Author: Andrew Packer

Cryptocurrencies

TFTC: Why the Next 12 Months Will Be HUGE For Bitcoin

Posted on by Andrew Packer

Many assets have hit new all-time highs this year. That includes the stock market, gold, and bitcoin. Right now, stocks and bitcoin are off their highs. However, trends are on track for those assets to move higher.

As that happens, several factors could help boost the price of bitcoin even further. It could end the year at the six-figure mark. Over the next 12 months, the price could jump even more.

That’s because bitcoin has become an institutional asset. The rise of bitcoin-related ETFs earlier this year attracts capital to bitcoin. And those assets can now be parked in tax-deferred accounts such as a 401(k) or an IRA.

Meanwhile, U.S. debt continues to soar. With a deficit of over $35 trillion debt levels have been soaring.

Plus, Treasury yields on bonds are set to decline as interest rates decline. That offers investors a lower prospective return, especially if inflation jumps higher again.

And that’s in the United States alone. Other countries face similar, if not worse, challenges for investors in so-called safe assets.

These trends look attractive for bitcoin. As does the prospect for any market dislocation or fear. Investors can still invest in bitcoin at a reasonable discount to its recent highs ahead of its next move higher.

 

For a full review of how bitcoin could have a huge move over the next year, click here.

Income investing

Dividend Growth Investor: Six Dividend Growth Stocks Raising Dividends Last Week

Posted on by Andrew Packer

Market volatility remains elevated. That trend may continue over the next few months, likely lasting through the election. That means that growth stocks could see some big swings. But many of those swings will be lower.

An alternative to growth stocks that may play well in the months ahead are dividend-paying stocks. These are companies that have extra cash flow that can be passed on to investors. And over time, a great company can pay growing dividends.

There are hundreds of companies that pay an increasing dividend over time. As these companies report earnings, they also announce dividend increases.

For instance, freight and logistics company C.H. Robinson Worldwide (CHRW) has raised its quarterly dividend by a penny. Shares pay a 2.5% dividend, but C.H. Robinson has paid an increased dividend in each of the last 26 years.

Financial services company Primerica (PRI) has now raised its dividend for the 14th consecutive year. Today, Primerica pays just a 1.4% dividend. However, the last decade, the payout has increased at an average annualized rate of 19.5%.

In financial markets, dividend growth stocks are a small group. Current dividend yields may not be high. Dividend growth may prove slow. But investors who stick with dividend growth stocks over time can build a powerful income stream that continues to grow.

 

To see the full list of recent dividend increases, click here.

Commodities

Rebel Capitalist: Copper and Gold Are Both Signaling This…

Posted on by Andrew Packer

Gold prices continue to trend higher. The metal recently topped $2,500 for the first time ever. The metal is having a strong year. But gold prices can also reflect some of the health of the underlying economy.

Gold’s move higher suggests that investors remain concerned about inflation. Gold tends to hold its own against inflation over time. It tends to fare best when inflation unexpectedly pops higher.

Meanwhile, other commodities continue to perk up. That could be a sign of a longer-term bull market in the commodity sector. Such a bull market will take years to play out, but could be highly rewarding.

Besides gold, copper is showing some signs of long-term strength. The metal has been in high demand. However, China has recently pulled back on its massive copper buys. That’s created a big price drop.

Despite a small selloff in July, along with the selloff in markets, copper is on track to trend higher.

More importantly, the ratio of copper prices relative to gold indicate a stronger value here.

Investors interested in the metal can wait for the price of copper to stop declining. Copper is a widely-traded commodity. But copper mining stocks may offer investors better valuations. And copper mining stocks can also provide the income of dividend payments.

 

To watch the full video, click here.

Stock market

FX Evolution: You Won’t Believe How Similar These Markets Are

Posted on by Andrew Packer

The market’s recent selloff has had several comparisons to the Crash of 1987. The one-day, 22% decline in the Dow reshaped how markets operate. The recent market selloff was far smaller. But it does have a number of similarities.

For starters, both markets were up considerably for the year. Markets were already having an above-average year going into the recent turbulence. And will still likely end the year in the green, as in 1987.

However, it could also be a sign of market weakness. In 2024, the Magnificent Seven stocks continued to drive the overall market higher. There’s been some sign of market breadth improving in recent weeks. But a shift to smaller companies could still lead to an overall market decline.

Meanwhile, economic data is coming in about where investors expect. The labor market continues to weaken. That will make it appropriate for the Federal Reserve to start cutting interest rates later this year.

For now, markets may have a bit more volatility in the coming weeks. The Crash of 1987 took nearly three weeks of sideways trading before stocks started to trend higher.

And once markets did start to trend higher, it took months for markets to get back into the swing of a full bull run. That could happen again, so investors have a few more months of likely sideways trading.

 

To see the full comparison of different markets, click here.

Stock market strategies

Elliott Wave Options: Beware This Downside Zig-Zag!

Posted on by Andrew Packer

Markets have caught a bit of a break from their selloff that kicked off August. And economic data, such as cooling inflation, have helped bring market volatility lower. However, while markets have started moving higher, the trend may not last.

That’s because markets don’t tend to sell off all at once over the span of a few days. The recent selloff looks like an exception to that notion, at least for now.

However, it’s possible that markets are facing a longer, multi-month decline. That will mean that there will be some sharp rallies along the way.

Right now, investors are focused on the spike on the market volatility index. However, stocks can trend lower without another big spike. With volatility still at elevated levels, investors should remain cautious.

Given how the markets are trading, investors may want to consider the possibility of a further downtrend. That would fit in with the seasonal weakness we see in markets in September and October.

For long-term investors, patience is the name of the game. There may be a chance to buy in again near the recent market lows.

And investors can still buy into some strong sectors of the market.

That includes utility stocks, which offer steady and reliable income. And it includes gold stocks. Gold prices are holding up well amid this recent market volatility.

 

To view the full technical analysis, click here.

Income investing

Rivkin Report: There is an Alternative (To Equities)

Posted on by Andrew Packer

Investors looking for an alternative asset to the stock market have several options. Cash and bonds currently pay a relatively high yield. But with central banks starting to cut interest rates, the yield earned on that asset is set to decline.

If inflation surges higher, investors could end up losing money in real terms investing in cash or bonds today. Precious metals have been holding up well this year. But they can still be volatile, and don’t provide a yield.

However, alternative assets exist as well. That includes cryptocurrencies, which have great overall returns but significant volatility. Precious metals hold up well over time, but can have significant periods of underperformance. Neither generate income.

Investors can also look at investing in places such as private credit. That offers some upside potential, combined with yields as high as 9%.

Private credit involves lending money to companies or individuals. And such private credit investments don’t trade on exchanges. While that avoids market volatility, it also means investors will lack liquidity. They would need to find another seller to exit the trade.

However, with yields, often paid monthly, investors looking for current income may find this niche part of the market attractive. Private credit provides a high-yielding alternative asset. That can help reduce the damage done by a market downturn.

 

To learn more about how private credit works and how it can be incorporated into a portfolio, click here.

Economy

David Lin: “Bigger Main Event” In a Few Weeks Warns Fund Manager Who Called Yen Carry Trade

Posted on by Andrew Packer

Is the market selloff over? The massive rush for the exit on the yen carry trade may have hit a frenzied peak. But that doesn’t mean that stocks will instantly bounce back to all-time highs anytime soon.

In fact, there could be more danger ahead for investors. Amid this latest selloff, another trend has emerged that suggests that there could be a danger in the coming weeks or months ahead. And as that unfolds, stocks could see a new wave lower.

The trend? The un-inversion of the yield curve. In English, the two-year U.S. Treasury bond has had a higher yield than the ten-year for some time. During the market’s selloff the past few days, that trend briefly reversed.

Typically, when yield curves un-invert, there’s a high probability of a recession within 12 months. While this un-inversion was temporary, that could change. It’s likely to flip and stay un-inverted after the Federal Reserve starts cutting interest rates.

For now, investors should be cautious, and use any market rally as an opportunity to take some profits off the table. That should start with the most speculative trades. And for tech trades, it may mean selling a partial position to lock in profits. The money can stay in cash, or move into defensive sectors such as utilities.

Doing so can ensure that any further market turbulence this year doesn’t lead to a big wipeout.

 

To watch the full interview, click here.

Economy

The Pomp Letter: Are We in a Recession and Should You Be Worried?

Posted on by Andrew Packer

Markets may have sold off largely from traders exiting the carry trade. But last week’s job data suggested another concern that markets may not have priced in yet. By at least one standard, it’s possible that the economy has entered a recession.

That’s based on a concept known as the Sahm rule. Under this rule, the economy is in a recession if the unemployment rate increases 0.5% from its prior 12-month low.

Over the last 65 years, this signal has had a 100% success rate. However, the creator of the rule notes that due to the pandemic-related job market and immigration, the rule may not be holding up quite yet.

For now, further data is needed to support the notion of a recession. The latest GDP data, for instance, suggests that the economy is fine. And inflation, while trending lower, is still high enough to suggest that economic activity remains strong.

Time will tell if this rule holds, or if there was just a technical breach this time around. One rule alone may not be a sign of a recession, at least right away.

For now, traders may want to get more cautious. While we may not be in a recession, the economy is slowing. And markets are showing some late-stage fragility that suggests that investors avoid leverage and invest in more defensive sectors such as utilities and gold.

 

To read the full explanation of the rule, click here.

 

Economy

QTR’s Fringe Finance: George Gammon Explains the Yen Carry Trade Chaos

Posted on by Andrew Packer

The market’s slump over the past two weeks has largely been driven by traders exiting the yen carry trade. Simply put, traders sell short the Japanese yen. They do this because the yen has historically had a zero or near-zero yield.

They then take the money and invest it in higher-earning assets. That could include the U.S. dollar, where cash yields currently sit near 4%. Some more aggressive traders could even use that money to invest in a market index.

However, last week the Bank of Japan raised interest rates to help curb inflation. While rates are still ultra-low in Japan, the quarter-point hike represented a big shift higher. That made the costs of undertaking the carry trade significantly more expensive.

As a result, traders have had to deleverage trades. This has not been an orderly process. It’s meant selling stocks to raise cash, to buy yen and close that short position. Selling pressures resulted in a big move down for markets in a matter of days.

Taking those positions down quickly will likely result in many losses for traders. But it could also avoid a further selloff and the danger of margin calls. Market volatility may have peaked for this year, but investors could still see some big market swings in the weeks ahead.

 

To listen to the full interview, click here.

Stock market

FX Evolution: In 40 Years This Has Only Happened 4 Times

Posted on by Andrew Packer

Monday’s market meltdown resulted in an unusual event that’s happened just a handful of times. On average, just once a decade. The event? A surge in the volatility index, or VIX, up to one of its highest spikes ever.

With a read of 65 in pre-market trading on Monday, the VIX had its third-highest reading. Only the closing of the economy during COVID-19 and the housing crisis had higher readings.

Typically, the VIX trades in a range around 17-20. Sometimes, the VIX gets too low, usually under 15 but as low as 12. When that happens, markets are overly complacent. And there’s the heightened risk of a pullback following an unexpected event.

Usually, when the VIX pops higher to 20, the market tends to calm down. This time, however, markets blew past 20 and to 65.

What happened? It’s likely that traders looking to deleverage and hedge their bets simply overshot the market. The heightened fear led to soaring volatility. And since it happened pre-market, it took less volume to move the market.

For now, it’s clear that traders are looking to deleverage. And that there may be further market downside over the coming weeks. But the worst of the slump may be over for the time being. Markets should see less volatile daily swings.

 

To see the full analysis, click here.