January 24, 2014
By Steve Blumenthal
I’m deep in season four of Breaking Bad and completely enjoying the series. Are we Breaking Bad? Have we become too addicted to the Fed’s super drug (a pure form of liquid currency)? After all, they are pretty good at making the stuff.
This week’s On My Radar summarizes the difficult position we find ourselves in today. It is about when bad is good and how “bad”, at the end of the day, may really turn out to be bad.
For now, bad is good. Good, because bad macro economic data means a continued flow of monetary super juice from the global central banks. We have become addicted to the meds and continued medication appears to be needed (if not demanded). We are now dependent on the junk and the junk has become a problem.
My good friend and partner, John Mauldin, highlighted an outstanding piece written by Greg Weldon this week and I share it with you today. It is one of the best research pieces I have read in recent weeks – I think you’ll find it well worth the read.
Greg points out, “whether it be India, the UK, Japan, the EU, or the US, bad economic data is celebrated, as is so grossly evidenced by the reaction seen on television, amid stock market exuberance and the resultant extension in net worth/wealth reflation.”
As a quick introduction, Greg writes,
“We might call this the ‘Breaking Bad Era’. Indeed, just like any addict, the global markets, not to mention the underlying global macroeconomy, has come to RELY ON a steady dose of monetary steroids, without which withdrawal kicks in, muscle atrophy intensifies and eventually organ failure ensues.”
Grab a coffee, find a quiet spot, sit down and enjoy this week’s shortened On My Radar:
- Greg Weldon’s – The United States: Are the Seeds Already Sown for the Next Macro-Market Deflation Crisis?
- Trade Signals – Investor Sentiment Remains Extremely Optimistic – I take a closer look at Big Mo
The United States: Are the Seeds Already Sown for the Next Macro-Market Deflation Crisis?
We tend to forget what is going on behind the great Oz’s (Fed’s) curtain. Greg pulls down the curtain and spotlights the critical issues. I quickly highlight the following chart that shows the exceptionally ‘tight’ positive correlation between the Fed’s Balance Sheet, the US S&P 500 stock index, and US Household Net Worth. Indeed, since the advent of QE3, the movements of the US stock market and the Fed’s balance sheet have become almost identical. Concerning? Yes.
Click here for the full piece. What I present is free with Greg’s linked piece made available courtesy of Greg and John Mauldin. Should you subscribe to Greg’s additional research, please know that neither I nor John have a business relationship with Greg or his firm. I do, however, think he is super smart. I hope you enjoy this week’s highlighted piece.
Trade Signals – Investor Sentiment Remains Extremely Optimistic – I take a closer look at Big Mo
My overall market view is the stay with the major trend, put a strategic asset allocation game plan in place, smartly hedge from time to time and have the discipline to stick to your plan.
In this week’s Trade Signals, I take a closer look at the Big Mo trend and momentum indicator. It is currently signaling that the Cyclical Bull Market trend, while aged, remains in place.
I also highlight Investor Sentiment and suggest that it may be used as a guide for hedging purposes. This all ties to a larger strategic asset allocation investment plan. I discuss this more clearly in Trade Signals. Investor Sentiment remained in the Excessive Optimism zone through this past Wednesday. Perhaps we are beginning to finally see the anticipated market selloff. I’m sure that optimism has lessened over the last few trading days. I’ll update Trade Signals again next Wednesday.
Click here for a link to Wednesday’s Trade Signals.
I’m heading to Florida on Sunday to attend the Index Universe ETF Conference through January 29 at the Westin Diplomat in Hollywood. Please let me know if you are attending. I am really looking forward to taking a break from the snowy and cold northeast.
In February, I’m traveling to Bend, Oregon from February 6-10 to huddle with my management team along with my good friend and business coach, Jim Ruff. NYC follows February 19 and 20, then onto San Diego
February 26-28 for several client meetings and the Gemini Advisor Forum.
I will be speaking at the NWA Financial Forum in Rogers, Arkansas along with Governor Mike Huckabee on March 6. The event is hosted by MACH 1 Financial Group. I’ve never been to Arkansas and I am really looking forward to meeting Governor Huckabee.
Wishing you a great weekend!
With warm regards,
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
Philadelphia – King of Prussia, PA
steve@cmgwealth.com
610-989-9090 Phone
610-989-9092 Fax
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