Thursday, December 19, 2013

The Taper Is On – 8 Ways That This Is Going To Affect You And Your Family

The unelected central planners at the Federal Reserve have decided that the time has come to slightly taper the amount of quantitative easing that it has been doing.  On Wednesday, the Fed announced that monthly purchases of U.S. Treasury bonds will be reduced from $45 billion to $40 billion, and monthly purchases of mortgage-backed securities will be reduced from $35 billion to $30 billion.  When this news came out, it sent shockwaves through financial markets all over the planet.  But the truth is that not that much has really changed.  The Federal Reserve will still be recklessly creating gigantic mountains of new money out of thin air and massively intervening in the financial marketplace.  It will just be slightly less than before.  However, this very well could represent a very important psychological turning point for investors.  It is a signal that “the party is starting to end” and that the great bull market of the past four years is drawing to a close.  So what is all of this going to mean for average Americans?  The following are 8 ways that “the taper” is going to affect you and your family…
1. Interest Rates Are Going To Go Up
Following the announcement on Wednesday, the yield on 10 year U.S. Treasuries went up to 2.89% and even CNBC admitted that the taper is a “bad omen for bonds“.  Thousands of other interest rates in our economy are directly affected by the 10 year rate, and so if that number climbs above 3 percent and stays there, that is going to be a sign that a significant slowdown of economic activity is ahead.

Read more at http://investmentwatchblog.com/the-taper-is-on-8-ways-that-this-is-going-to-affect-you-and-your-family/#AIwgYXpl52gcogyl.99
The unelected central planners at the Federal Reserve have decided that the time has come to slightly taper the amount of quantitative easing that it has been doing.  On Wednesday, the Fed announced that monthly purchases of U.S. Treasury bonds will be reduced from $45 billion to $40 billion, and monthly purchases of mortgage-backed securities will be reduced from $35 billion to $30 billion.  When this news came out, it sent shockwaves through financial markets all over the planet.  But the truth is that not that much has really changed.  The Federal Reserve will still be recklessly creating gigantic mountains of new money out of thin air and massively intervening in the financial marketplace.  It will just be slightly less than before.  However, this very well could represent a very important psychological turning point for investors.  It is a signal that “the party is starting to end” and that the great bull market of the past four years is drawing to a close.  So what is all of this going to mean for average Americans?  The following are 8 ways that “the taper” is going to affect you and your family…
1. Interest Rates Are Going To Go Up
Following the announcement on Wednesday, the yield on 10 year U.S. Treasuries went up to 2.89% and even CNBC admitted that the taper is a “bad omen for bonds“.  Thousands of other interest rates in our economy are directly affected by the 10 year rate, and so if that number climbs above 3 percent and stays there, that is going to be a sign that a significant slowdown of economic activity is ahead.

Read more at http://investmentwatchblog.com/the-taper-is-on-8-ways-that-this-is-going-to-affect-you-and-your-family/#AIwgYXpl52gcogyl.99
The unelected central planners at the Federal Reserve have decided that the time has come to slightly taper the amount of quantitative easing that it has been doing.  On Wednesday, the Fed announced that monthly purchases of U.S. Treasury bonds will be reduced from $45 billion to $40 billion, and monthly purchases of mortgage-backed securities will be reduced from $35 billion to $30 billion.  When this news came out, it sent shockwaves through financial markets all over the planet.  But the truth is that not that much has really changed.  The Federal Reserve will still be recklessly creating gigantic mountains of new money out of thin air and massively intervening in the financial marketplace.  It will just be slightly less than before.  However, this very well could represent a very important psychological turning point for investors.  It is a signal that “the party is starting to end” and that the great bull market of the past four years is drawing to a close.  So what is all of this going to mean for average Americans?  The following are 8 ways that “the taper” is going to affect you and your family…
1. Interest Rates Are Going To Go Up
Following the announcement on Wednesday, the yield on 10 year U.S. Treasuries went up to 2.89% and even CNBC admitted that the taper is a “bad omen for bonds“.  Thousands of other interest rates in our economy are directly affected by the 10 year rate, and so if that number climbs above 3 percent and stays there, that is going to be a sign that a significant slowdown of economic activity is ahead.  (more)

Please share this article

Broadcom Corporation (NASDAQ: BRCM)

Broadcom Corporation provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environments. The company operates in three segments. The Broadband Communications segment offers solutions for home, including cable, xDSL, fiber, satellite, and IP broadband networks to enable the connected home, such as set-top-boxes and media servers, residential modems and gateways, small and residential cells, and wired home networking solutions. The Mobile and Wireless segment provides low-power, high-performance, and highly integrated solutions powering the mobile and wireless ecosystem that consists of Wi-Fi and bluetooth, cellular SoCs, personal navigation and global positioning, near field communications, voice over IP, and mobile power management solutions. The Infrastructure and Networking segment offers highly integrated solutions for carriers, service providers, enterprises, small-to-medium businesses, and data centers for network infrastructure needs, including ethernet switches, physical layer devices, multicore embedded processors, knowledge-based processors, digital front ends for wireless infrastructure, switch fabric solutions, high-speed ethernet controllers, and microwave backhaul devices.
Please take a look at the 1-year chart of BRCM (Broadcom Corporation) below with my added notations:
1-year chart of BRCM (Broadcom Corporation)
BRCM appears to have been forming a base from July through November. Several times over that period of time the stock hit a key resistance level at around $28 (blue). Earlier this week BRCM finally broke up out of its range and above that important $28 level. The stock should be moving overall higher from here, assuming it holds above $28.

The Tale of the Tape: BRCM had a key level of resistance at $28 that should now act as support on any pullbacks. A long trade could be entered on a pullback to $28 with a stop placed below that level. A break back below $28 could negate the forecast for a move higher.
Please share this article

McAlvany Weekly Commentary

China, the Cure for Lower Gold Prices


About this week’s show:
-Gold price to be Shanghaied by 2018
-100,000 banks distribute gold in China
-760 tons of liquidated gold shipped to China
Please share this article

Mortgage Applications Collapse To New 13-Year Low

Despite yesterday's exuberant spike in optimism from the NAHB sentiment index to 8 year highs, the delusion from reality appears to growing ever wider. This morning's "if we build them, they will buy'em" false headline spike in housing starts (seasonally-adjusted) is yet another delusional divergence as the mortgage applications index collapses (down 60% from 2013 highs) to a new 13-year low.
New 13-year lows in mortgage applications...


but, hey, seasonally-adjusted we'll just keep building...


Charts: Bloomberg
Please share this article

Perfect storm sending the A$ below 85c

Australian dollar


Earlier this year I ate a $36 hamburger in Sydney.

And after the sticker shock wore off, I wrote about the Australian dollar’s massive, obvious overvaluation.

When the Aussie dollar passed A$1.04 per US dollar, I advised readers of my premium investment newsletter to protect the value of their portfolios with a trade that profits as the Australian dollar falls.

This call paid off for my readers; the Aussie dollar is now below $0.90. But I believe it has much further to fall.

For starters, Reserve Bank Governor Glenn Stevens (Australia’s equivalent of Ben Bernanke) said in a widely publicized interview last week that he wants the Australian dollar at 85c or below.  (more)

Please share this article

Do Stocks Offer Protection From Rising Rates?


Dec 17, 2013

Click to view There is a rising belief that when the Federal Reserve begins to taper that interest rates are set to rise. It is believed that, as rates rise due to stronger economic strength, the stock market will act as a hedge against falling bond prices. Recently, Blackrock attempted to answer this question by stating:
More...

Please share this article