Is A Stealth Liquidation In Stocks Underway?

It is September 2014 and all is well. Or is it? The U.S. stock market set a new all-time high earlier in the month and is less than +2% from striking another fresh peak despite some modest weakness in recent days. The uptrend in stocks also remains firmly intact and is supported by an economy that while sluggish is still plodding along. But despite this generally placid appearance on the surface, some notable signs of deterioration are growing underneath that warrant close attention in the days ahead. For it is possible that something much more substantial to the downside may be slowly starting to brew.

Please click on the link to read more of my article on Seeking Alpha.

Are You Positioned For ECB Stimulus?

The European Central Bank (ECB) brought fireworks to their latest press conference this past Thursday. Not only did ECB President Mario Draghi announce a cut of its main lending rate to the “lower bound” of 0.05%, he also revealed that the central bank’s intent to enter into its own form of quantitative easing (QE) by purchasing asset backed securities (ABS) and covered bonds at totals estimated between $500 billion to $1.3 trillion as early as October. This targeted long-term refinancing operation (TLTRO) is being done with the stated objective of trying to more directly promote lending activity to small and mid-sized businesses across the euro zone. Given that we have seen so many of these monetary stimulus programs initiated by global central banks over the past few years, it is reasonable to consider whether a portfolio strategy is well positioned for this latest ECB stimulus plan.

Please click on the link to read more of my article on Seeking Alpha.

Investissements Sans Frontieres

Investors are stock market obsessed. When tracking the daily financial news from mainstream media sources, you could easily draw the conclusion that if one seeks to generate a reasonable rate of return on their investment, the U.S. stock market is the only game in town. Sure, the bond market gets a passing discussion on occasion but it is often in relation to stocks. Gold might also receive a brief mention along with a look of derision every now and then. But otherwise, nearly all of the daily conversation in the mainstream financial media centers on the U.S. stock market. It might seem to many that if you are not invested in U.S. stocks, you are simply not invested at all. But this notion could not be further from the truth as we live in a world of investment possibilities that is increasingly without borders. And given how strong the U.S. stock market has performed over the last few years relative to so many alternatives, it is becoming ever more reasonable to explore the opportunities that may exist outside of this perceived comfort zone.

Please click on the link to read more of my article on Seeking Alpha.

Rising Risks In The Quest For Yield

Income oriented investors have been traveling through a yield desert over the last several years. Thanks to extraordinary monetary policy from the U.S. Federal Reserve that has included keeping interest rates pinned at zero percent for the last five years, those living on fixed incomes including retirees have been forced out of the safety of FDIC insured saving deposits and into various higher risk investment vehicles in an effort to find yield. Recognizing the voracious appetite for income in the yield-starved environment, some institutions and individuals have poured into these same higher income areas of the stock market, some with the use of leverage, to not only capture but also amplify yields. While the reliance on higher risk investments has helped satisfy the demand for yield to this point, it is reasonable to consider whether unforeseen risks and unintended consequences are being fostered in the process.

Please click on the link to read more of my article on Seeking Alpha.

This QE Bower My Prison

The Federal Reserve’s persistently aggressive monetary policy has had a paralyzing effect for many investors over the last several years. Like a skillet of boiling hot milk being emptied on one’s foot, repeated monetary stimulus programs, including three rounds of quantitative easing, two rounds of Operation Twist and the quintupling of the Fed’s balance sheet, has distorted capital markets in such a way that it has imprisoned many investors to a bower of heightened risk control and uncharacteristically short-term thinking amid the expectation that the negative spillover effects from such unprecedented policies will eventually come home to roost in a significant way. But as we enter the twilight of the Fed’s supposed final round of quantitative easing, the confined investor has reason for gladness, for they can continue to delight in the splendor of today’s market while also knowing that nature never deserts the wise and pure in the end.

Please click on the link to read more of my article on Seeking Alpha.

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