With stocks plummeting in January, of all months, it’s tempting to think something in the big picture has changed, or is about to. The evidence becomes even more compelling with the apparent reversal in gold and silver.  Bullion prices have been in a relentless downtrend for more than two years, but they seem, finally, to be getting traction. If their reversal portends an economic sea change, what could possibly be its cause?  A plausible explanation is that Obamacare, by far the biggest new tax ever imposed on Americans, is starting to take its toll. Burdened by health insurance premiums that have been doubling or even tripling for some households, and with astronomical deductibles that leave millions of ACA enrollees more vulnerable than ever to bankruptcy in a medical emergency, consumers have beaten a hasty retreat to their bunkers. If so, The Great Recession is about to resume with 1930s vengeance.

Moreover, and putting aside the painful impact of Obamacare on individuals, let’s not overlook the fact that the ACA has pushed a nearly 20% swath of the U.S. economy into chaos, if not to say, to the brink of collapse. Considering that uncertainty is the one thing Wall Street supposedly cannot abide, perhaps we should be wondering why the Dow is not trading 5000 points lower rather than a mere 400.

Bullion’s Rally Worrisome

An imploding economy would not explain the firming of bullion prices that has occurred in recent weeks, however.  Gold and silver have been so weak for so long that it’s difficult to imagine that they are moving higher now merely in reaction to the stock market’s relatively rare bout of weakness. We might conclude that if the precious metals sector has in fact embarked on a new bull market, something more dramatic than falling share prices and recession must be looming on the horizon.

From a technical standpoint, however, there is as yet insufficient evidence to suggest that the bull market begun in 2009 is over. Yes, it’s a matter of record that I encouraged subscribers to buy put options after the S&Ps hit an important long-term rally target on the last trading day of 2013.  That was intended as a short-term trade, however, and it was done in such a way that the puts options we still own effectively cost us nothing.  If it turns out that we timed the onset of a bear market perfectly, as some subscribers evidently believe, then coincidence and luck will have played a role.

Meanwhile, last week’s refreshing selloff on Wall Street did not change my mind about the prospect of higher highs in the months ahead, after this presumptive correction has run its course.  My gut feeling is that the bull market is not dead – that the brazen financial fraud that has sustained it for nearly five years is intact. Nor will the torrent of Other People’s Money that has supported reckless buying by fund managers have abated sufficiently to kill the bull.  [Full disclosure: The foregoing was inspired in part by the drive I took yesterday along the ocean highway from Delray to Palm Beach. There were more Ferraris, Lamborghinis, Porsches and Maseratis than one could shake a stick at.]

One More Fabulous, Stupid Rally?

Bottom line, I still see at least one more massive, blithely oblivious rally before Wall Street’s amazing hoax achieves a proper climax. To that end, my Dow target remains 17622, more than 1700 points above current levels.  We can revel in put-option profits in the meantime as Mr. Market coaxes forth a healthy does of fear and dread with this correction. However, permabears would be wise not to take their eyes off the nasty little sonofabitch while it’s falling, since, even if this is a bear market, the rallies are bound to be real doozies.

– Rick Ackerman, Rick’s Picks

(Orig. Publish Date: January 27, 2014)

With Apple reporting flat iPhone sales, its stock was hammered down 8% today.

With Blackberry getting a bit of a lift recently with its new CEO and somewhat new strategy, perhaps it is time to do some comparisons.

Since Apple hit its peak of $705 back in September 2012, Blackberry shares have outperformed Apple shares by about 67%.  Who knew?!?

The relative performance trend of the two stocks is also evident in their current 2014 year-to-date movements, with Blackberry up 35% and Apple down about 10%.

That said, the low-hanging fruit of the smartphone business is behind us.  So, Blackberry is going to have to come up with some pretty clever strategies to get its fundamentals and market share looking more like Apple’s.  Then, maybe the price gap between the two shares has a chance to persist.

Neither Apple Inc (AAPL) or Blackberry Ltd (BB) are held in the McIver-Jasayko Model Portfolios as of January 28 2014.  Comments about AAPL and BB are not intended as advice and do not constitute a recommendation to buy, sell, or hold.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.  

Richardson GMP Limited, Member Canadian Investor Protection Fund.

Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.

Blame Argentina! 

Some people think it was the 15% drop in the peso that triggered the recent selloff in the emerging markets… and back in the US of A.

On the last two days of the week, the Dow lost nearly 500 points. And on Saturday, after-hours trading signaled worse to come. It looked as though the Dow would drop more than 300 points when the doors opened on Monday. 

That didn’t happen. Instead, the Dow fell just 40 points.

So, we sit tight, wondering if the beginning of the end is coming now… or later. And when it happens, we won’t blame Argentina. 

Argentina seems much too quirky and particular to be a leader of anything. For example, it’s the only place we know where you get better banking services out on the sidewalk than in the bank. 

Every time we go we take a big wad of green pieces of paper with Ben Franklin’s picture on them. Driving directly to the town square in Salta (close to the family ranch), we then simply stop the truck and beckon over one of the many black-market moneychangers standing in front of the bank. 

This time a year ago, one Ben Franklin would bring you nine pieces of paper with former Argentine president Julio Argentino Roca’s picture, in purple. 

Roca was no match for Franklin. Reports from Salta tell us that the rate has gone over 13.

The official rate changes, too. It was only five Rocas to a Franklin a year ago. As of last Friday, it is 8. But wait… There are more official rates. There’s one for savers – 9.2. And one for travelers – 10.8.

Why so complicated? 

It’s a long story. But the simple version is that the city of Buenos Aires is big and sophisticated. And like New York or San Francisco, it has socialist tendencies. 

Here’s how it works: The urban intelligentsia provides the ideas. The urban proletariat provides the votes. And farm exports provide the money. 

But the rural productive sector can never quite provide enough money to satisfy Buenos Aires’ longings. Farmers and other producers labor under such binding restraints – such as import/export restrictions – that even in a roaring bull market, such as we had three years ago, Argentina lost agricultural market share. 

Now, without much money coming in, the government prints money to pay its bills and lies about inflation. The money supply in Argentina has been increasing at a rate of about 40% a year. And yet, the keepers of Argentina’s official numbers maintain that consumer prices have been rising less than 10% a year. 

When everyone had caught on that prices were obviously rising much faster than a 10% annual clip, the Argentine feds tried to control prices… as well as the statistics that measure them. Last year, they enacted a ‘voluntary’ price control measure at the supermarkets. 

This was the work of Argentina’s 42-year-old minister of the economy, Axel Kicillof. He is probably a decent guy. He taught economics at the University of Buenos Aires. The papers say he “reinterpreted Keynes from a Marxist perspective.” With this intellectual toolkit, he says he has the leaks under control. 

Most likely, our man on the scene, Miguel, has a clearer picture. He reports: 

“I dropped my Kindle reader and broke it,” he reports. “I wanted to order another one from Amazon. But the government just announced a 50% import tax. That’s in addition to the 35% penalty I would pay on credit card purchases from overseas. You also have to go to [an office of the tax collector] and wait for hours to do the paperwork. It’s not worth that much.” 

So, Amazon lost a sale. And the Argentine economy lost a connection to sanity. 

“This is just the beginning,” Miguel continues. “We’re headed into another real crisis. The people are restless and the government is desperate. We’ve got major union negotiations coming up. It wouldn’t be at all surprising to see riots… looting… and some kind of bankruptcy or default.” 

Regards,

Bill

You know that mustache you grew to raise awareness for prostate cancer as part of the “Movember” movement? Well, it just crushed Procter & Gamble’s (PG) business.

At least, that’s what the executives want us to believe.

Last Friday, Chief Financial Officer, Jon Moeller, tried to pin the company’s disappointing results for its grooming business on the fact that four million men ditched shaving for a month.

Puh-lease!

What’s next, Jon, the dog ate your homework?

I don’t expect this to be the last excuse offered up on an earnings call, either.

Thanks to the record cold temperatures that much of the country has been enduring for a solid month, I’m sure that the weather will get blamed a few times, too.

Why bring any of this up?

Because we’re about to get bombarded with earnings. This week alone, over 225 companies are scheduled to report results.

While I want you to be on the lookout for the most laughable excuses (please submit your candidates for consideration here), I also want to make sure that you understand why individual earnings reports are more important than they’ve ever been this entire bull market.

In the process, I promise to share one corner of the market that’s poised for outsized gains. Even if the broader market continues to stumble. So let’s get to it…

When it comes to discerning the future direction for the stock market, I typically tell you to focus on the averages. Specifically, the average percentage of companies that beat earnings expectations.

The higher, the better. After all, stock prices ultimately follow earnings.

So far, so good…

As Bespoke Investment Group notes, 64% of companies have beat expectations this quarter, which puts us on pace for the best quarter in nearly three years.

Under normal circumstances, I’d be ecstatic about the early reading. Not this time around, though. And that’s simply because the averages don’t matter this quarter.

As Chris Verrone at Strategas Research Partners notes, correlations among S&P 500 stocks rest at their lowest level in over a year.

That means stocks aren’t moving in unison anymore. Instead, companies are going to rise or fall on the merits of their individual fundamentals.

Or, more simply, we’re in a stock picker’s market. And we need to make sure we pick wisely.

You see, companies missing expectations are getting throttled, dropping an average of almost 4% on their report days.

Big misses, like Sallie Mae’s (SLM), are prompting double-digit selloffs.

Meanwhile, companies reporting better-than-expected results are responding to the upside. Like server technology company, Super Micro Computer, Inc. (SMCI).

Not only did it beat earnings expectations by tripling profits in the last quarter, it raised expectations for the next quarter. Shares jumped more than 24% on the news. And therein lies the opportunity for us…

As investors scrutinize individual company results, earnings season is yielding clear-cut losers and winners. In such an environment, we need to tip the odds in our favor by focusing on the corner of the market with the highest probability of winners.

And that distinction belongs solely to the technology sector.

There’s no arguing with the data…

According to FactSet, a chart-topping 85% of technology companies have reported better-than-expected earnings and sales this quarter.

Not only that, but the technology sector is reporting the largest increase in earnings growth out of any sectors.

Bottom line: In this jittery and excuse-laden market, companies in the technology sector keep putting up impressive profit growth. That should translate into big profits for investors, too. So keep betting big on tech.

Ahead of the tape,

Louis Basenese

About Wall Street Daily

In a World of Liars, the Truth Starts Here…

The harsh reality is that you’re being lied to  every day – over and over again.

Wall Street is lying to you. The talking heads on television are lying to you. Your banker is lying to you. Your local Congressman is lying to you. Even your own broker is lying to you (mostly because he’s being lied to).

Consider: Behavioral science tells us that bankers and politicians are lying to us 93% of the time. And that Wall Street is 13 times more likely to tell a lie than the truth.

They win and we lose because our brains have been conditioned to cooperate in their con game.

But I believe you deserve the truth.

And to see that you get it, I’ve assembled a team of unbiased, seasoned investment professionals who pick apart the market’s biggest headlines on a daily basis.

Our mission?

To challenge Wall Street’s most widely accepted wisdom. And uncover the real intentions behind the greatest moneymaking machine of all time.

Along the way, we’ll also expose the profit trends others simply don’t have the experience to detect (or the courage to broadcast).

Bottom line, the most informed investor always wins. And getting you clued in is our top priority.

That’s why I’m personally challenging you to read our daily content for the next 30 days and see for yourself. If we’re doing our job effectively, you should notice it on your brokerage statement.

So don’t delay. To start getting a healthy dose of genuine, no-nonsense, 100% unbiased investment research and market commentary – i.e. THE TRUTH – justsign up below.

Ahead of the tape,

Louis Basenese
Chief Investment Strategist

As we are approaching the end of January, it looks as though, barring a 650 point jump in the Dow before the end of Friday, US markets will be down for the month.

Time to start thinking of the old adage: As January goes, so goes the year.

Since 1973, when January was a negative month, the average return for that year was -2.8%.  Also, a negative January resulted in a negative year 66.7% of the time.

However, when January was positive, the average return for the year has been 16.3%.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. 

Richardson GMP Limited, Member Canadian Investor Protection Fund.

Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.