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BCN Advantage - June 2014June 03, 2014
It's worth comparing the frequent headlines trumpeting new stock market highs with actual performance. Five months into 2014, the Dow is +0.3%, the S&P is +3.3% and the Nasdaq is +1.2%. The majority of growth stock funds are up less than 2% year-to-date. 2014 first quarter earnings were both dismal and deteriorating. A year ago, Q1 2014 estimated earnings were $30.45.Actual earnings came in at $24.80, a miss of -19%. First quarter earnings typically are much stronger than the previous year's fourth quarter. You have to go all the way back to Q1 2001 to find a first quarter with flat - much less falling - earnings. But that pattern was broken decisively this year, with Q1 2014 earnings declining -6.3% from Q4 2013. Perhaps mostdisturbing: 2014 first quarter earnings barely edged out Q1 2013 ($24.80 vs.$24.22), this despite the S&P 500 ending March more than three hundred points and +19% higher than its level twelve months prior. This is stunning when you consider the massive amount of debt corporations have saddled themselves with in an effort to buy back shares and artificially inflate their earnings. The amount of debt globally has soared more than 40 percent to $100 trillion since the financial crisis. U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007. And global corporate bonds have also soared during the period, with issuance totaling more than $21 trillion. The -1.0% contraction in first quarter GDP was far below expectations, yet the Fed continues to cut its massive bond-buying program. Tapering will close an era of quantitative easing that has seen the Fed's balance sheet quadrupled to more than $4.2 trillion. Minutes from the central bank's April 29-30 meeting showed policymakers brainstorming ways of raising interest rates above the near zero level maintained since late 2008. "Because the Federal Reserve has not previously tightened the stance of policy while holding a large balance sheet, most participants judged that the Committee should consider a range of options and be prepared to adjust the mix of its policy tools as warranted," the minutes read. Analysts expect the Fed to end its bond buys by October this year and begin hiking rates in mid-2015. But the implication is that the Fed doesn't have a clear path for what it will do next. Uncertainty in unwinding such massive and unprecedented monetary stimulus does not bode well for the economy. As we stated back in January, we are about to enter a period that could be worse than 2008. This time around, stocks, bonds and real estate could all fall in value - perhaps precipitously. Already, home sales have been slowing, with loan applications to buy a home down 15% vs. a year earlier. Housing has been a major driver of an otherwise tepid economic recovery. If housing activity continues to wither, it shouldn't be long before stocks slump as well. This cyclical bull rally since March 2009 (fueled by Fed bond-buying) is getting long in the tooth. After 5 years and 2 months, only 2 rallies since 1929 have lasted longer.

CalPERS Drops a Hedge Fund Bomb October 17, 2014
Leo KolivakisSource Address    Seeking Alpha
The California Public Employees’ Retirement System plans to divest the entire $4 billion that it has with hedge funds, saying they’re too expensive and complex. “We concluded that we would eliminate the hedge fund program in order to reduce the complexity, reduce the costs in the program, particularly ...

Germany Raises Risk of EU RecessionOctober 16, 2014
Andrea RiquierSource Address    Investors Business Daily
German industrial production slid 4% in August, its worst showing in nearly six years. That followed a 5.7% plunge in manufacturing orders in August, and a spate of surveys showing sentiment at multiyear lows. Those reports suggest Germany's Q2 GDP dip was not just a one-time event. The International ...

Anatomy of Market Top October 15, 2014
Charlie BilelloSource Address    Yahoo - Finance
Crashes get all the headlines, but the reality is that a breakdown in markets is more often a process than an event. It takes time to break the back of a strong uptrends as there are many buyers on the sidelines eager to “buy the dip.” This is why you tend to see a period of back and forth, a rotation ...

Oil Below $90 First Time in Two YearsOctober 14, 2014
Mark ShenkSource Address    Yahoo - Finance
Brent crude dropped below $90 a barrel for the first time since June 2012 as supplies increased and global economic growth slowed. West Texas Intermediate oil fell to a 22-month low in New York. The European benchmark has decreased more than 20 percent from this year's June peak. Saudi Arabia, the world's ...