Peter Dag & Friends: October 2015

10/30/15

We are in a recession - no doubt about it!

We are in a recession. Just look at the trends in the above chart (click it to enlarge it). I will discuss them in detail in my next issue of The Peter Dag Portfolio.

Scary! And the Fed is still telling us the economy is ok and they want to push interest rates higher. Incredible.

I have been writing about it for months.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

Deflation!

I have been predicting deflation for some time in my The Peter Dag Portfolio. And now all the recent data suggest we are at the beginning of this dangerous development (see above chart). Dangerous for business and all of us.

Producer prices were down -4.1% y/y.
Consumer prices were down -0.03% y/y.
Prices of the broad PCE were down -0.1% y/y.

Now you understand why major corporations are cutting costs (people). Sales are not rising because of lower prices. Margins are shrinking.

If people find it harder to find jobs they cannot buy goods and services. Consumption grew at a meager 0.1% in September. And business will keep cutting costs due to lower sales and profits.

The business cycle will continue to slow down. A vicious cycle. Risky times ahead. Be careful.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/29/15

The current phase of the business cycle

Where are we in the current phase of the business cycle?

The growth of the economy peaked in 2011 (end of Phase 2). Since 2011 we have been in Phase 3. Beginning in 2015 the real economy started sliding into Phase 4, characterized by very slow growth. Possibly a recession.

Why do we care about trying to understand what is happening to the business cycle?

The growth of the economy has an enormous and defining impact on the prices of all asset classes - from gold to equities to any commodity to bond yields.

Since 2011 investments in commodities, commodity-sensitive investments/stocks, gold or any hard asset has provided very poor returns.

The returns have been generated by staples, healthcare, discretionary, REITs, bonds

This is exactly what you should expect during any business cycle. The time to invest in real assets and commodity-sensitive investment is when the economy moves from Phase 1 to Phase 2 as it did in 2009-2011.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

This is not the way to run a ship!

Incredible! The largest contribution to Q3 economic growth was ......healthcare (via ZeroHedge).

We cannot generate high paying quality jobs if we keep ignoring the real engines of growth. What is happening to private enterprise, education, high-productivity investments, engineering, sciences, math.....?

Are we going to become all nurses and doctors working for an insurance company and government?

I am really confused!

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/19/15

Outlook for gold

Long-term outlook. Since May 2011 I have been writing in The Peter Dag Portfolio that gold had peaked.

Two reasons. The first one - GLD spiked with heavy volume. Second reason - gold is a metal, a commodity. My outlook for commodities has been "down" because of the weak global economy and when the economy is weak commodities are weak.

Near-term outlook. I love to see the patterns as in the above chart. Heavy bursts of volume with rising prices is an inevitable a near-term top. See for instance what happened August, May and January 2015. The 200dma represents also an important resistance.

But heavy volume with a sinking prce suggests a near-term bottom.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/12/15

This is bad news

"Total Q3 earnings for the S&P 500 index are expected to be down -5.7% from the same period last year on an equal decline in revenues. This would follow the -2.1% decline in earnings on -6.4% lower revenues in the preceding quarter."

This outlook from Zacks is bad news and reinforces my idea the economy is slowing down to dangerous levels. It may even force the hand of our leaders to come up with some sort of stimulus not tried yet.

Stay tuned.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/9/15

Is a recession around the corner?

Sales are growing much slower than inventories. Business will have to cut further production to cut inventories in line with the slow growth in sales.

This is the recipe for a recession. More details in the latest issue of The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/4/15

Are we heading into a recession?

In spite of all the good news growth remains anemic. Productivity is growing at less than 1.0%, placing a cap on the expansion.

US manufacturing is still stagnant according to the purchasing managers.

Backlogs, and this is the real bad news, have declined over the past 12 months – something that has happened during recessions or very slow economic periods.

The economic scenario used in our investment strategy is one of slow growth. It has major repercussions on earnings, commodities, and inflation.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

From the 9-13-15 issue of The Peter Dag Portfolio

The markets seem to hope for more QE to give some life to the distressed economies.

But they are now realizing that stimulus has failed. It has instead opened deep social wounds and unrest.

Economies have not responded and profits and productivity are languishing.

Bearish.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Author, Profiting in Bull and Bear Markets

Disclaimer. The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Subscribe now and learn "EASY WAYS TO BEAT THE MARKET WITH ETFs". Several portfolios back-tested from 2000 are shown in the subscribers' area on our website (www.peterdag.com) when you subscribe. Total returns, annualized returns, maximum losses during the period, and number of transactions are shown for each portfolio. The rules are easy to follow and you will find them in the appendix of each issue of The Peter Dag Portfolio. These portfolios are provided as a service to our subscribers.

10/3/15

The world is in shambles

"The world is in shambles.

The ugly spectacle of men, women and children fleeing the war-torn countries of the Middle East and invading the European countries. The incompetence of the world leaders who created this human tragedy.

The crushing process of deleveraging, punishing pension returns and the majority of society, while causing lower prices of goods and assets.

The fight of corporations to maintain current profitability, let alone trying to improve it.

The misguided monetary policy of the past 10 years. What is even more tragic is that the same ineffective thinking that created this chaos is being applied to solve it.

Yes, the world is in a mess."