prices. Be wary when the crowd is ecstatic and ecstatic when the crowd panics.

Posted courtesy of TacticalInvestor.com

US household debt rising again to 13.21 Trillion dollars

Posted on January 16, 2021 by Martin Dorman

NEW YORK, May 17 (Reuters) – U.S. household debt grew by $63 billion, or 0.5 percent, to $13.21 trillion in the first quarter, driven largely by the increase in mortgage balances, a New York Federal Reserve quarterly report released on Thursday showed.

The amount of mortgage balances rose by $57 billion in the first three months of 2018 to $8.94 trillion. Families, however, paid down their home equity loans, which fell by $8 billion to $436 billion, according to the report.

“Although household debt has been growing for five years, its growth has been slow relative to earlier periods, as mortgage debt has continued to be relatively flat,” N.Y. Fed analysts wrote about the report’s findings.

Overall tight lending standards have likely contributed to the modest increase in mortgage debt, they said.

Meanwhile, the U.S. housing sector has continued to its recovery since the global credit crisis a decade ago, according to N.Y. Fed analysts. Full Story

All is well until it’s not but before the party ends we expect debt levels to soar 2X to 3X higher and the ensuing stock market bailout will probably amount to $5-$7 trillion. I know it sounds insane and the first reaction is to say you have lost your mind. Ah but go back in time, the national debt was once less than one million dollars, and it took almost 100 years to get to one trillion, and now we add one trillion every year. It’s all a matter of perspective; the masses believe that paper is fine and will believe it fine until the system implodes. A system only implodes because the masses have lost faith in it and the current players are masters in the Art of Mass psychology. If you understand the concepts of mass psychology well and have the money, you can make almost anyone believe that they are doing things out of their free will, when in fact, they are not.

To do this one needs boatloads of money and complete access to the press. So here is one technique that is used almost all the time with deadly precision. You give the masses two choices, both equally different and both of which are backed up a lot of so-called experts. Unbeknownst to the masses is a simple fact; both choices are wrong. Look at how brilliant this plan is; you introduce the illusion of choice while knowing both choices will lead to the same outcome. Its treachery on steroids and if one wants to take things up a notch, you introduce a third party that comes out with fringe based ideas; this creates the illusion of freedom as the idea is to make it look like even nut jobs have say.

Even in this area, the financial arena leads the way in deception; they treacherously use mass psychology to whip the masses into a frenzy.

Ardern Must Win Over Economists – Ackman exits Herbalife short bet – Coinbase CEO discusses his company’s new service

Posted on January 13, 2021 by Imogen Durant

After New Zealand Victory, Ardern Must Win Over Economists

After her stunning rise to power, New Zealand’s incoming leader Jacinda Ardern faces a pressing challenge: delivering economic change with a team that lacks credentials.Investors used to the steady hand of former Prime Minister Bill English are nervous as the new government hints at central bank reform, immigration cuts and increased social spending that will hit just as the economy is losing some gloss. New Zealand’s dollar slumped and the stock market opened lower after Ardern’s elevation was confirmed late Thursday.

“The new coalition government is likely to be more interventionist in the economy than any government New Zealand has seen in decades,” said Dominick Stephens, chief New Zealand economist at Westpac Banking Corp. in Auckland. “Both Labour and New Zealand First’s rhetoric often sounds more mistrustful of markets than the previous government.” Full Story

The new players in the Alt-right camp are savvier and they understand that you can’t move too far to the right in one shot until you control all the pieces on the board. As we stated in the interim update, we expect this trend to last 12-15 years and that’s our conservative estimate. On the extreme end, this trend could last as long as 30 years.

Ackman exits years-long Herbalife short bet, turns to options

(Reuters) – Activist investor William Ackman, who placed a $1 billion (£754.5 million) bet in 2012 that Herbalife Ltd’s (HLF.N) stock price would tumble to zero, said on Wednesday his firm has capped losses by recently closing out its short position in the nutrition and supplements company.

For years, Ackman has said that the company would eventually crumble under regulatory scrutiny for operating what he has called a pyramid scheme, a claim Herbalife denies. He said on Wednesday he has opened a separate bet that Herbalife shares would fall in the form of put options.

Herbalife has been buying back shares and its stock price has soared some 50 percent this year, piling pressure on Ackman’s $10 billion hedge fund as paper losses mounted and the cost to borrow the shares rose.

“We covered the shorts and replaced them with outright put positions,” Ackman told Reuters, adding that potential losses on Herbalife will now be limited to 3 percent of the firm’s capital. “We can still lose money but the loss is capped.”

Ackman did not disclose how much his firm, Pershing Square Capital Management, had lost by buying shares to cover its short position. Full Story

The 1st rule of thumb is to never go against the main market trend. This is the reason we have not shorted anything for awhile, and if we do short a market, the pattern would have to be incredibly strong. It’s amazing how much money Penguins like Ackman get paid for losing other people’s money. However, their time is coming to an end for two reasonsMillennial don’t want to deal with high priced idiots like this, and more importantly, AI can work ten times better than guys like this.

Coinbase CEO Brian Armstrong discusses his company’s new service for purchasing digital currencies

NEW YORK (Reuters) – Major world equity markets rallied and government bond yields fell on Tuesday as strong corporate profits, steady global growth and low inflation provide scant alternatives for investors outside of stocks.

Equity markets from Asia to Europe to the Americas rose, while the S&P 500 and Nasdaq surged to fresh closing highs, lifted by technology shares. The Dow set a new intra-day high.

In Asia, the main Hang Seng index <.HSI> in Hong Kong and China’s H-shares index <.HSCE> posted their best day in seven weeks, while stocks in Tokyo <.N225> also rose.

In Europe, Germany’s benchmark DAX index <.GDAXI> jumped more than 1 percent before paring gains. MSCI’s emerging markets index <.MSCIEF> rose 1.44 percent and its gauge of stocks across the globe <.MIWD00000PUS> gained 0.71 percent.

“It’s incredible,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. “Certainly sentiment is pretty strong and it’s widespread, both from the business community and consumers. Any economic concerns are pretty much falling by the wayside,” he said.

Corporate earnings and expanding growth have propelled the stock rally while investors shrug off political risk. Wall Street trading volumes were low in a week marked by the U.S. Thanksgiving holiday.

Full Story

Everyone is Code word for Bubble. So Bitcoin could experience its first big pop in the near future. Remember we stated that we expected this market to become a super bubble, so this is just one of many bubbles that will pop before this market experiences a full blown meltdown.

Unhackable computer network – Japan’s bullet trains scandal – AI and Finance

Posted on January 12, 2021 by Martin Dorman

China has unveiled the world’s first ‘unhackable computer network’

China has successfully tested the Jinan Project, and is set to begin using the system by the end of August. This marks a world milestone in the development of quantum technology, and identifies China as one of the world leaders in the field.

By the end of August, China plans to rollout the Jinan Project — the world’s first unhackable computer network, which is based on quantum principles. The project uses the city of Jinan as a quantum computer hub that boosts the Beijing-Shanghai quantum network due to its central geographical position between the two larger cities.

Specifically, the network alerts both users to any tampering with the system — as tampering alters the information being relayed. The disturbance is instantly recognizable and both parties can immediately identify when something is amiss.

Zhou Fei, Assistant Director of the Jinan Institute of Quantum Technology, sees the system having worldwide ramifications. He told the Financial Times that “We plan to use the network for national defense, finance and other fields, and hope to spread it out as a pilot that if successful, can be used across China and the whole world.”

By implementing the quantum computer network, China will become the first country to implement quantum technology for a real life, commercial end. It also marks China as a quantum leader worldwide — a status that is reinforced by their development of the Heifei machine, which could eclipse all current supercomputers, as well as their successful transportation of a photon from a satellite in space using quantum physics. Full Story

Technology is changing at such a fast pace, that what took 100 years to achieve a few years ago, could soon be achieved in under five years.

Substandard metal parts used in Japan’s bullet trains

Planes, trains and automobiles — Kobe Steel’s fake product data scandal has now touched every major form of transportation. Two big Japanese railway companies said Thursday that substandard parts from Kobe Steel (KBSTY) were used in the manufacturing of several bullet trains.

The scandal came to light Sunday, when Kobe Steel said employees had falsified data about the strength and durability of thousands of tons of aluminum and copper parts sold between September 2016 and August 2017. They did not meet specifications agreed with customers. Central Japan Railway (CJPRY), which operates high speed trains between Tokyo and Osaka, found aluminum parts used in the truck — the part that connects the wheels to train cars — failed to meet company standards, said spokesman Atsuo Utano. A total of 310 tested parts were found to be substandard. Full Story

The fallout from this will be big, and while most will not see the connection, this falls in line with the theme we laid out for 2017. That theme in case you have forgotten is “polarisation”. Japan just took a massive hit, and its reputation will be tarnished for a long time. China will use this to elbow its way in, and countries will start becoming nationalistic; you will start to hear variations of our product is better than theirs going forward.

On a separate note, this hiccup will put to rest any hopes Japan might have had of raising rates in the future. A plethora of nations is refusing to raise interest rates because there are more disruptive technologies about to come into play. We will expand on this in a future update, but the medical sector which has been immune to deflationary pressures is going to be ripped apart suddenly. As no one is expecting it, the fallout will be immensely painful (particularly for hospitals and many of their staff), and the higher education sector is just waiting to be taken apart. Deflationary forces are not going to go away anytime soon. The billion dollar question is whether inflationary forces can exert their effect in the face of so many deflationary factors.

BNP Paribas is unveiling a new trade matching tool that uses artificial intelligence

NP Paribas (BNPQY) is unveiling a new trade matching tool that uses artificial intelligence and says it will be ready for MiFID II, the European banking regulation that takes effect in early 2018. “We do a lot of trade matching for our clients – which is, matching the trade of our clients with the broker they have contracted with,” said Patrick Colle, CEO and General Manager of BNP Paribas Securities Services. “30% of trades do not match or need to be repaired – so here comes artificial intelligence.”

Colle said the algorithms comb through data and find reasons why a trade doesn’t match. The tool, called Smart Chaser, has a 98% accuracy rate. Full Story

Forget about complying with new EU banking regulations, the main focus is that AI is once again outperforming humans and this means that this bank is destined to fire at least 60,000 workers if not more in the not too distant future.

EU and Bank protection – Bank earnings and buybacks – Trump’s Fed chair nominee

Posted on January 11, 2021 by Martin Dorman

EU weakens plan on bank protection, risks ECB clash on bad loans

The European Commission proposed on Wednesday watered-down measures to help guard European Union banks against future crises, after two years of fruitless talks among the 28 EU states on more ambitious plans. The new proposals were designed to win over Germany, the EU’s largest economy and the staunchest opponent of sharing banking risks among EU states, but the German banking lobby quickly dismissed them.

The proposals could also slow the European Central Bank’s plans to reduce the exposure of banks to bad loans. Shares of Italian banks rose, since they would face big losses if the EU mandated they quickly unload bad debts [nL8N1MM4Q8].

The Commission proposal would reduce the sharing of banking risks and set strict conditions that states must meet before their banks gain access to safety nets funded at the EU level. Those changes were intended to placate Germany, whose departing finance minister, Wolfgang Schaeuble, repeatedly argued that sharing risks meant richer German banks would prop up weaker banks in other EU countries. His successor may be equally dubious. Full Story

Sounds familiar; it’s an early signal informing us that something similar is set to take place in the US but on a much larger scale. To get the masses to embrace this Bull Market, the era of easy money has to be brought back. So a variation of liar loans is set to debut in the future.

Bank earnings: ‘lower for longer’ means buybacks will continue

When big banks kick off the third-quarter earnings season next week, a familiar theme is likely to dominate: it’s hard to make money in a lower-for-longer world. Analysts expect banks to report tepid growth in nearly all their business lines, from mortgage originations to investment banking to lending, and most of the good news story is likely to come from a practice that’s often considered a sign that companies are out of ideas: issuing debt to buy back stock.

J.P. Morgan Chase & Co. JPM, -0.37% kicks off earnings season Thursday, followed that day by Citigroup Inc. C, -0.06% On Friday, Bank of America Corp. BAC, -0.37% reports, followed by Wells Fargo & Co. WFC, -0.27%

“Results are likely to be tepid due to very weak loan growth, modest increase in net interest margins, and weak capital markets related trends,” somewhat offset by lower expenses and better-performing loans, wrote J.P. Morgan analyst Vivek Juneja in a note Friday. “On average, most of the (quarter-over-quarter) EPS growth in 3Q is likely to be led by share buybacks at our banks,” Juneja added. Full Story

Very few will spot the main point in this story; banks are admitting that this recovery is bogus and that the only way to maintain the illusion of all is well is to take on more debt to buy their shares and in doing magically boost EPS. Share buybacks are set to soar again, and we suspect that before this bull keels over, that the total amount of funds put aside for Dividends and share buybacks will soar to $2 trillion over a 12 month period.

Trump Pick for Fed’s Bank Regulation Chief Wins Senate Confirmation

Randy Quarles, a Bush-era regulator whom Democrats criticized for not doing enough to prevent the 2008 financial crisis, has been confirmed by the U.S. Senate to lead the Federal Reserve’s oversight of Wall Street.

The 60-year-old won approval to join the central bank’s board of governors in a 65-32 vote on Thursday, Oct. 5, as well as approval to serve as vice chairman of banking supervision. The decisions followed a split recommendation from the chamber’s banking committee in early September and came just in time to prevent the panel from shrinking to less than half its full complement of seven members when Vice Chairman Stanley Fischer leaves mid-month.

All of the governors are members of the bank’s 12-person Federal Open Market Committee that sets monetary policy, so the excess vacancies would have shifted the balance of power even further toward the five regional Fed presidents who serve on the panel, as well as heightened uncertainty about the pace of interest-rate adjustments.

Even so, Quarles’ portfolio as head of the Fed’s regulatory programs, handled on a de facto basis by Governor Daniel Tarullo before his departure earlier this year, is vastly different from that of the 73-year-old Fischer, a monetary policy expert. Among his responsibilities will be overseeing annual stress tests designed to ensure that the largest U.S. banks have sufficient capital to withstand an economic crisis. Full Story

The dominoes are all falling place; the argument we put forward almost one year ago that Dodd-Frank would either be gutted out or eliminated is gaining traction. If Trump replaces Yellen with a dovish leaning person, then its game over for Dodd-Frank and the market will have the fuel necessary to soar to stupendous levels.

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