Commentary for the Week of March 8

In the past, Rick’s Picks has shunned year-end predictions because there are far too many variables to handicap accurately. I’ve decided to take a crack at it anyway this year because I was curious to see what conclusions purely technical analysis would yield for some widely followed issues. I’m no seer, just a chartist, and I’ll say up front that the question of whether the Dow Industrials are trading at 23,000 at the end of 2015, or at 14,000, is probably no better than a coin-toss bet. Also, because the stock market is a house of cards and only distantly connected to economic reality, only a fool would try to predict the timing of The Big One that we all know is coming. Stocks could collapse at any moment, to be sure, and although I doubt this will occur next year, the odds are hardly remote. If you absolutely need to know when calamity will strike, I recommend checking the year-end predictions of Bob Prechter, Martin Armstrong and Ross Clark, since they are the very best timers in the guru world. Click here to share these stock predictions for 2015 on Twitter Keeping the foregoing in mind, I’ve allowed for both bullish and bearish scenarios in most of the forecasts above. Those designated ‘N/A’ imply outcomes that are unimaginable to me. For instance, the shares of Snipp Interactive, a penny stock that is my number one bullish pick for 2015, seem unlikely to head lower no matter what happens to the economy. The firm provides personal-device-based marketing solutions to a growing list of blue-chip clients, and they are nimble and imaginative enough not only to excel in their niche, but to expand it. Similarly, Apple looks like a surefire winner, especially with the company positioning itself via Apple Pay to

Nothing in the technical picture has changed since we shouted “Buy T-Bonds!” from the rooftop in October. A commentary published at the time bore the headline Inflation, Deflation, and Our Very Confident Bet in T-Bonds. The bet has become even more enticing since then, mainly because even more investors have lined up on the wrong side of it. Wall Street, hedge funds, paper-shufflers, LBO artistes, TV pundits and economists all seem convinced the Fed will raise rates in 2015. The Wall Street Journal added to the drumbeat with an article asserting that it’s not a matter of whether the Fed will raise rates, but when. Oddly, the only mainstream pundit on our side of the argument is Paul Krugman, an economist with whom we’ve never agreed about anything before. He thinks tightening would be ill-advised because the U.S. economy is not nearly as strong as the spinmeisters would have us believe. That would be putting it mildly. If the monetary hawks are right, we should be shorting Treasury paper up the wazoo rather than loading up on it, since bond prices move inversely to yields. We’ll take the odds. If ever there were a time to bet against the herd, this is it. It’s not a case of the smart money being dead wrong; it’s that the smart money is going to get crushed when it panics to unwind their epic mistake. Since every borrowed dollar is essentially a short position against the dollar, a day of reckoning logically awaits in the form of a dollar short-squeeze.  Realize that all who have borrowed dollars, included mortgage debtors,  are implicitly hoping they will be able to repay their loans in dollars cheapened by inflation. Deflation produces the opposite result, and merely because that result would wreck the global financial system is

When will the Fed raise interest rates?  My stock answer has been “never,” and the record shows that this prediction has held up pretty well. The last time the Fed actually raised rates was in June 2006, so my “read” on Fed policy has been essentially correct for the better part of a decade. This is notwithstanding the fact that whenever the Fed is not tightening, it drives eggheads, economists and op-ed hacks nuts. Lately, they appear to have been emboldened by the prospect of finally being right. Some of their newfound bravado has undoubtedly been inspired by emanations from the Fed itself. Just last week, the central bank, trying to sound hawkish, leaked that it’s considering changing the wording of its monthly hint about when tightening will come. For years, they’ve been saying over and over again that credit would be kept loose more or less indefinitely. Despite this, the markets have never failed to react like a headless chicken to each and every mote of dogs-bites-man “news”.  Now, the nervous Nellies may have to stoke their angst with a new policy that would translate thus: Don’t expect money to stay loose forever. This is the sort of claptrap that an ignorant, self-absorbed and habitually lazy news media have seized on to unwittingly help the Fed manage our expectations. Yellen and the banksters would have us believe the economy is sufficiently robust to stand on its own, and that inflation could break out at any moment. In reality, more than half of U.S. workers polled think the Great Recession never ended. And they would know. Wages have fallen in real terms since the recession officially ended in 2009, and the economy has failed miserably to create the kind of jobs that might help raise the standard of living for

What's the difference between a flood tide and the bull market? The answer is that flood tides recede. Not this bull, however. Having long since decoupled from economic reality, the bull market that began in 2009 will soon enter its seventh year, presumably  accompanied by new record highs that have become almost as predictable as the next sunrise. This is occurring even as the U.S. economy continues to languish in what we euphemistically refer to as the Great Recession. When a reporter or pundit uses that term, the not-so-subtle implication is that the recession has yet to end for most middle class Americans. Workers have said as much when polled -- not that Wall Street seems to have noticed.  The last few years have been an orgy for financiers, paper-shufflers and deal-makers in the U.S. and around the world. Exchange-listed companies have joined in the revelry, promiscuously borrowing untold billions for stock buybacks that push earnings per share higher without generating a dime’s worth of economic growth. How long can the stock market continue to rise parabolically when the economy behind it is too feeble to boost incomes or create good jobs? No one can say for sure, but the spectacle has become wearying for those who have yet to have their boats floated, of which there many.  Their ranks will only swell as the largest tax hike in U.S. history, deceptively named the Affordable Care Act, hits more and more households. Not surprisingly, Obama suck-ups in the news media continue to ignore the deepening disaster, or to mischaracterize it with brazen lies such as this one, in the Boulder Daily Camera: “Coloradans are finding what appears to be a pleasant surprise: Average premiums are only increasing by 2 percent. The Affordable Care Act’s naysayers predicted ‘double-digit’ spikes or worse.”  Two percent??

I’ve never had a good word to say about Barack Obama, and I’m not going to start now. But it would be disingenuous to blame him for the Great Recession that has persisted for most Americans since the downturn ended officially in 2009. Politically speaking, there is nothing Obama or any other president could have done to alter the course of economic events after real estate prices collapsed in 2007-08. This happened on George W. Bush’s watch, but he can’t be blamed either, since the factors leading up to the crash had been gathering strength for more than a generation. Economic cycles are far bigger than the presidency, and anyone in the White House when times are good is simply lucky to be in the right place at the right time. Luckiest of all was Bill Clinton, who, for all his personal failings, is recalled almost nostalgically because of the relatively prosperous economic times America enjoyed during his tenure as president. Obama, on the other hand, inherited a mess that no president, Democrat or Republican, could have cleaned up. There was but one solution that would have worked: Let the system fail, and then regenerate itself. Of course, that could never have happened in the real world -- even with Ron Paul in the White House and a veto-proof Libertarian majority in both houses of Congress. Yes, they initially would have stood on principle. But not for long, and certainly not for the full length of an election cycle. If laissez-faire economics had obtained during the Great Financial Crash, it seems likely the entire banking system would have collapsed rather than just a few big players such as Lehman and Bear Stearns that were sacrificed to make it appear the government had control of the situation. Why Risk Collapse? The

The Plunge Protection Team has been hard at work lately, although not in the way some traders might imagine. The very name evokes the shadowy activities of a group of Svengalis believed to control the stock market through timely interventions in such key trading vehicles as the S&P 500 futures. In fact, the PPT, more blandly known as the President’s Working Group on Financial Markets, was commissioned under President Reagan after the 1987 Crash to prevent meltdowns. These day, however, nearly six years into a ferocious bull market that seldom pauses for breath, one might question why a Plunge Protection Team is needed at all. The answer is that the PPT, far from defending against selling panics, has been furtively on the offensive, triggering short-squeeze panics that spike shares to new record highs at every opportunity. Usually, the news catalyzing these rallies hits the tickertape on a Friday, when the effects of a short-covering binge are apt to be most pronounced. It is hardly a stretch to imagine that these engineered events have been scheduled and coordinated by the PPT, working in concert with the central banks. Last Friday, for instance, U.S. stocks opened with a ballistic lurch higher on news that China, increasingly fearful of deflation, is about to ease. This had already sent stocks in Europe and Asia screaming overnight, setting up Wall Street’s by-now reflexive reaction. Recall that just five weeks earlier – on a Friday, as it happened – Japan announced its own, epic stimulus package – Max Keiser wryly called it QE9 – to the same effect: stock markets around the world soared. A presumably intended side-effect was that U.S. T-Bond prices spiked higher, briefly pushing yields down to lows that will linger in investors’ collective subconscious with a sedative effect against whatever fears they

The newspaper business is in a state of collapse, undermining the very health of democracy in America in ways that I shall explain. From a financial standpoint, the fatal problems of newspapers are well known, having begun with the encroachment of web-based advertising on crucial sources of revenue, most particularly classified ads. Adding to this problem is the death spiral of brick-and-mortar retail, a failure that has all but killed the big display ads that used to spread across two full pages. Newsprint and delivery costs have soared as well. The result is that newspapers can no longer afford to cover the news. This is true not only for small papers with circulation of less than 50,000, but for big metros such as the Chicago Tribune, Boston Globe, Dallas Morning News and the San Francisco Chronicle; and for newspapers with national or international reach, such as the New York Times, the Wall Street Journal and USA Today. All have dramatically downsized, not only in width and thickness, but in the resources they allocate to covering even the most important stories. Unfortunately, in an appalling number of instances, important stories are no longer being covered at all. I speak with first-hand knowledge, as the anecdotes below will attest. I was the state editor of a midsize paper myself, working for seven years at the Atlantic City Press after graduating from college in 1971. From my vantage point in the newsroom, I saw close-up how my employer’s uncritical coverage of New Jersey’s dawning casino era ultimately led to the ruinous decline of a city that used to be called the 'Queen of Resorts'. The Atlantic City Press was a weak advocate for the town, and casino operators seized on this to make their own rules. Why Atlantic City Died Atlantic City could

“Following every great bubble the senior currency eventually became ‘chronically’ strong relative to most asset classes, including commodities, and other currencies for most of the time.” - Bob Hoye, chief strategist of Institutional Advisors *** With the U.S. dollar in the throes of a rally that has been rampaging since June, it’s time to revisit an idea that I first wrote about nearly twenty years ago – that a short-squeeze on the dollar could eventually cause a meltdown of the global financial system. Although doomsdayers have put forth many theories about how economic Armageddon might play out, it was always a given that the dollar would be at the very center of the crisis. The reason for this is that there are vastly more dollars in play globally than the central banks, even acting in concert, could hope to manage when the day of reckoning arrives, as it most surely will. There are perhaps a quadrillion digital dollars swirling in the financial ether right now, most of them created not by the central banks, but by modern-day alchemists who have transformed the very flotsam of the securities world – Bolivian reverse floaters, non-performing receivables of all kinds, rehypothecated brokerage accounts and such -- into seven- and eight-figure bonuses for every partner on Wall Street. Each and every one of those dollars represents both an asset and a liability on the macro ledger, and although they would cancel each other out at some level, it can hardly be assumed that this would occur in an orderly way, if at all, in the event of a financial panic. That the preponderance of those quadrillion dollars are being used to sustain an epic financial Ponzi scheme is inarguable, since the output of real goods and services in this world amounts to no more

European bond yields went negative last week, saddling big investors who want to sit on cash with a weighty surcharge for the financial luxury of idling. While this abnormal state of affairs is not proof in itself that deflation has finally begun to overwhelm the central banks, we’ll lay odds that it’s not going to extract Europe’s economy from quicksand, let alone ignite an increasingly prayed-for inflation.  As much could be said of Japan’s latest attempt to dynamite itself from the bog of deflation.  BOJ announced it was raising its annual monetary target to $724 billion from around $580 billion. Twenty years of such shenanigans has produced no successes -- unless you regard bear rallies in the Nikkei as productive. Still, because it’s more about enlarging expectations than about growing the money supply, perhaps there’s still hope for the Masters of the Universe, more than a few rubes actually seem to believe inflation is on the verge of breaking out. There's “Jay,” for one, who took me to task at Korelin Economic Report for my hardcore-deflationist views: “Ridiculous… still wailing on about deflation, Rick??  It’ll never happen for more than brief flashes in time. Japan is answering your deflation as we speak.  And 5,000 to 10,000-contract dumps on Comex precious metals have ABSOLUTELY NOTHING to do with gold signaling deflation…. Preposterous, imo.” Now, I’m not about to get into another pissing match with anyone misguided enought to think that serious inflation is about to return when it's obvious the deflationary vise is tightening on the global economy.  If you want to put your money where your mouths is, try shorting long-term Treasury Bonds and we'll compare results in a year, okay?  But considering the economic state of things in Europe and Japan, as well as the feeble delicacy of the