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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.

This is an Equity BubbleAugust 27, 2014
Source Address    Hussman Fund
At present, the major risk to economic stability is not that the stock market is strenuously overvalued, but that so much low-quality debt has been issued, and so many of the assets that support that debt are based on either equities, or corporate profits that rely on record profit margins to be sustained ...

Bubbles and CrashesAugust 22, 2014
John MauldinSource Address    Investors Insight
You can almost feel it in the air. The froth and foam on markets of all shapes and sizes all over the world. It's exhilarating, and the pundits who populate the media outlets are bubbling over. Perhaps the biggest bubble around is in complacency. There is enough data out there to suggest that the market ...

Awash in Cash, World Economies SlowAugust 22, 2014
Jeremy GauntSource Address    Yahoo - Finance
China's economy is slowing. The euro zone's is a flat line. Japan's sank in the second quarter. Britain has wage deflation. The U.S. economy is ticking over at best. In a world preoccupied by geopolitical crises, the global economy has taken something of a back seat. But there are increasing signs it ...

What the Fed Survey says about the EconomyAugust 12, 2014
Source Address    Huffingtonpost
Fewer than one-third of Americans report being better off financially than they were five years ago, with weak household savings and hefty debt burdens holding back large segments of the economy, according to a new Federal Reserve survey. Just 30 percent of survey respondents described themselves as ...