FUNDAMENTAL
PICTURE: US Dollar, War economy, Housing Bubble and Inflation.
-
Interest
rates will
continue to increase, “unless
they can’t”
because the
US economy
is too weak
-
Real
estate has peaked.
-
The US
Dollar,
after the current
rally cycle,
will
continue its secular decline unless things change.
-
The real
financial costs and consequences of the Iraq War and the War
on Terror
will
be realized: It
is like focusing on the more
than 1500
dead and not
counting the well
over
15,000 seriously wounded. The future costs to the
Veterans
administration, military equipment
replacement,
and the higher
cost of
recruiting is NOT
properly factored in.
-
Corporate
earnings will
decline,
especially as financial engineering and other such profits
decline due to high interest rates.
-
Increased
inflation due
to a declining
US Dollar
and
the after effects of a vastly increased
monetary
supply.
-
Budget
deficits and trade
deficits will continue at or near record
levels.
Bottom
line: 2006 will show sluggish growth under 2%, no growth or perhaps
even an
outright recession!
MARKET
PSYCHOLOGY: THREE MARKET FAIRY TALES FEW STILL BELIEVE
- HIGH OIL PRICES DON’T MATTER.
- THERE IS LITTLE OR NO INFLATION.
- THE US ECONOMY IS
STRONG AND HEALTHY.
TECHNICAL
PICTURE
A
reasonable case can be made that the 2005 market
top
is in.
If so, it is only a question of what to sell and when (ideally into the
post tax
season
May rallies).
CYCLIC
PICTURE
2006: In
the 4 year presidential cycle, this is often a down year (witness 2002,
1998
etc.)
ASTROLOGICAL
PICTURE
-
There
are four possible
high
energy, i.e.,
potential crash dates,
in 2006
-
There
will
be three Jupiter/Saturn
squares
(which translates into a business cycle risk), beginning December 2005
and lasting until October 2006.
-
On
March 29, 2006,
there is a Total Solar Eclipse,
which increases the global terror risk in 2006.
-
Jupiter
squares
Neptune in 2006, while Saturn opposes Neptune in
2006 and 2007. Both of these planetary pairings
translate into future
Oil and Inflation risks.
GOLD
AND
DISTRESSED INVESTING
-
Looking
ahead, Distressed Investing
will replace M&A as the BIG money maker in 2006/2007. Watch for
stocks near
or breaking their 52 week lows.
-
Gold
is more than a
currency, it is an INFLATION metal. Years ago, Weingarten
was a rare
voice saying
that “Gold
is
more than an inflation metal, it is a currency.” Gold
has been above $400 for quite some
time. There is inflation,
despite the
fact that it is under-reported.
-
Jupiter
will
enter Scorpio in late 2005, which will
cosmically bestow favor on sectors
such as Health Science, Mining and
Nanotechnology, VOIP/Wireless,
Business Intelligence
(spying) and Environment Control.
This will
also increase
bankruptcy, which is a challenge for the financial sector.
The
following are a few
potential courses of action investors are advised to consider by this Summer:
1.
Reduce margin
in your
securities account to 0.
2.
Consider
selling what you
personally would not dream of buying at current pricing or placing a
close stop
to protect profits.
3.
Explore whether
writing
covered calls or buying some put protection or a Bear Fund makes sense
for your
portfolio.
4.
Accumulate gold
and/or gold
stocks in May/June.
5.
Make a wish
list of what you
want to buy with the cash you have or
will raise. However, don’t
be in a rush to buy until there really are bargain basement price sales
as CASH WILL BE KING in 2006.
6.
Take a vacation!
To
be continued.