Central Banks

  • 27 Nov
    This Is Why International Diversification Is So Important

    This Is Why International Diversification Is So Important

    • The 30% international revenue exposure the S&P 500 offers isn’t enough.
    • It’s possible to add significant returns and lower your risk when investing internationally.
    • A look at economic health and fundamentals will show where it’s best to invest now.



    Introduction

    An often overlooked part of investing and portfolio strategies are currencies.

    The easiest way to look at it is to say that it all evens out over time and that the only thing important is to be diversified. By owning the S&P 500 or companies that have global revenues, we could say that a portfolio is well diversified. More →

  • 23 Nov
    The Stock Market Will Crash In 2018 – Here’s What Could Trigger It

    The Stock Market Will Crash In 2018 – Here’s What Could Trigger It

    • All indicators show a stock market crash is imminent, but what will the trigger be?
    • I’ll discuss what can happen and how bad it could get.
    • As for the timing of it, the best thing is to be prepared for anything.



    Introduction

    To see whether the stock market will crash in 2018 or not, we have to first see what makes a stock market crash and the best way to do that is to look at the 2001 and 2008 market crashes because the financial environment prior to those crashes resembles the current market environment. More →

  • 13 Nov
    Inflation Points To A Recession On The Horizon – Here’s What You Need To Know

    Inflation Points To A Recession On The Horizon – Here’s What You Need To Know

    • Everybody expected high inflation after 2009, but it didn’t happen. There are specific reasons for that.
    • However, higher food and energy prices are pushing inflation higher. The low unemployment rate should help too.
    • Today, I’ll discuss how to best position yourself for an inflationary environment.



    Introduction

    There is one little bell always ringing in my mind: inflation, inflation, inflation.

    From all my analysis, inflation is something that could really shock the financial world. In today’s article, I’ll first show the current inflation levels for the most important economies, and then will dig deeper into what can happen in the next few years and how could that affect your portfolio. More →

  • 08 Nov
    Is Everything Now Too Big To Fail?

    Is Everything Now Too Big To Fail?

    • Today, we’ll discuss how the “too big to fail” concept has evolved since it was first used back in 1984.
    • The U.S. stock market to pension funds relation shows that even the stock market is simply too big to fail.
    • In Europe, the situation is even worse. Everything there is too big to fail, from countries to corporations to junk bonds.



    Introduction

    “Too big to fail” is a concept that you probably recognize from the 2009 financial crisis when many corporations, particularly financial institutions, were considered too big to fail due to the negative impact their demise would have on the whole economic system.

    In order to prevent massive negative effects on the economy, and also to prevent a 1930s depression-style situation, governments intervened and bailed out the distressed assets. More →

  • 25 Sep
    These 5 Charts Say A Recession Is Near

    These 5 Charts Say A Recession Is Near

    • A recession usually takes everyone by surprise.
    • The current environment is ripe for a recession, we just need a trigger.
    • The stock market will react as investors react, which is usually completely irrationally. Be prepared.

    Introduction

    The latest FED meeting didn’t give us much news.

    The monetary policy remains accommodative with the interest rate between 1% and 1.25%, while the balance sheet normalization program is purely cosmetic with minimum monthly asset sales.

    We shouldn’t expect anything else from the FED as their objective is to maintain full employment and stability. As long as there isn’t significant inflation, the low interest rates help lower the unemployment rate. More →

  • 11 Sep
    Out Of This World Debt Levels Will Damn Future Generations

    Out Of This World Debt Levels Will Damn Future Generations

    • Debt levels are the key driver of economic growth in developed countries. So keep an eye on debt.
    • The velocity of money, household debt, car loans and sales aren’t telling a good story.
    • Globally, the situation isn’t much better. However, there are a few exceptions.

    Introduction

    In today’s article, I’ll analyze the current global debt environment.

    Debt is an economic factor that is unwatched as long as things are going well but as soon at things turn south, everyone will be screaming about a debt crisis and the end of the financial world as we know it.

    Given this, it’s extremely important to know what is going on, how sustainable the current debt levels are, what the impact of debt on the economy is, how to position your portfolio, and perhaps even how to take advantage of potential black swans arising from future debt instabilities. More →

  • 17 Aug
    Worried About The Current Environment? Here’s Why You Should Be.

    Worried About The Current Environment? Here’s Why You Should Be.

    • We’ll discuss the most obvious risks to the current financial environment.
    • For example, higher interest rates are already negatively affecting the U.S. economy and inflation.
    • However, the most dangerous risks are the hidden ones.

    Introduction

    Yesterday we discussed the main factor behind the current bull market, i.e. central bank asset purchases, and I described three potential scenarios, one where things continue as expected, one where central banks increase stimulus, and one where inflation messes things up for everyone.

    Nevertheless, nothing that was discussed in yesterday’s article was a new finding. Such fears have been circulating the financial environment since 2009, and as we have witnessed, nothing much has changed since then while the global financial system seems stable as a rock. Even Japan’s economic activity has surprised on the upside with growth of 4% for Q2 2017. More →

  • 16 Aug
    Why You Need To Prepare For All Hell To Break Loose

    Why You Need To Prepare For All Hell To Break Loose

    • The last stock bull market was influenced by central bank activity, that’s clear. What’s next is the question.
    • I’ll describe three potential scenarios that could impact our financial system.
    • One is good, the second is interesting, while the third is ugly.

    Introduction

    The general expectation is that the FED will start selling securities in order to tighten monetary policy, that the ECB will slowly stop buying, and that nothing will change in Japan. Nevertheless, such a situation would lead to an environment where the additional liquidity created by central banks finally dries up. As the liquidity provided by central banks is the main reason behind this bull market, should investors begin to cut their positions?

    In order to elaborate on this question, we’ll first analyze the situation, the expected situation, and then possible scenarios in order to give you the best answer on how to prepare yourself for what might happen. It’s extremely important to do so and, as you will see, it isn’t that difficult. More →

  • 08 Aug
    Are Stocks & Bonds In A Bubble? Sven Thinks So…

    Are Stocks & Bonds In A Bubble? Sven Thinks So…

    • Earnings have been growing in the last 12 months, but haven’t grown that much over the last 20 years.
    • Even the Swiss central bank owns almost $3 billion worth of Apple’s stock.
    • After the dot-com and the housing bubbles, school books will talk about the central bank bubble in the future.

    Introduction

    All we see right now is the stock market continuing to go up. The S&P 500 is already up 9.7% year to date, and there is no sign that the trend might weaken or reverse. Over the last 8 and a half years, the index is up 242%. More →

  • 31 Jul
    Europe Is Verging On Communism. Investors Beware.

    Europe Is Verging On Communism. Investors Beware.

    • I’ll describe what communism is and how close Europe is to it.
    • I’ll analyze the implications the current monetary environment will have on investments in Europe and the European currency.
    • You can’t compete with a European company that borrows at negative interest rates.

    Introduction

    Now, the title of today’s article is a pretty heavy statement, but let’s look at the definition of communism and what’s currently going on in Europe to see how far Europe is from actually being communist. More →

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