Well here it is; it is a sure bet that a lot of companies are saving their machine tool and high end manufacturing equipment purchases until year end, for tax management purposes. This graph (from EDA) does not tell me this. My many years in the industry do. It’s a Q4 tradition, which I participated in on a few occasions myself.
Indeed, my contact (servicing the Semi industry) is planning to add a couple pieces. Whether or not this bump will coincide with market strength is another topic, but one might want to watch the best of the machine tool and high end manufacturing equipment sectors. Much hyped though it is, that would include the the 3D Printing guys too.
*  This is a 5 year relative view. Longer-term, the S&P 500 remains over valued per its historical corporate profits metrics.
Pretend with me that we are in Wonderland, where policy inputs can keep everything on the macro in control forever and allow conventional mainstream financial industry people to twittle their P/E ratios and growth metrics for individual stocks and sectors as if it is a normal recovery of a normal economy. In this scenario the S&P 500 is no longer over valued, at least by the corporate profits data compiled by this SlopeCharts graph.
It’s the same one we used to illustrate the over valuation that even a buttoned down Wall Street analyst could see (or should have seen) in the run up to the recent correction. Well, it’s fixed now. Again, we’re talking about what the financial services industry will want to promote to its clients, not the macro.
Guest Analysis by Bob Hoye
Click image for full report
Guest Post by Steve Saville
That gold mining has generally been a crappy long-term investment for almost five decades is evidenced by the following chart. The chart, much of the data for which were provided by Nick Laird of www.sharelynx.com, shows the ratio of the Barrons Gold Mining Index (BGMI) and the US$ gold price from 1920 through to the present*. More specifically, it shows that, relative to gold bullion, the group of gold-mining stocks represented by the BGMI has been in a secular decline since 1968 and is now close to its lowest level since 1948. The question is: Why have gold mining stocks performed so poorly for so long relative to the metal?
After weeks of bloating up to 35-40 pages in gauging what turned out to be a fully expected market crack, NFTRH slims back down to 26 concise and clear pages dealing with what we have now. We look at 1998 to 2002, 2007-2008 and 2011 for reference and perspective on previous market tops; secular, cyclical and interim, respectively.
We also keep the relevant indicators in rotation and carve out some favored near to intermediate term plans for the US stock market. Global markets are a mess and commodities are caught in a deflationary whirlpool circling around the drain.
Then there are the precious metals. Most gold bugs fetishize inflation and most gold bugs are wrong.
A very enjoyable report to write and speaking personally, it was rewarding as well because it helped me clarify my own views on asset markets.
NFTRH 313 out now. Check out a subscription. You’ll be glad you did.
Here is some feedback a republished post of mine (Market Summary; Saturday Morning Cartoons) got at a leading gold website from a reader.
Guest Post by Doug Noland
“Anyone who isn’t really concerned doesn’t understand the situation.”
Goldman Sachs CEO Lloyd Blankfein provided a market-calming interview late Thursday afternoon with CNBC’s Carl Quintanilla. Not surprisingly, I suppose, Blankfein praised the Fed for being “wise and courageous.” He also stated that extreme market views were wrong. Considering the global backdrop, I actually see a curious lack of extreme views (at least from the bear side). Instead, we’re at the stage of the cycle where even “bearish” pundits go out of their way to distance themselves from “the world is ending” prognosis. I guess I would be considered an extremist, though I don’t see the world ending anytime soon. But this week did offer further evidence that history’s greatest financial Bubble is at significant risk.
So am I and so are most decent people. So bravo Janet, you are a decent person. You are greatly concerned about inequality in this richest nation on earth.
Yellen says she’s ‘greatly’ concerned by rising inequality
Now let’s work the details…
“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” Yellen said in a speech to a conference on inequality sponsored by the Boston Fed.
It is also no secret that manipulating short-term interest rates toward zero kills regular peoples’ ability to save. It creates and furthers a wealthy investor class directly at the expense of the public, who have traditionally been savers.
Allow me to share a simple sketch I drew that was part of an NFTRH interim update for subscribers last night. The black line is where we have been. The blue line is a projection of what a typical correction (whether a healthy interim one or a bear market kick off) might look like.
We used real charts of the Dow, S&P 500 and Nasdaq 100 to gauge the entry into the current correction and now the resistance points to the expected bounce off of the US market’s first healthy sentiment reset in quite some time. But our cartoon above gives you the favored plan on how the correction could play out.
Guest Post by Tom McClellan
Summation Index Rate Of Change
October 17, 2014
When the McClellan A-D Summation Index makes a big move in a short amount of time, that action contains important information. This week, I’ll show a pair of charts that help to make this point.