Monday, May 14, 2012

Tom Fitzpatrick: Stocks to Go Down 27%, Bonds to Go Up to Extreme Levels, Gold to Remain Firm / by Munknee / May 13, 2012

A top analyst at Citibank has told King World News that global stock markets are set to plunge 27%. Fitzpatrick…the panic will move global bond markets to extreme levels, but gold will remain firm.

So says*Tom Fitzpatrick*in edited excerpts from an interview with King World News as provided by Lorimer Wilson, editor of (Your Key to Making Money!). This paragraph must be included in its entirety in any re-posting to avoid copyright infringement.

Specifically Fitzpatrick said, in part [you can read the full article here, complete with enlightening charts]:

“We think that, short-term,*the S&P 500 and the DJIA*will head down to their 200 day moving averages in a similar fashion to what we saw last year which would be*1277 and 12,000 respectively [Go here to see*his chart].

Comparing the market environment with that of ’73 to ’77….when we had a similar deterioration in housing, in the economy as well as in the U.S.*dollar, gold and the oil price shocks, and*sensing that we may have already put in the peak here, the suggestion is that the next down-move would be in the region of 27%. This could be a very quick move, in as little as four or five months.” [Go here to see his chart.


LISTEN NOW – Gold, Major Markets, What to Expect this Summer & More – Michael Pento

from KingWorldNews:

Michael Pento: President of Pento Portfolio Strategies – Michael is a well-established specialist in the “Austrian School” of economics. A regular on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications. Prior to starting Pento Portfolio Strategies and joining Agora Financial, Mr. Pento served as a senior economist and VP of the managed products division of another well known financial firm. Michael has also created ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.


BAY STREET-Canada stocks seen sliding further on global woes

(Reuters) - Canadian stocks, which slumped to a 2012 low last week, are likely to suffer further losses in the coming months as Europe's debt woes move back into the headlines and China's economy struggles to maintain momentum.

Market watchers warn the benchmark Toronto Stock Exchange S&P/TSX composite index could easily revisit its 2011 low, giving credence to the old market adage "sell in May and go away".

"The lows of last year are a reasonable barometer of where we might go," said George Vasic, chief economist and strategist at UBS Securities Canada Inc. "We had a pretty solid fear factor last year."

Last week the Toronto Stock Exchange's S&P composite index hit a 2012 low of 11,555.08 as it fell for six straight sessions. It was the index's worst skid since falling for seven consecutive trading days in May and June of last year.

The first leg of the weakness was triggered by the second soft U.S. jobs report in as many months. But selling picked up after European elections in which France turned sharply to the left and Greeks gave more support to anti-austerity parties, threatening a painfully constructed bailout package.

The losses echoed a year-earlier drop that ultimately sent the TSX index to a 2011 low of 10,848.19 in October. That move was also triggered by Greek and other euro zone debt problems.

Markets only recovered after the European Central Bank flooded the region's shaky banking sector with cheap short-term loans. Encouraging U.S. economic data and a U.S. Federal Reserve pledge to keep interest rates near zero until 2014 later helped push the TSX to a 2012 high of 12,788.63 in February.

Toronto's main stock index, which closed at 11,694.67 on Friday, i s now down more than 8 percent from that high, m aking the Canadian market one of the world's worst performers this year. An alysts warn it could correct a full 10-15 percent.

"Somewhere in the low 11,500s should be the technical bottom," said Barry Schwartz, a portfolio manager at Baskin Financial Services. "If it gets lower, then we're heading into a bear market."

The push lower could come from China. Analysts warn poor trade numbers and a weak reading of industrial growth have made it more likely that the world's top commodities consumer is headed for a hard landing.

"As we see the Chinese economy slow from 11 percent over the past decade down below 8 percent, we're seeing the negative impact on commodity prices and thus on the Canadian market," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis.

The sectors of the TSX most sensitive to growth, resource shares, are seen as the most likely to lead market declines. Energy and mining stocks are already 2012's worst performers.

A drop in U.S. crude oil prices to around $96 a barrel from its yearly high of more than $110 in March has sent the TSX's energy sector plunging ne arly 9 pe rcent. Energy stocks suffering double-digit declines include Talisman Energy Inc and Canadian Natural Resources.

"The biggest risk on the resource side is the oil price," said Paul Hand, managing director at RBC Capital Markets.

Materials stocks, which include miners, have done even worse, shedding more than 1 4 p ercent since March. Gold-mining shares have helped lead the decline, with even such major names as Barrick Gold and Goldcorp Inc off sharply.

"If you look at metals and gold stocks, they've all been crushed," Hand said.


While short-term prospects are ugly, analysts said the losses could be short-lived, with many expecting the market to recover after the uncertainty of the U.S. elections ends in November.

"From these levels, you can see 10, 15, 20 percent tacked on really easily if you have any type of resolution on the political side in the U.S.," said Arthur Salzer, chief executive officer at Northland Wealth Management.

In Reuters poll of 32 market watchers conducted at the end of March, the median forecast predicted the TSX would climb to 13,275 by year's end. While many have since pared back their targets, there are still expectations of a recovery.

"We're certainly constructive on the global growth story over time, and Canada is uniquely and very favorably positioned for that trend," said Fehr. "It's also the exact same trend that is pushing the Canadian markets lower now."

Still, veteran market watchers warned investors shouldn't be too smug, with the volatility of recent years showing Canada's cyclicals-heavy stock market can fall steeply in a crisis.

"Saying something is cheap is by no means any assurance that it won't go down further," Vasic said.

The Power of Motherhood: How to Raise Your Kids to Be Wealthy

Believe it or not, Mother's Day isn't just an invention of the greeting card and flower industry. The tradition dates back to the ancient Greeks as a celebration of Rhea. From there it became a Christian ritual paying tribute to Mary. By the 19th century, Mother's Day evolved into roughly what it is a today: a celebration of Mom.

For the kids and dads, Mother's Day may be all about paying tribute and giving mom a break, but as every good parent knows, raising a child means never really getting a day off.

Camilla Webster, co-author of "The Seven Pearls of Financial Wisdom" is putting a slightly different spin on the day. She's looking to remind us all of the power of mom by encouraging every parent to rethink their influence on their children's financial futures.

Here are Camilla Webster's 5 Ways to Raise Your Kids to Be Wealthy

1. The Big Three

Webster says mothers need to teach your kids the fundamental point of making money in the first place. Income isn't a way to keep score with others or determine your non-financial self worth.

Kids should understand the "Big Three before" drawing their first allowance or paycheck --Save, Spend and Benevolence. Every portion of every dollar coming in should be divided into each of the three.

Stashing some cash for a rainy day, providing for basic needs, and giving back to others. If there's another reason for making a living Webster doesn't think your kids should know it.

2. Model Behavior

"Do as I say, not as I do," is a way to teach your children how to behave recklessly and lie about it.

Your kids are going to imitate the behavior they see at home. The only way to teach them to manage their money correctly is to start doing it yourself.

3. Money Language

Parents recklessly talk about money in an exaggerated, dramatic way bound to confuse kids. "We're broke!" or "We're going to Disneyland" may just mean the heating bill was unexpectedly high or an investment had an uptick, but kids are likely to take the words at face value.

A good mother should no more toss around such talk in front of her kids than she would vulgarity. Speak about your financial situation in plain, honest language in front of your kids.

4. Financial Literacy

Speaking of money talk, finance has a language all its own. Gross, net, tax rate, income bracket... these terms can be indecipherable to many parents, let alone the kids.

Take the time to walk your kids through a financial statement the same way you'd teach them to read or write. Moms will be shocked how fast kids can learn to speak the often bizarre language of money.

5. Drip, Drip, Drip Theory

Step five is to read steps one through four and make them part of your every day life. Sometimes it'll be hard, if not outright painful to spend time organizing and staying on top of your finances. Getting your brokerage statement in the mail after a brutal month in the market is much like bringing home a bad report card; you simply don't want to look at it.

The dirty little secret of being a mom or a dad is that feeling overwhelmed is often par for the course. Teaching your kids to take control of their spending and develop the proper habits will put them on the road to wealth of every kind.

When you think about it, giving kids gifts that last a lifetime is exactly why Mothers deserve their own day in the first place.

Chart of the Day - Scana Corp (SCG)

The "Chart of the Day" is Scana Corp (SCG), which showed up on Thursday's Barchart "All Time High" list. Scana on Thursday posted a new all-time high of $46.70 and closed up 1.75%. TrendSpotter has been Long since Apr 24 at $45.59. In recent news on the stock, Scana on May 3 reported Q1 EPS of 93 cents, which was below the consensus of $1.01 due to the company's natural gas business in Georgia. Stephens on May 4 downgraded Scana to Equal Weight from Overweight. Scana Corp (SCG), with a market cap of $6 billion, Scana Corp. (SCG), has businesses that include regulated electric and natural gas utility operations, telecommunications and other non-regulated energy-related businesses. SCANA's subsidiaries serve electric customers in South Carolina, North Carolina and Georgia.


US Weekly Economic Calendar

time (et) report period Actual forecast previous
None scheduled
8:30 am Retail sales April 0.0% 0.8%
8:30 am Retail sales ex-autos April 0.0% 0.8%
8:30 am Consumer price index April 0.0% 0.3%
8:30 am Core CPI April 0.2% 0.2%
8:30 am Empire state index May 10.0 6.6
10 am Inventories March 0.4% 0.6%
10 am Home builders' index May 27 25
8:30 am Housing starts April 690,000 654,000
9:15 am Industrial production April 0.7% 0.0%
9:15 am Capacity utilization April 79.1% 78.6%
8:30 am Weekly jobless claims 5-12 365,000 367,000
10 am Leading indicators April
0.2% 0.3%
10 am Philly Fed May 11.3 8.5
FRIDAY, May 18
None scheduled