Thursday , November 15 2018
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Lance Roberts

Lance Roberts

Lance Roberts has sharpened that lens with 30 years in the investing world from private banking and investment management to private and venture capital. Lance Roberts’ perspective and common sense analysis is sought after by media outlets such as Fox 26 News in Houston, CNBC, CNN and Fox Business News along with numerous publications including the Wall Street Journal, USA Today, Reuters and the Washington Post. Roberts is the Editor of the X-Factor report and publishes the blog Daily X-change.

Articles by Lance Roberts

Technically Speaking: Major Markets Are All Flashing Warning Signs

2 days ago

In this past weekend’s newsletter, I touched on the outcome of the mid-term elections and why it would likely not be as optimistic as the mainstream media was portraying it to be. To wit:
“It is likely little will get done as the desire to engage in conflict and positioning between parties will obliterate any chance for potential bipartisan agenda items such as infrastructure spending.
So, really, despite all of the excitement over the outcome of the mid-terms, it will likely mean little going forward. The bigger issue to focus on will be the ongoing impact of rising interest rates on major drivers of debt-driven consumption such as housing and auto sales. Combine that with a late stage economic cycle colliding with a Central Bank bent on removing accommodation and you have a potentially

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The Economic Consequences Of Debt

3 days ago

Not surprisingly, my recent article on “The Important Role Of Recessions” led to more than just a bit of debate on why “this time is different.” The running theme in the debate was that debt really isn’t an issue as long as our neighbors are willing to support continued fiscal largesse.
As I have pointed out previously, the U.S. is currently running a nearly $1 Trillion dollar deficit during an economic expansion. This is completely contrary to the Keynesian economic theory.
“Keynes contended that ‘a general glut would occur when aggregate demand for goods was insufficient, leading to an economic downturn resulting in losses of potential output due to unnecessarily high unemployment, which results from the defensive (or reactive) decisions of the producers.’  In other words, when there is

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Rally Fails As Gridlock Weighs On Outlook 11-09-18

5 days ago

Market Rally Fails Key Resistance
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Market Rally Fails Key Resistance
Last weekend I discussed the fact we had started using the rally to lift some exposure out of portfolios ahead of the mid-term elections simply as a hedge for the “unknown.”
Well, on Tuesday, the ballots were cast and while the Republicans were able to hold onto the Senate, they lost the House. As I wrote on Tuesday, where the markets are concerned, that may not be a bad thing.
“The safest outcome for the markets, and the economy, is what is most likely. The Republicans will likely retain control of Congress but will lose enough seats in the House to make passage of

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Weekend Reading: American Gridlock & Why Mid-Terms Don’t Matter

6 days ago

With some bit of relief, I am glad to see the mid-term elections now behind us as another cloud of uncertainty is removed. However, in reality, I suspect the outcome of the elections will have much less impact on the markets than most currently think.
Barbara Kollmeyer penned a note earlier this week for MarketWatch:
“For financial markets, one takeaway mattered above all others in the midterm election—no curveballs.
And that’s basically what was delivered as pundits who got it so wrong in 2016, correctly forecast the end of one-party rule this time. With Dems calling the shots in the House, we could see no end to investigations, subpoenas and possibly impeachment talk and a hard push for POTUS to cough up those tax returns.
All that may slow down President Donald Trump’s MAGA plans.”

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The Tailwinds To The Bull Market Have Shifted

7 days ago

In last Tuesday’s technical update, I discussed why a rally last week was highly probable from a psychological, technical, fundamental, and seasonal perspective. However, the key message of that discussion was simply:
“There remains an ongoing bullish bias which continues to cling to the belief this is ‘just a correction’ in an ongoing bull market. However, there are ample indications the decade-long bull market has come to its inevitable conclusion.”
On Saturday, I explained why we “sold the rally” the preceding Friday morning:
“The combination of both the extreme oversold and deviated conditions contributed to a bounce which hit our ‘target neighborhood’ of 2740-2750 on Friday morning.
In accordance with our portfolio management strategy, when the markets reached our target zone

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Rosso: 4-Simple Steps To Save Money

8 days ago

Nobody ever said that saving money is easy.
All of us leave a daily spending trail. Rarely, do we analyze the financial impact, positive or negative, of simple things like eating out (usually overeating), utilizing smartphone food delivery apps and bringing lunch to work every day (which also can have a positive impact on personal health!)
Actions to save money are habits and just like anything we find a challenge, it takes time for a habit to forge into a discipline. Personal philosophies about saving vs. spending are a deep-seated cognitive soup formed early in childhood and molded over the years based on perceptions and experiences.
Here are 4 simple ideas you can use to gain more money in your pocket:
1) Savers think backwards, always with a financially beneficial endgame in mind.
They

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Exclusive Interview: Peter Boockvar

9 days ago

Last week, I visited with Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group and Editor of The Boock Report. He previously was the Chief Market Analyst for The Lindsey Group, a macro economic and market research firm started by Larry Lindsey. Prior to this, Peter spent a brief time at Omega Advisors, a New York-based hedge fund, as a macro analyst and portfolio manager. Before this, he was an employee and partner at Miller Tabak + Co for 18 years where he was recently the equity strategist and a portfolio manager with Miller Tabak Advisors.
Peter and I cover a wide range of topics from the market, the coming recession, the impact and risks of higher rates, and the Federal Reserve.
If you like the content – please share with your friends.
Why QE Is Like Wearing Bear Goggles

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Technically Speaking: Election Day & What Happens Next

9 days ago

This article contains some thoughts in regards to tonight’s election results. RIA Pro customers will receive a cheat sheet today in which 3 election scenarios are analyzed and the expectations, based on the 3 scenarios, for stocks, bonds, the economy, and monetary policy are discussed. To gain access, please sign up for a 14 day free trial at RIA Pro.
In this past weekend’s newsletter, I noted Raymond James’ Kevin Giddis’ three possible outcomes for the mid-term elections:
“What could a potential change do for bonds and stocks? There are many possible scenarios, so the devil is in the details. I will lay out a couple of them for you:
1) The Republicans could lose the House, or the House and Senate. Either of these possibilities could derail the President’s agenda, leading us back to a

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Exclusive Interview: Chris Martenson

10 days ago

I recently spent some time with Chris Martenson from Peak Prosperity about the market, the economy, and the “Great Reset” which is approaching.
Chris Martenson, PhD (Duke), MBA (Cornell) is an economic researcher and futurist specializing in energy and resource depletion, and co-founder of PeakProsperity.com (along with Adam Taggart). As one of the early econobloggers who forecasted the housing market collapse and stock market correction years in advance, Chris rose to prominence with the launch of his seminal video seminar: The Crash Course which has also been published in book form (Wiley, March 2011). It’s a popular and extremely well-regarded distillation of the interconnected forces in the Economy, Energy and the Environment (the “Three Es” as Chris calls them) that are shaping the

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GE – “Bringing Investment Mistakes To Life”

10 days ago

Last week, General Electric (GE) did something that many never thought would happen. They slashed their dividend to just $0.01 per share.
We are talking about GE. A company which has been bringing “good things to life” for well over 100-years.
There is an important lesson to be learned here by investors who have long bought into the myth of:
“I don’t care about the price, I bought it for the yield.”
First of all, let’s clear up something.
Company ABC is priced at $20/share and pays $1/share in a dividend each year. The dividend yield is 5% which is calculated by dividing the $1 cash dividend by the price of the stock.
Here is the important point. You do NOT receive a “yield.”
What you DO receive is the $1/share in cash paid out each year.
Yield is simply a mathematical calculation.
This

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S&P 500 Monthly Valuation & Analysis Review – 10-31-18

10 days ago

J. Brett Freeze, CFA, founder of Global Technical Analysis. Each month Brett will provide you their valuable S&P 500 Valuation Chart Book. This unique analysis provides an invaluable long term perspective of equity valuations. If you are interested in learning more about their services, please connect with them.

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Market Stalls At Resistance (Selling The Rally) 11-02-18

12 days ago

Market Stalls At Resistance
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Market Stalls At Resistance
This past Tuesday, I wrote “A Sellable Rally” in which I laid out the 4-reasons for a rally based on the psychological, fundamental, technical, and seasonal underpinnings. That rally came to fruition over the last few days.
For us, it has been the technical backdrop which remains the most compelling. To wit:
“Unlike the February lows, the recent sell-off fell 4-standard deviations below the 50-dma which is a rare event historically speaking. Such deviations do not last long as such an extreme move away from the average price tend to be corrected in fairly short order.“

As shown,

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Weekend Reading: October Exposed The Passive Problem

13 days ago

I have written about the “problem with passive” previously which mostly fell on “deaf ears.” Such should not be surprising after one of the longest advances in market history with virtually no volatility in 2017.
However, as they say, “payback is a bitch.”
This year started off with a January rush higher followed immediately by a 2-week sell-off that wiped out the entire advance. But then it was over, and the market began to stair step higher ultimately reaching all-time highs.
Once again, the “buy and hold” and “passive indexing” mantras were seemingly proved right.
And then the month of October arrived and stocks plunged more in one month (-7.4%) as compared to the decline from the closing highs in January to the lows of March (-6.5%).  (As noted, it is important that November musters a

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The Important Role Of Recessions

14 days ago

It is a given that you should never mention the “R” word.
People assume you mean the end of the world is coming and you are sitting in cash, burying gold in the backyard, and stocking up on “beanie weenies” and ammo.
The reality is that recessions are just a necessary part of the economic cycle and the only real debate is on the timing of when the next recession will begin. Currently, most economists expect no recession until 2020 or even later. However, given the economy’s weakened ability to withstand higher interest rates, which has been compounded by a decade of artificially suppressed interest rates which have pulled forward future demand, I suspect it could come sooner.
More importantly, the decade of low rates has allowed fundamentally weak companies to stay in business by taking on

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Technically Speaking: A Sellable Rally?

16 days ago

In this past weekend’s revised newsletter format, I noted the markets were due for an oversold rally. To wit:
“While technically there is a weekly confirmed sell-signal in place, the very oversold condition continues to suggest a short-term rally back to the top of the current trading range is likely.”
Yesterday, the markets surged out of the gate as buyers came in and it looked as if a tradeable rally was set to ensue. But such was not to be the case as by late afternoon the markets turned red.
The good news, if you want to call it that, was that the market did approach, and bounce off of, the March weekly closing lows. With the market now more deeply oversold than what was seen earlier this year, we still expect there to be a counter-trend rally in the next several days.
The bad news is

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Kass: High Anxiety In The Markets

16 days ago

“Brophy: I got it. I got it. I got it. 
[thump] 
Brophy: I ain’t got it.” – Mel Brooks, High Anxiety
Arriving at Los Angeles International Airport, Dr. Richard Thorndyke has several odd encounters (such as a flasher impersonating a police officer, and a passing bus with a full orchestra playing inside it). Dr. Thorndyke remarks:
“What a dramatic airport!”
He is taken by his driver, Brophy, to the Psycho-Neurotic Institute for the Very, Very Nervous, where he has been hired as a replacement for Dr. Ashley, who died mysteriously. Brophy has a condition of nervousness, and he takes pictures when he gets nervous. Upon his arrival, Thorndyke is greeted by the staff, Dr. Charles Montague, Dr. Philip Wentworth, and Nurse Charlotte Diesel. When he goes to his room, a large rock is thrown through

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Jeremy Grantham’s Best Long-Term Advice For Investors

17 days ago

Over the weekend, I was reviewing some old commentary and stumbled across a piece from 2012 which contained an excerpt from Jeremy Grantham who is the famed investor at GMO.
I have spoken, and written many times in the past, that the media and Wall Street alike promotes the bullish and optimistic views not because it is correct – but because it sells product. There is no value in telling the retail investor the truth about the risks in the market because investors would pull money out of the market which would reduce Wall Street’s profitability. In other words, the bullish and optimistic marketing machines are good for their bottom line – just not necessarily yours.  This is one of the primary points that Jeremy Grantham brought out in his commentary.
This is a read which is well worth

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Market Gets Crash(ier) 10-26-18

19 days ago

Newsletter Changes
Markets Get Crash(ier)
Actions To Take Next Week
Sector & Market Analysis
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Newsletter Changes
Okay…I Heard You.
Shorter. Simpler. To The Point(ier.)
For almost two decades now I have been writing this weekly newsletter. I am overwhelmed and humbled by the literally millions of you who have read and shared it over these past years.
Back then, I was ONLY writing on the weekends. So, the newsletter became a central repository of my thoughts, convictions, forecasts, and portfolio actions each week as the market evolved.
However, in recent years, I have started writing almost daily (along with my great and talented colleagues of Michael Lebowitz (CFA), Richard Rosso (CFP), Danny Ratliff

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Weekend Reading: Recession Risk Rising

20 days ago

In yesterday’s post, we discussed the importance of the S&P 500 as a leading indicator of recessions in the U.S.
“The problem with making an assessment about the state of the economy today, based on current data points, is that these numbers are “best guesses” about the economy currently. However, economic data is subject to substantive negative revisions in the future as actual data is collected and adjusted over the next 12-months and 3-years. Consider for a minute that in January 2008 Chairman Bernanke stated:
‘The Federal Reserve is not currently forecasting a recession.’
In hindsight, the NBER called an official recession that began in December of 2007.”
My friend David Stockman from Stockman’s ContraCorner (a must-read site) sent me an email on Thursday morning stating:
“On your

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Exclusive Interview: Daniel LaCalle

20 days ago

My interview with Daniel LaCalle on everything from Central Bank policy, interest rates, market risk, and the future of economic growth.
Read more from Daniel Lacalle at D-Lacalle.com
Daniel Lacalle is a PhD in Economy and fund manager. He holds the CIIA financial analyst title, with a post graduate degree in IESE and a master’s degree in economic investigation (UCV).
Chief Economist at Tressis SV
Fund Manager at Adriza International Opportunities.
Member of the advisory board of the Rafael del Pino foundation.
Commissioner of the Community of Madrid in London.
President of Instituto Mises Hispano.
Professor at IE business school, IEB and UNED.
Ranked Top 20 most influential economist in the world 2016
Why This Earnings Season Is Less-Euphoric Than The Last
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Is The U.S.

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Exclusive Interview: Doug Kass

21 days ago

My interview with the brilliant Doug Kass on the recent market rout, his views on the world, economic growth, and earnings outlook going into next year. We also talk bonds, market cycles, and why the bull market remains at risk.
You can subscribe to Doug’s excellent commentary at Real Money Pro
Doug cut his teeth as an investigator and truth-teller as a member of “Nader’s Raiders,” Ralph Nader’s crusaders for consumer protection and safety. In fact, he co-authored Citibank: The Ralph Nader Report with Ralph Nader and the Center for the Study of Responsive Law.
Kass started his investment career as a housing analyst at Kidder, Peabody in 1972 after receiving his bachelor’s from Alfred University and his MBA in Finance from the University of Pennsylvania’s Wharton School.
After holding a

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Is The Market Predicting A Recession?

21 days ago

There has been lot’s of analysis lately on what message the recent gyrations in the market are sending.
Is this just a correction in an ongoing, and seemingly never-ending, bull market?
Maybe. Anything is possible.
Or, is the financial market starting to pick up on what we have been warning about for the last several months which is simply higher rates, slowing global growth, and trade wars are going to impact the economy?
The consensus is that with the current spat of strong economic growth, unemployment and jobless claims at record lows, and confidence near record highs, there is simply no way the economy is even close to starting a recession. Furthermore, with economic growth slated to come in at 3.4% for the 3rd-quarter, this is further evidence a recession is “nowhere in sight.”

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Technically Speaking: Risk Of A Bigger Correction Rising

23 days ago

Update: This article was update post-market open to account for early decline.
In this past weekend’s missive “Market’s Cling To Support,” I noted the early February correction process where we saw a similar short-term bottoming process where the initial bounce failed then bounced in mid-March before failing again to retest the February lows. 
On Monday, the market broke through the 200-dma which puts portfolio management on high alert. However, we have seen these breaks before where the market rallies back above support by Friday’s close. With the market deeply oversold, as we saw in February of this year, we want to give the market just a bit of room here.

This morning, futures are pointing to about a 1% loss on the S&P 500 at the open. Importantly, if the market fails to recover by

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An Investor’s Desktop Guide To Trading

24 days ago

Throughout history, individuals have been drawn into the more speculative stages of the financial market under the assumption that “this time is different.” Of course, as we now know with the benefit of hindsight, 1929, 1972, 1999, 2007, and most likely 2019, were not different – they were just the peak of speculative investing frenzies. Of course, if you went through one of the more recent bear market drawdowns, there is an important distinction, as my colleague John Coumarianos recently penned, “You’re Different This Time.”
“Even if you sailed through the 2007-2009 market meltdown without undue worry or panic-selling, the next downturn could prove more visceral if retirement is closer at hand and starting to seem like a realistic possibility. It’s not fun to see your portfolio drop from

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Market Clings To Support 10-19-18

26 days ago

Clinging To Support
Tops Are Processes – A Review
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Clinging To Support
Over the last couple of weeks, as interest rates surged above 3%, we explored the question of whether something had “just broken” in the market.
This is an important question given the current stance by the Fed appears to be considerably hawkish as noted by the recent minutes:
 A Number of Officials Saw Need to Hike Above Long-Run Level
“A few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level.”
The Fed is

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Weekend Reading: Tax Cuts Saved The Economy?

27 days ago

IBD recently penned an article touting the success of the recent tax cuts from the Trump administration.
“The Treasury Department reported this week that individual income tax collections for FY 2018 totaled $1.7 trillion. That’s up $14 billion from fiscal 2017, and an all-time high. And that’s despite the fact that individual income tax rates got a significant cut this year as part of President Donald Trump’s tax reform plan.”
Hold on a second.
A $14 billion increase on $1.68 Trillion in receipts is a very paltry 0.8% increase. This is the 8th LOWEST rate of increase in the history of data and is more representative of population growth rather than the success of tax cuts bringing in more revenue.

In fact, when looking at Federal Receipts on an annualized basis, growth in receipts as of

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F.I.R.E.’d Up – A Million Ain’t What It Used To Be

28 days ago

The FIRE (Financial Independence Retire Early) Movement is literally on “fire” after Suze Orman recently suggested that one would need $5 million if they wanted to retire early.
“You need at least $5 million, or $6 million. … Really, you might need $10 million,” she said — short of that, it’s just not going to be enough for most people.
“You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime. I think it’s just ridiculous. You will get burned if you play with FIRE.”
FIRE supporters immediately leapt to the movement’s defense and criticized Orman’s view.
Here is the interesting part – both are right and wrong.
The amount of money you need in retirement is based on what you think your income needs will be

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Technically Speaking: Is A Year-End Rally Still Possible?

October 16, 2018

For the last few months, we have repeatedly warned about the mounting risks which were being ignored by an increasingly overly complacent, overly exuberant market. Doug Kass had a good compilation of those concerns on Friday:
The Fed Chairman seemed more hawkish in tone recently
Rising interest rates provide an alternative to stocks and reduce the value of long-dated assets.
Higher inflation (input costs) will pressure corporate margins and profitability.
A pivot in global monetary policy towards constraint from easing.
Policy risks.
Midterm election uncertainties.
Fiscal policy that has trickled up (not trickling down).
Our Administration’s trade policy and (as expressed in my missives this week) reversing the post-WWII liberal order holds multiple social and economic risks.

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Let’s Be Like Japan

October 15, 2018

There has been a lot of angst lately over the rise in interest rates and the question of whether the government will be able to continue to fund itself given the massive surge in the fiscal deficit since the beginning of the year.

While “spending like drunken sailors” is not a long-term solution to creating economic stability, unbridled fiscal stimulus does support growth in the short-term. Spending on natural disaster recovery last year (3-major hurricanes and two wildfires) led to a pop in Q2 and Q3 economic growth rates. The two recent hurricanes that slammed into South Carolina and Florida were big enough to sustain a bump in activity into early 2019. However, all that activity is simply “pulling forward” future growth.
But the most recent cause of concern behind the rise in interest

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Yes, Something Just Broke 10-12-18

October 13, 2018

Yes, Something Broke
More Than Just Rates
This Time IS Different
What To Expect Next Week
Checklist Summary Of Actions To Take
Sector & Market Analysis
401k Plan Manager
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Yes, Something Broke
In this missive, we are just going to focus on the “WTF!” moment of this past week. In order to do this properly, I need to start with last week’s missive where we asked the question “Did Something Just Break?” In that article we addressed very specific concerns about interest rates and the problem they were going to cause.
“Speaking of rates, each time rates have climbed towards 3%, the market has stumbled.”
Chart updated through Friday.

“If you note in the chart above, a short-term ‘warning signal’ has been triggered which

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