Martin Weiss - Martin D. Weiss, Ph.D.

Q&A with Martin

by Martin D. Weiss on September 11, 2014


You and I Need to Talk …

by Martin D. Weiss on August 25, 2014

I’m writing to you this afternoon because you have distinguished yourself as one of my company’s closest and most loyal friends, and I need your help.

I need to hear from you as soon as possible — so I can better understand your views, goals, fears and hopes.

For all of us — and especially for many readers I’ve heard from lately — the world suddenly feels like a very dangerous place. For ourselves, our families and our wealth, the threat level is rising rapidly, day by day.

Everywhere we look, we see rising tensions between nations … new cold wars … savage shooting wars … horrific atrocities … and now, even the threat of a new wave of terrorism right here in America.

The investment picture is no less unsettling: Despite everything, we’re seeing sky-high stock and bond prices. And now, the Fed is warning that, sooner or later, it will have no choice but to stop printing money and begin raising interest rates.

It’s enough to make the hair stand up on the back of your neck: The ominous feeling that the other shoe is about to drop … but not knowing what it will be or when it will happen.

My question for you is simply this: How can I best help you?

Next week — on Tuesday and Thursday — I’m going to invite you to join me in two very special video briefings. There will be no promotion whatsoever. Nothing at all to buy. Just the help you need to keep your family safe and your wealth intact and growing.

But before I prepare for those briefings, I need to hear from you:

How do you feel about this alarming new environment? What worries you most right now? What are your greatest wealth-building challenges today? How can my team and I best help you?

Please give me your personal feedback now, while you’re thinking about it. Hearing from you now will go a long way towards helping me to help you in the most effective ways possible.

Good luck and God bless!


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Larry Edelson’s Gold and Silver TAKE-OVER!

by Larry Edelson on July 9, 2014

Larry Edelson

I’m taking over this blog for the next 7 days to help make sure YOU have the opportunity to maximize your profit potential and minimize your risk as gold and silver continue to soar!

Each day, I’ll check in at 9:00 AM and 10:30 PM Eastern time to meet you, discuss gold and silver investments with you and even answer your questions — so be sure to bookmark this page and come back often!

Also Important: If you haven’t already registered for free admission to Session #1 of The Ultimate Gold and Silver Trading Course on Thursday, July 17: Click this link to reserve your place now!

{ Comments on this entry are closed }

Mike Larson, Money and Markets columnist and editor of the Safe Money Report, is out today. Mark Najarian, the managing editor of Money and Markets, is filling in …

Next week marks the start of the World Cup in Brazil.

That’s when the entire country — and much of the world — will come to a halt, with bars, pubs and restaurants filled with TV viewers, wearing their home country colors and shouting in a cacophony of languages. Business and office life dies.

Peripheral to what concerns investors? Not at all.

For over a decade, Brazil has been a leading light in the investment community; and the World Cup will draw the intense gaze of millions of investors to Brazil’s unique opportunities — and challenges.

Yes, Brazil is one of the BRIC countries (Brazil, Russia, India and China). And yes, it’s more generally grouped as an “emerging market.” But it’s always important to remember this: Regardless of these kinds of labels, each country offers a different investment opportunity, and that’s especially true for Brazil.

Don’t underestimate how important this is. Should the games run smoothly, with scenes of happy soccer fans flocking to stadiums and satisfied foreign tourists frolicking on Ipanema Beach, it could give the country a real boost as an investment destination. However, should things go terribly wrong, it could dampen any enthusiasm for outsiders to pour in more money.

The key attraction for foreign investors is the country’s rapidly growing middle class — estimated at 100 million people.

The key attraction for foreign investors is the country’s rapidly growing middle class — a group of people who will need consumer goods, health-care services, insurance and more. One study put Brazil’s middle class at about 100 million people, half its population. According to a report by the U.N., the World Bank and Haver Analytics, Brazil’s annual private consumption was $1.3 trillion in 2012, ranking fourth behind the U.S., Japan and China.

Along with other emerging markets, Brazil hit some hiccups late last year and early this year, with many markets selling off on fears of the U.S. Fed’s tapering of its massive bond-buying program. But right now, the search for yield is driving investors to take another look, especially when those yields just aren’t available in U.S., European and Japanese markets.

How attractive is Brazil as an investment opportunity?

The quick answer is: In the short and near term, it’s certain to face further rough stretches. Many experts are also seeing a potential recession.Wait for the turmoil related to the tournament — protests over spending on sporting venues, likely bad press about crime and poverty — and uncertainty over the national elections in October — to take its toll on Brazil-related investments. And then look to grab up some bargains for the longer-term rebound. In the immediate future, understated inflation, over-valued currency, lack of fiscal discipline and political uncertainty are being cited as likely barriers to growth.

In a May 28 report by Bank of America/Merrill Lynch, Brazil equities placed exactly last in a survey of 58 countries’ markets for performance for the most recent week and 53rd over the past year.

Here’s what some other key Brazil-watchers are saying:

Henry H. McVey, head of Global Macro and Asset Allocation, in his Global Macro Outlook last month, noted Standard & Poor’s downgrade of Brazil to BBB- (one notch above junk) from BBB, citing lack of fiscal discipline and weak policy credibility as a reason to stay clear for now. “In our view, Brazil’s current economic trajectory is likely to run substantially below what many investors now think,” he said.

“We continue to approach macro investments in this country with caution,” he added. “In particular, we think that Brazil needs the combination of a weaker currency to improve exports at the same time it needs higher rates to quell greater-than-reported inflation and lack of slack in the labor force. If we are right, then the central bank’s current tightening cycle may go on for longer than many investors think, which likely means slower growth not only in 2014 but also 2015.”

Last week, Brazil reported that its first-quarter GDP grew 1.9 percent compared with the prior year, slightly below expectations and slowing from 2.2 percent in the fourth quarter of 2013. “Weaker industrial production as energy costs rose, falling business and consumer confidence, and high inflation all served to erode activity,” Schroders Emerging Markets Economist Craig Botham said. “The need for a change in policy is increasingly evident. Bottlenecks play a large role in driving Brazil’s inflation, now running close to the top of its target band, and it will be difficult to tackle without addressing supply-side concerns. This data will only spur investor desire to see President Dilma Rousseff ousted in October’s elections.”

Amundi Asset Management, in its May report, said the trend for Brazil “remains bearish,” citing high inflation, and added that “the risk is that the World Cup will cause even more tension on consumer prices.”

Latin America’s biggest country has all the makings of a comeback story.

In the long run, though, Brazil will certainly be back on the investment agenda, so you can use any downturn to seek out bargains. Latin America’s biggest country has all the makings of a comeback story. It boasts that growing middle class; strong trade ties with China, which is struggling now but sure to rediscover its place as a global giant; proximity to the U.S. market; long cultural ties to Europe; a sophisticated stock exchange; self-sufficiency in oil; and a large supply of alternative energy sources (ethanol) and other commodities. After the election, the new government, whoever is in charge, will be forced to set reforms into motion.

“If you think about Brazil in the next four, five or seven years, which is our horizon, the country is still an attractive market,” Walter Piacsek, head of Apax Partners LLP in Brazil and Latin America, told the Wall Street Journal in May. Apax, the U.K-based private-equity firm, said at the time that it planned to invest hundreds of millions of dollars in Brazilian companies in the next 12-18 months.

“In the long run, Brazil will certainly be back on the investment agenda, so you can use any downturn to seek out bargains.”

So how to invest in Brazil?

The key Brazil ETFs — iShares MSCI Brazil Capped (EWZ) — is a way to play the broad equity market on the whole, boasting that it covers 85 percent of total market capitalization. Petrobras (PBR), Vale (VALE), Banco Bradesco (BBD), Itau Bank (ITUB), Brasil Food (BRFS), and leading mobile company TIM Participacoes S.A. (TSU) are closely watched names as individual plays and stand to gain from an eventual turnaround.

Brazil is a favorite to win the World Cup, being a traditional soccer power and the home team. But what goes on off the pitch could take a lot of the shine off of any championship and put a dent in its image to the investment world. And the country will have little time to rest, as Rio will be hosting the 2016 Summer Olympics. It will be hoping the recovery has at least started by then.

What has been your experience with Brazil, either as an investor in bonds or equities or through foreign direct investment and what do you think about the prospects? Should a country with such a poverty problem spend so much on a soccer tournament? Or is it a good opportunity to show off what’s good about the country? And who’s your pick to win the tournament, and how far will the U.S. go? Jump down to the comment section and let us know.


 Speaking of important June dates, today marks the 70th anniversary of D-Day. Since that day in 1944 when U.S., British and Canadian forces helped liberate the Continent, Europe has come a long way, with the European Union, a common currency and a common central bank.

But all is not perfect on the Continent, as Martin Weiss recently wrote about. And not to mention the recent heightening of business tensions between the U.S. and its oldest ally, France, over a potential $10 billion fine against BNP Paribas and France’s efforts to block GE’s bid to buy Alstom.

 The U.S. economy added 217,000 jobs in May, the fourth month in a row that the figure has exceeded 200,000, showing solid-if-not-spectacular growth. Stocks got a lift, with the Dow Jones Industrial Average gaining nearly 90 points and edging ever closer to the 17,000 level. Still, many observers lamented the slow rise in real wages, indicating that more needs to be done to spur a sustainable recovery.

Reminder: If you have any thoughts to share on these market events, all you have to do is hop down to the comment section.

Best wishes,

Mark Najarian

Mike Larson’s afternoon Money and Markets commentary will resume on Monday.



 The European Central Bank whipped stock investors into a buying frenzy today, sending the Dow Industrials up around 98 points to 16,836 and the Nasdaq Composite rising 44 to 4,296.

 Bonds and currencies traded all over the map in the immediate aftermath of the ECB news. But by late in the day, interest rates dipped slightly (-2 basis points on the 10-year), the euro currency dropped as low as 1.35 then rallied back to 1.366, and gold regained some of its recent losses, rising around $9 an ounce to $1,253.

 Drug store Rite Aid (Weiss Ratings: RAD, B) was one of the big losers on the day, falling 7.5 percent on heavy volume. The firm said higher-than-expected drug costs would result in it missing full-year earnings estimates.

 But in the “W” column, network equipment maker Ciena Corp. (Weiss Ratings: CIEN, C-) jumped 18.5 percent thanks to stronger-than-expected profit, and a bullish outlook for later in

Imagine you went down to your friendly, neighborhood corner bank. You plunked your bag of nickels, dimes, quarters and dollars down on the counter and said: “I’d like to deposit this, please. How much will I make this year in interest?”

Then imagine the banker chuckled. And instead of telling you “2 percent” or “5 percent” or whatever, he said: “Actually, you’ll owe us interest. For every $10,000 you stick in our vault, it’ll cost you $10.”

You’d probably laugh your way out of the branch … then go stick your cash in a safe in your closet. But if you can believe it, what I just described is essentially what the European Central Bank (ECB) is going to do.

This morning, the ECB took the radical step of cutting its deposit rate to negative 0.1 percent. It also lowered its benchmark lending rate (similar to the federal funds rate the U.S. Federal Reserve has been raising and lowering for decades) to 0.15 percent from 0.25 percent.

Furthermore, it tried to boost the mortgage and business loan businesses by offering to buy Asset Backed Securities (ABS) and by launching more Long-Term Refinancing Operations. Without getting too deep in the weeds here, the idea is that by offering to buy up bundles of loans from banks at advantageous prices, banks will be more likely to make loans in the first place.

The ECB is hoping to drive the euro lower against the dollar and other major world currencies.

While central banks in Sweden and Denmark took tentative steps in the direction of negative rates, the ECB’s move is unprecedented because no major world central bank has ever tried it before. The theory is that banks are parking hundreds of billions of euros at the ECB rather than doing something productive with it, like lend it out. By actually penalizing that behavior, ECB policymakers are hoping to change the behavior.

They’re also hoping to drive the euro lower against the dollar and other major world currencies. The theory is that by driving the euro lower, it will give a boost to European-based export firms by making their goods cheaper on the world market. A lower euro currency would also put upward pressure on inflation by driving up the cost of imported goods.

To understand how a negative deposit rate would impact the currency, consider that global investors typically direct their money toward economies where it will be treated best. Or in plain English, they invest their money where it’ll earn the most yield.

“Will this incredibly risky gambit be the tipping point for the markets?”

It’s just like when you go shopping for a certificate of deposit. You’re not going to stick it at Bank A if that bank is paying 1 percent … and Bank B across the street is paying 1.5 percent, assuming the risk of either bank failing is equal, are you? Of course not!

But notice how I keep saying “the theory is this, the theory is that?” That’s intentional! The truth is, no one knows what the heck this will do — including the central bankers themselves!

Let’s just say for the sake of argument that the big European private banks do exactly what you would do if your bank said you had to pay the bank interest on deposits, rather than the other way around.

Maybe rather than pay millions of euros in interest to the ECB, they’re going to yank their money out and put it in a metaphorical wall safe?

Or the functional equivalent of a can in the back yard, like their own fortified vaults?

That would hurt, rather than help, the European economy by causing even less lending and less circulation of money throughout the system.

The only true judge of the success or failure of the latest Frankenstein Financing scheme from central bankers is the market.

Will stocks rally on the news, inspiring investors and lenders to gain more confidence in the future?

Will bonds sell off, driving interest rates higher and further boosting confidence in economic growth?

Will the euro weaken significantly, unleashing a fresh flood of liquidity on the world stage as investors borrow ever-cheaper euros and invest them in higher-yielding investments of all shapes and sizes?

Or will this incredibly risky gambit push us closer to the tipping point for the markets? We’ve already seen volatility plunge, stocks surge, and investors chase risky assets like at no other point in history, save 2006-07. That, of course, was right before the markets crashed.

What we’ve lacked is a catalyst for change — a real “Emperor Has No Clothes” moment. By that, I mean a moment where investors realize that their friendly central bankers really have no idea what the heck they’re doing! Could this ECB move be that catalyst? Enquiring minds want to know.

I personally have been riding the heck out of this rally in stocks for more than a year and a half now. It’s been a great one, especially for the kinds I have repeatedly emphasized: High-quality, higher-yielding stocks in private bull markets in select sectors with strong momentum. But with market conditions so stretched, complacency so high, and volatility so low, risk is rising.

That’s why I just dedicated my entire June Safe Money Report issue to the risks and opportunities here, and included important steps to take. That issue was just posted to the web, so make sure you check it out if you’re a subscriber.

Not on board yet? Then consider clicking here or giving us a call at 800-291-8545. I believe the concrete investment recommendations therein could help make the difference between a great 2014 or a much rockier one.


As for how to power the next leg of growth in the U.S., many of you agreed that coal is a dirty fuel. But there were a few dissenters who are skeptical of global warming or mankind’s contribution to it. Others felt the transition costs associated with shifting from coal to other fuels could be steep.

Reader Clay weighed in on the cost problem specifically, saying:

“Eliminating coal with no transition strategy will punish the most needy by raising their heating and cooling costs. The 2 percent inflation rate is a lie as it excludes gas & food. Our real inflation rate is above 10 percent. Reducing coal use also puts more people out of work. By this time we should know there is no coherent plan in Washington for anything except political party above all else.”

At the same time, Reader Norman worried about the even more distant future — what happens after even the gas is gone. His comments:

“The issue with switching from coal to natural gas derived from fracking that I see is, how long will this source last? Articles that I read say about 35 years. Since it takes a long time to migrate everything over, we have to start working on this now. What will we migrate to after using up the fracked gas?”

Certainly there are a lot of questions being raised — and no easy answers. But I personally believe natural gas is one of our best options as a country, and investing in the companies that are levered to the gas boom has certainly paid off nicely in the past couple of years.

Any other thoughts? Share them with us in the comment section below.


 Initial jobless claims rose to 312,000 in the most recent week from 304,000 in the prior one. That was roughly in line with consensus estimates. Tomorrow is the big Kahuna though — the monthly employment report.

 More telecom consolidation is the name of the game, with reports that Sprint (Weiss Ratings: S, C-) is getting closer to buying T-Mobile US (Weiss Ratings: TMUS, C-) for about $32 billion. That’s about $40 on a per-share basis. But questions remain as to whether regulators would permit the third-largest and fourth-largest U.S. wireless phone providers to combine.

 Speaking of mergers, the soap opera around British firm Smith & Nephew (Weiss Ratings: SNN, C) continues. Both Medtronic (Weiss Ratings: MDT, A) and Stryker (Weiss Ratings: SYK, B-) have been mentioned as potential suitors for the maker of artificial joints, wound care products, and other medical devices.

 Color me excited about the upcoming World Cup, which begins a week from today with a match between host nation Brazil and Croatia. I’ll be pulling for the U.S. and Germany … and hoping I don’t jinx every team I root for like I did in 2010!

Reminder: If you have any thoughts to share on these market events, all you have to do is hop down to the comment section.

Until next time,

Mike Larson


Feds: Down With Coal! Up With Gas!

by Mike Larson on June 4, 2014


 The waiting game ahead of tomorrow’s ECB policy meeting and Friday’s jobs report continued today, with stocks modestly higher on light volume. The S&P 500 rose 3.6 points, while the Nasdaq Composite gained 17.6. Ten-year Treasury yields, metals, and energy commodities were essentially unchanged.

 Insurer Protective Life (Weiss Ratings: PL, A+) surged 18.1 percent today after Dai-ichi Life Insurance of Japan confirmed that it is buying the U.S. firm for $5.7 billion. The move will allow the Japanese company to offset slower growth at home, and it immediately led to speculation about which other U.S. firms could be in play.

 The volatile Chinese firm NQ Mobile (Weiss Ratings: NQ, C+) also jumped, gaining 30.9 percent on heavy volume after the company said an audit cleared it of the kind of wrongdoing alleged by the research firm Muddy Waters.

Sometimes a picture tells a thousand words. And boy do the next two charts speak volumes.

The first shows the performance of the Market Vectors Coal ETF (KOL), an exchange traded fund that tracks the performance of 35 leading coal producers in the U.S., China, Australia, Canada and other countries. You can see that it has plunged from the low-$50s three years ago into the high teens today, a decline of around 65 percent.

“The coal industry is dying on the vine, courtesy of federal pressure, while gas is increasingly seen as the wave of the future.”

At the same time, here’s a chart of one of my favorite plays in the natural gas and gas liquids transportation and storage business. (Hint: It’s in the Safe Money model portfolio, where it’s spinning off big profits. You can learn more about it — and get my “buy” and “sell” signals here — or by calling 800-291-8545).

Click for larger version

You can see this gas-levered stock has done nothing but rally for the past three years. It recently hit an all-time high of around $95, more than tripling its value since this time in 2011.

Click for larger version

What the heck is going on? How can two investments in the energy and materials sector perform so differently? I believe it’s because the coal industry is dying on the vine, courtesy of federal pressure, while gas is increasingly seen as the wave of the future.

Look, we all know coal is a dirty fuel when it comes to power generation. Burning it spews off tons of greenhouse gases, and the federal government has taken aim at those emissions.

The Environmental Protection Agency (EPA) just proposed new regulations designed to slash carbon dioxide emissions by 30 percent from a 2005 baseline by 2030. To meet those tough standards, utilities realize they need to increasingly turn away from coal as a fuel source.

That’s because older, inefficient, and dirty coal-based plants are a primary reason why power plants produce an estimated 38 percent of the country’s carbon-based pollutants. The cars and trucks we drive are next in line at 32 percent.

It’s also where natural gas comes in. Gas-driven plants produce roughly half the carbon emissions of coal-based units. Many of them are newer and more efficient than their coal-based counterparts.

It also doesn’t hurt that the U.S. is swimming in relatively cheap, abundant natural gas due to all the new finds we’re uncovering, fracking technology, and more. Domestic production surged to 24.3 trillion cubic feet last year. That was up more than 20 percent from five years ago and the highest level ever, according to the Energy Information Administration.

The way I see it, we’re in the midst of a secular shift here — away from coal and toward gas. As part of that, we’re also shifting away from imports of coal, oil, and gas, and toward domestic production and/or more aggressive exports. That is creating all kinds of winners … but also some losers. The key is being able to separate the two.

So what do you think? Is the U.S. better off with a gas-based and electric utility industry? Or are there hidden downsides to weaning our nation off of coal? What will the impact of this shift be on jobs, the economy, and the stock market? Have you profited from specific energy recommendations, and what are your favorites for the coming few quarters? Hop down to the comment section and share your thoughts.


We have quite a lively debate going on over the 1-percent crowd, and income inequality in America in general. Some strongly believe we’ve lost our way as a nation, with a virtual corporate kleptocracy led by executives who “skim all they can” the new norm. Others said we should celebrate success and let productive, hard-working people spend their money how they want.

Reader Jerry F. is a fan of the progressive politician and regulator Elizabeth Warren, author of “A Fighting Chance.” He calls it a “good thorough study of the causes of the wealthy getting it all, at the expense of the middle class … Her passion to protect the average American could propel her to the White House.”

Likewise, Reader Marilyn G. reacted angrily to the stories of opulence and conspicuous consumption. She said:

“I find this astonishing. I mean, disgusting! While so many families are struggling to put food on the table, find a decent place to live. To say nothing of the unemployed with no unemployment benefits left. Reminiscent of France before the Revolution. “No bread? Then let them eat cake!”

But Reader Carl B. had a different take. His view? “Seems much of the anger about the 1 percent is connected to how they spend their money. Imagine they spent most of their money on inner city schools or children with cancer instead of on yachts or penthouses. I think this is envy, pure and simple. These men are working within the system and being rewarded for their contributions.”

If you want to add your voice to the discussion, I’d love to hear your view. Just go down to the comment section and weigh in.


 Mega-bank BNP Paribas of France is reportedly facing some stiff penalties, including at least $8 billion in fines and the ouster of some top-level executives.

The French government is up in arms, protesting the move to U.S. officials. Me? I want to know why U.S. banks and U.S. bankers never got smacked down like this for the U.S. mortgage and credit market meltdown. Could it be because all the U.S. regulators want cushy jobs on Wall Street when their terms expire? No, perish the thought!

 Looks like the Federal Reserve is getting nervous about plunging volatility too. Ironic, considering the Fed itself caused it. I’ll have more on this topic later in the week, but here’s an important Wall Street Journal story on the topic you should not miss!

 Russian President Vladimir Putin threw a wrench in the works during President Barack Obama’s European tour. He offered to meet for face-to-face talks, an offer that followed Obama’s meeting with Ukraine President-Elect Petro Poroshenko. That prompted a slight, intraday move lower in crude oil and volatility.

 Yesterday, I told you about what $110 million will get you in downtown Manhattan if you’re at the top of the income spectrum. Today, I stumbled across this brief item showing what $1,200 a month gets you in another wildly expensive city, London.

Yikes! I guess the only “benefit” is that instead of just eating breakfast in bed, you can do your dishes in bed, too.

Reminder: If you have any thoughts to share on these market events, all you have to do is hop down to the comment section and weigh in.

Until next time,

Mike Larson


The Top 1% Keep Sailing Along

by Mike Larson on June 3, 2014


 It was another interesting day ahead of the big ECB meeting on Thursday and the May jobs report on Friday. I say that because both bonds and stocks sold off today. The Dow Industrials fell 21 points to 16,722.34, while long bond futures dropped just over a point in price to a three-week low.

 Corn and wheat prices continued to fall, too, slumping to their lowest in three months. Metals were quiet, with copper trying (and failing so far) to recapture the crucial $3.20 per pound price level amid lingering concerns over China’s real estate market.

Wireless chip maker InterDigital (IDCC, Weiss Rating: C) jumped 20.7 percent today on better-than-expected revenue and a licensing agreement with handset maker Samsung.

But surf clothing vendor Quiksilver (ZQK, Weiss Rating: C-) suffered one of the worst wipeouts on the day, plunging 41.1 percent after reporting lackluster sales and pressure on margins.

In the movie Wall Street, Bud Fox asks Gordon Gekko a simple pair of questions: “How many yachts can you water-ski behind? How much is enough, huh?”

I got to wondering the same thing when I came across a pair of Bloomberg stories this morning.

The first one talks about some of the astonishing pursuits of a handful of ex-Goldman Sachs bankers.

Take Jay Dweck, a 58-year-old who used to head Goldman’s equities strategies unit. He’s the proud owner of a $1 million pool that’s shaped like a Stradivarius violin. It comes equipped with 5,600 fiber optic lights shaped like the instrument’s strings.

But what he’d really like is a system that would coordinate the lighting with violin music, to make it look like the strings were being played underwater with every note. Yes, that would be simply smashing dah-ling!

Then there’s Paul Scialla, a 40-year-old former interest rate exec at Goldman. His Delos Living LLC company is trying to sell a $50 million penthouse in New York that comes complete with purified air, antimicrobial coatings, and other features to appeal to the 1 percent. On tap in other projects? Vitamin C-infused showers! (No word on whether it smells like you’re bathing in Minute Maid, though.)

“When I read stories like these, I can’t help but think the 1-percent crowd has it pretty good.”

The other story chronicles how the most expensive downtown Manhattan condo in history just hit the market. Clocking in at a cool $110 million, the penthouse apartment in the 58-story Woolworth Building is just one of 34 luxury units that’ll be offered in the renovated property. For that price, you get almost 9,000 square feet, four bedrooms, a private elevator, wine cellar, library, and all the other “necessities” you need to survive.

I don’t know about you. But when I read stories like these, I can’t help but think the 1-percent crowd has it pretty good. That was the conclusion of a just-released study by the Associated Press and Equilar, too.

It found that S&P 500 CEOs earned a median pay package of $10.5 million in 2013. That was up almost 9 percent from 2012. CEOs now earn about 333 times what an average worker earns.

Source: Bloomberg

Now as Americans, we all strive to earn better lives for ourselves. It’s ingrained in our collective DNA to want to make our way up the ladder, through hard work, entrepreneurship and more. The question at hand, though, is whether that system is running off the rails … whether too much wealth is being concentrated in too few hands, leaving everyone else to fight for a few scraps.

Certainly, that’s the argument being made by controversial French economist Thomas Piketty in his bestselling book “Capital in the Twenty-First Century.” Some have seized on his arguments as justification for redistributionist policies — policies that would level the playing field between rich and poor.

So where do you stand? Just how many yachts can the 1 percent water-ski behind? Should we care, or is it a case of “to each his own”? Is there an increasing split between the haves and the have nots — and does it have any investing implications?

Do we, for example, sell discount retailers and buy shares of luxury goods makers? Hop on down to the comment section and let me know what you think!


There’s been some good back and forth on housing and borrowing against home equity on the blog. For instance, Reader Will W. notes that you can use a home equity loan or line of credit wisely if you put the money to good use. His comments:

“My wife and I took a second mortgage on our house, used the money to purchase another house for ourselves and rented the first one for enough to cover both mortgages, the taxes, insurance and had some positive cash flow each month. Both houses are now paid for in full and have been for several years. We now have the cash flow from that house (and 6 others) on which to live.

“I do recognize that most people don’t use the money they take on a line of credit or second mortgage for anything other than instant gratification, but that doesn’t mean all LOC are bad.”

Duly noted, Will! Meanwhile, Reader Fred chimed in on the lack of real earnings and revenue growth from Corporate America. His comments:

“I backed out share buybacks from earnings of companies who just beat the analysts last quarter and they were pretty dismal. Where’s the demand? This euphoria over great margins but no demand spells real trouble ahead. The rich get richer and have everything so they need not spend, the poor don’t have the resources, and the middle class’ earnings have deteriorated. That’s what happens when the government doesn’t let capitalism work.”

So are you optimistic that America’s biggest companies can turn things around? Or is it all going to be cost-cutting, cost-cutting, cost-cutting driving results? Share your thoughts with me in the comment section below.


 President Obama is swinging through Europe this week as part of a solidarity trip in the face of recent aggressive steps by Russian President Vladimir Putin. He announced plans to seek $1 billion to support exercises, training, and deployment of troops and ships to the European theatre.

 The debate is heating up over the Obama administration’s decision to trade five Guantanamo Bay captives to the Taliban in exchange for the release of Army POW Sgt. Bowe Bergdahl. We’ll have to see how history judges the president and Bergdahl, and whether there will prove to be any adverse consequences for other U.S. soldiers.

 Considering Southwest Airlines just got fined $200,000 by the Department of Transportation for violations related to advertising of low fares, I found this USA Today story about its latest sale hilarious. Click through and read it and you find that it’s a three-day sale … that excludes Friday and Sunday flights in most cases … that has lots of flights blacked out to places like Florida and Nevada … and that only involves a limited number of seats.

Me? I’ve found it next to impossible to actually get the discounted fares you see in advertisements — unless you fly between 11:50 p.m. and midnight on Wednesday evening, and only if you agree to connect through Tajikistan on your way from Los Angeles to Las Vegas. How about you?

Reminder: If you have any thoughts to share on these market events, all you have to do is hop on down to the comment section.

Until next time,

Mike Larson



 The stock market continued its slow and steady climb, with the Dow Industrials tacking on 26 points to 16,743.63. But the real action was taking place in interest rates and currencies.

 The yield on the 10-year Treasury note shot up 8 basis points to 2.53 percent, while the euro fell sharply against the dollar to a three-month low of 1.359 before bouncing back ever so slightly. Precious metals stabilized, while crude oil dipped slightly to $102.46 a barrel.

 Among individual names, Broadcom (BRCM, Weiss Rating: C) was broadly higher today on heavy volume. It rose 9.3 percent after the firm said it would try to sell or wind down its struggling cellular baseband business.

 But Puma Biotechnology (PBYI, Weiss Rating: D) got clawed to the tune of 25.4 percent after the release of disappointing drug development data.

It may not officially be summer yet. But it sure has felt like it lately on Wall Street. Earnings season ended weeks ago. Volatility has collapsed. Economic data has been thin as can be.

But no longer. This week, we get major updates on both the policy and economic front — and depending on what happens, it could have dramatic impacts on your wealth.

First, the European Central Bank (ECB) meets Thursday to decide its next major policy move. Speculation is running rampant that the ECB will follow the lead of the U.S. Federal Reserve and Bank of Japan, and shift the printing presses into overdrive.

Full-scale “Euro-QE” is the most aggressive move policymakers could choose. Alternatively, the ECB could cut select interest rates into negative territory — meaning the ECB would actually charge banks interest to park money with it rather than do something productive with the funds. We could also see the launching of long-term loan programs designed to spur banks to lend … or more-targeted purchases of select instruments, such as asset-backed securities made up of bundled loans.

“This week, we get major updates on both the policy and economic front – and depending on what happens, it could have dramatic impacts on your wealth!”


Second, the Labor Department will release the all-important May jobs report Friday. This is the most important economic report in any given month, and especially so this time around because there’s so much uncertainty about where things are headed.

The reason? We got a dismal report on first-quarter GDP last week. Many investors are desperately seeking signs that it was a weather-driven, short-term bump in the recovery’s road rather than a major trend change. This report could go a long way toward settling the debate.

Economists polled by expect an increase in payrolls of 220,000, down from 288,000 in April. They believe the unemployment rate will climb to 6.4 percent from 6.3 percent, but that average hourly earnings growth will rise to 0.2 percent from flat.

We actually got a “data appetizer” today in the form of the ISM manufacturing index. It rose to 55.4 in May from 54.9 in April, a pretty decent reading.

Economists polled expect an increase in payrolls of 220,000, down from 288,000 in April. They believe the unemployment rate will climb to 6.4 percent from 6.3 percent.

But on a lighter note, the Institute for Supply Management botched the release of the figures twice. The initial release said the index dropped sharply to 53.2 … but it turned out that figure stemmed from a computer error. Then an “incorrect correction” from ISM said it was 56. Finally, we got the actual number of 55.4 or at least, I think we did — hopefully my iPhone’s Bloomberg app won’t fire off in the middle of the night with another revision.

So what kind of results are you expecting? Is the ECB going to go all-out when it comes to money printing? Or do you think ECB President Mario Draghi lacks the willingness to follow Ben Bernanke and Janet Yellen into the monetary policy wilderness? Is the job market improving, or is the first-quarter slump only going to get worse? And what does all of it mean for your investing approach?

Share your thoughts in the comment section  with your fellow investors now — before the fireworks get going. Personally, I believe Draghi wants a weaker euro and will do what he can to bring that about. That’s one reason I’m so attracted to investments that rise in value when the euro falls. (You can read about my favorite in the Safe Money Report. More details here.)

I also think the economy is still on a recovery track, albeit one that’s being dragged down by renewed weakness in housing. That’s why I’m focusing on select bull markets in sectors like domestic energy, aerospace, and food and beverage, and generally avoiding financials and housing stocks.


Speaking of housing, Reader Brian V. weighed in on the return of home equity loans and lines of credit. He said he doesn’t want to see homeowners get buried under too much mortgage debt again, adding:

“As long time Realtors in Idaho and Washington, we do not want to see HELOCs come back. We have worked with many selling clients who went the HELOC route and even with increases in home prices; most of them do not have enough equity to sell without bringing money to the table.”

Reader Scott H. echoed Brian’s concerns, saying he has “never held a second mortgage and never will.” He added:

“How does one pay their home loans off if they keep pulling money out of their equity? It’s like falling in to a hole and putting dirt on top of you. Add up all the interest charges to see what you could buy each month with that money. It will make most folks sick.”

As for the markets, Reader Fred can’t help but wonder — like I have — if we might be vulnerable because of extreme investor complacency. He described it like this: “Volatility has collapsed … It is like when you are in the wilderness and you suddenly realize … things are getting too quiet.”

Do you worry like Fred that an unexpected threat could pounce out of the brush? Are you as anti-HELOC as Brian? Feel free to hop down to the comment section and share your thoughts on those or other topics when you have time!


 Everyone’s favorite technology company — Apple (AAPL, Weiss Rating: A-) — launched its World Wide Developers Conference in San Francisco today. At the closely watched event, the company tried to get some of its post-Steve Jobs mojo back by announcing a series of features associated with its new mobile software system iOS8, amid other things. But I didn’t see anything earth shattering in the news.

 Speaking of Apple, the firm’s 7-for-1 stock split takes effect shortly. Shareholders of record today will receive seven shares for each one share they currently own on June 6, but the price of those shares will be divided by seven. The new, split-adjusted shares will then begin trading on June 9.

Yes, owning seven shares of a $100 stock is the same as owning one share of a $700 stock. But the big stock split could theoretically encourage more investors to buy Apple because the per-share price will be lower (and therefore, more affordable to investors with less capital).

 The Environmental Protection Agency released wide-ranging regulations that apply to coal-fired power plants today. Only time will tell whether it drives up retail electricity costs and eliminates jobs throughout the coal-mining sector, or whether the trade offs in terms of reducing greenhouse gas emissions will be worth it.

 The latest Disney (DIS, Weiss Rating: A) hit — Maleficent — raked in $70 million in the U.S. and Canada over the weekend. Not sure if my girls will be singing every song from the soundtrack like they did with Frozen. But I’ll just be glad if I can figure out how to pronounce the title character’s darn name!

Reminder: If you have any thoughts to share on these market events, all you have to do is hop down to the comment section.

Until next time,

Mike Larson


Question: Will this sink the U.S. Economy?

by Martin D. Weiss on May 31, 2014

Martin Weiss

We’ll give you our answer soon.

But for now, let me say this: If you think it’s time to throw all caution to the wind, accept high risk and go for high yield, just take one quick look at what’s happening in the world’s biggest economy: Europe.

The GDP of the European Union (EU) is nearly $17 trillion, making it about $1 trillion larger than the U.S. economy.

Its population is more than 500 million, also far larger than the U.S.

Its half-dozen megabanks have far more assets than all U.S. banks put together.

And it’s sinking.

Just this week, European Central Bank president Mario Draghi finally admitted it: He declared bluntly that the EU is at risk of sinking into deflation, a downward price spiral that can destroy banks, destroy corporate profits, and make it impossible for companies to hire.

Also this week, Europe’s leaders were dealt a painful blow to the gut, as the majority of voters rose in rebellion against the European establishment.

Click here for larger image
European inflation falls far below the central bank’s target level.

And we haven’t even started talking about the potential damage to a region that’s caught in the middle of a new, emerging cold war between global superpowers. (See what I said about this last week.)

I warn you. Don’t write this off as something far away or irrelevant. Nor can you say it’s just another Eurocrisis that comes and goes.

Quite the contrary: What you see happening today is the convergence of all recent European crises in one time and place — a currency crisis, a deflation crisis, the debt crisis, the banking crisis, the unemployment crisis, and the long, smoldering popular movement for European disintegration.

It’s the Grand Convention of Ghosts Past and Present, returning to haunt all advocates and apologists for a united Europe.

And just by its sheer size, it’s likely to have a major impact on the entire world.

For starters, consider the sudden, dramatic rise of anti-establishment, anti-EU, populist movements in this week’s landmark European Election, sending shock waves up the spine of virtually every head of state on the continent.

In Great Britain, the UK Independence Party swept to EU Parliamentary victory — the first time in a hundred years that BOTH the Conservative Party AND the Labour Party lost an election. These folks want England to withdraw from the European Union entirely. They want to scrap the free movement of people within the EU. And they’re not exactly members of the good ol’ boys club: UK Prime Minister David Cameron once described the party’s members as “fruitcakes, loonies and closet racists.”

France’s National Front leader Marine Le Pen

In France, the National Front won for the first time in history. They want to get France the heck out of the euro zone and reintroduce national border controls.

Just this past Wednesday, party leader Marine Le Pen vowed to form a bloc in the European legislator to restore the power of individual member states.

In the Netherlands, victory went to the Dutch Party for Freedom, also campaigning for a Dutch withdrawal from the European Union and the reintroduction of state border controls.

Germany’s Alternative for Germany, a newcomer to the country’s politics, won a surprisingly large share of the vote. Its manifesto: “A careful and organized dissolution of the currency union.” In other words, an end to the euro and euro zone.

We see the same trend in Hungary, Denmark and Finland. We see it happening in local elections and national elections. We see it on the streets and even among some elites.

In all of these countries I’ve cited so far, the rebellion comes within a tradition of right-wing politics, with oft-heavy overtones of anti-Semitism, anti-Arab and anti-immigration rhetoric.

Meanwhile, in at least five European countries, including Spain, Greece and Portugal, the revolt came mostly from the left. They’re rebelling against austerity. They want jobs. They want to keep or restore their pensions. But like the right wing, they’re fed up with the European establishment.

Deflation and Disintegration

Now, put it all together, and what do you have?

You have the largest economy in the world, sinking into a deflationary spiral … careening toward possible dismemberment … inviting social chaos.

Will this drag the U.S. economy into the same gutter? Or will it drive massive amounts of scared money from Europe to U.S. markets?

What about the impact on gold and silver? Will the latest dip in prices set off panic selling in the precious metals? Or will it attract a new wave of buying by Europeans and others seeking safe havens?

And in the meantime, hop down to the comment section to help answer the big question of the day: Will Europe sink the U.S. economy?

Good luck and God bless!





Want a House? Be Rich and Pay Cash

by Mike Larson

If you want to own a house today, you can. Just make sure you are A) Rich and B) Can pay cash!

That’s my not-so-tongue-in-cheek summation of the state of the housing market, based on all the data I’m seeing.

How to Profit from the “Stealth” Market Correction

by Mike Burnick

A “stealth” market correction has been underway on Wall Street the past few months. If you blinked, you might have missed it.

Techs go sideways, but look upward

by Jon Markman

Tech shares inched higher last week, recovering some of the losses suffered in the first four months of this year.


Stocks’ sweet spot could turn sour without growth

by Bill Hall

In recent Money and Markets columns, I have been saying that we are in the sweet spot for U.S. stocks and investors should consider pursuing a “risk on regardless” strategy in their portfolios.

Volume deficit disorder: A trend in your favor

by Don Lucek

Three trillion dollars.

It’s not chump change, and it’s the most recent figure I’ve seen of investor cash sitting in money-market mutual funds (Investment Company Institute estimate).

Digging Deep to Find the Right Mining Stock

by Larry Edelson

As I’ve mentioned in the past, mining shares will soon be a major buy, but importantly, not all mining shares.


Home Equity Lending Back … Really

by Mike Larson on May 30, 2014


 Stock, bond and currency investors looked like they were squaring up their books ahead of the weekend, in light of the major week for data and policy that looms dead ahead. The Dow Industrials inched up to 16,717, while the S&P 500 rose just over 3 points to 1,923. Gold dropped another $6 an ounce, while the Dollar Index took a breather after its recent run to the 80.50 level.

 Infoblox (BLOX, Weiss Rating: D+) shareholders must feel like they woke up with blocks of lead in their portfolios. The stock plunged a whopping 36.8 percent after the network gear maker warned of weak sales and earnings and said its CEO was hitting the pavement.

 On the flip side, OmniVision Technologies (OVTI, Weiss Rating: B) shares jumped 11.6 percent after the semiconductor firm beat profit, revenue and margin forecasts.

Remember home equity loans? Or before it became Un-Politically Correct to call them that, second mortgages? Like the ghosts in the movie Poltergeist II, theyyyy’rrreee baaaccckkkk!

So notes this morning’s Wall Street Journal, cheerfully proclaiming:

“A rebound in house prices and near-record-low interest rates are prompting homeowners to borrow against their properties, marking the return of a practice that was all the rage before the financial crisis.”

The story goes on to note that home equity lending hit $59 billion last year, the highest level (excluding the housing bubble years) since 2000. The most popular product? A “HELOC” or Home Equity Line of Credit.

I have years of experience tracking these puppies. Rather than give you a fixed amount of money for a fixed amount of time all at once, HELOCs are revolving-style loans that can be drawn upon as needed via credit cards or checks.

You typically have a draw period of, say, 10 years. Your interest rate fluctuates along with market rates during that time. At the end of the draw period, you can no longer take additional advances and, instead, have to pay the remaining balance off over a period of a few more years.

“These are the kinds of products that helped blow up the entire banking industry.”

HELOC volume at Bank of America (BAC, Weiss Rating: A) surged 77 percent year-over-year in the first quarter, according to the Journal. Wells Fargo & Co. (WFC, Weiss Rating: A+) reports strong volume as well, while EverBank (EVER, Weiss Rating: B+) is going to start offering HELOCs for the first time since 2007 this month.

The bad news? These are the kinds of products that helped blow up the entire banking industry.

People borrowed up to 100 percent of their homes’ values as prices spiraled higher. They used that money for everything from more legitimate purposes, like funding home improvements, to more reckless things, like paying for vacations and flat-screen TVs.

Would you borrow against your house in this environment?

Rather than put down any money to buy homes, many Americans also used home equity loans as part of 80-20 “piggyback” mortgage financing structures. In other words, rather than put 20 percent down in cash and take out a first mortgage for the remaining 80 percent of a home’s purchase price, a borrower would take out a second mortgage for the 20 percent and a first mortgage for the 80 percent. That meant many borrowers had essentially no skin in the game, and they subsequently walked away in droves when home prices plunged.

Now, bank execs will tell you it’s different this time. They’ll say they’re only lending up to 80-85 percent of a home’s value, that they’ll only do loans on owner-occupied properties (rather than investment homes), and that they’ll only extend credit to borrowers with tip-top credit scores.

But if home prices have been artificially inflated recently, thanks to the “Echo Bubble” process I’ve described, will that matter? Or are we just getting into a scenario where Americans are borrowing against artificially inflated assets … again? Then when asset prices deflate, they’ll be hung out to dry … again?

Would you borrow against your house in this environment? Do you think the tax benefits and relatively low costs of home equity loans outweigh the potential downside? And what is the broader message here from the revival of home equity lending? Are banks taking on too much risk … or is this a welcome loosening of credit standards for the economy? Hop on down to the comment section and let me know!


Meanwhile, many of you sounded off about the split between the real economy and the markets. Reader Mark said the stock market will inevitably run out of steam unless the economy plays catch up. His comments:

“A market where only the stockholders profit is not a long-term solution, and we are starting to see it unravel before our eyes. You simply can’t keep cutting jobs and expect the economy to improve. The beginning of any economic engine starts with consumption, and if people don’t have money with which to consume goods, the economy will come to a halt.”

Reader Rick A. agreed, saying that central banks are trying to interfere with long-term economic cycles — a battle they’re destined to lose. His forecast?

“The Fed is simply interfering with capitalism, just as Japan’s central bank has done for the past 20 years … look out below! … I see another real estate slide and stock market retracement soon unfortunately.”

On the other hand, Reader Robert G. said he thinks that we will get out of this mess and get back on track once we see political change in Washington — and that stocks are the best asset in this environment. His view:

“I believe the market knows we will get out of this mess and the American engine will roll again when we get a new administration. So we are currently marking time. We have a lot of money on the sidelines just waiting to be put to work, but business does not feel comfortable with the way we are being taken by our current government.

“There is no place to put money today to earn any kind of a return except the stock market. We will continue to invest in the market and keep setting new highs. Only a major disaster or something like 911 will cause a major correction.”

Interesting thoughts all around. Personally, I’ve been recommending several stocks that are in their own “private bull markets” in sectors like domestic energy, aerospace, and health care. They have worked out very well. But with volatility collapsing and complacency running rampant, I’m definitely getting more nervous about stocks.

If you have any additional thoughts, please don’t hesitate to share ‘em with me down in the comment section.


 The former CEO of Microsoft (MSFT, Weiss Rating: A), Steve Ballmer, is reportedly going to buy the Los Angeles Clippers for around $2 billion. That should bring the sorry saga of Donald Sterling’s ownership to an end, assuming the NBA and other parties can agree to terms.

 We’re going to dine on a ton of very important economic data next week. But we got a couple of appetizers today. Personal spending slipped 0.1 percent in April, or 0.3 percent once you adjust for inflation. That inflation-adjusted drop was the biggest since September 2009!

At the same time, a consumer sentiment indicator rose to 81.9 in May from 81.8 a month earlier. And an index of Chicago-area manufacturing jumped to 65.5 in May, against forecasts for a reading of 60.3.

 I’m scared of heights. But on one of my first dates with my Chicago-born wife, Kim, I braved the “Ledge” attraction at the Willis Tower (or Sears Tower, as Chicagoans still call it). It’s a series of reinforced glass boxes that protrude from the 103rd floor — allowing you to look out or straight down to the street hundreds of feet below.

Lo and behold, a protective layer of material that covers the underlying glass shattered when some tourists visited the other day. This is what it looked like. Yikes! I don’t think Kim will get me out there again anytime soon.

Reminder: If you have any thoughts to share on these market events, all you have to do is hop on down into the comment section.

Until next time,

Mike Larson