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  • September: A Rough Month for the Markets?

    September is often a bad month for the stock markets, historically speaking, and this year it could be especially turbulent. In addition to all the uncertainty about the weak US economy, there is uncertainty about what the Fed may do just ahead and what, if anything, will be done to address Europe’s recession and debt crisis. In addition, there is the looming presidential election which no doubt will go hyperbolic this month.

    We begin today by looking at the situation in Europe, now that the August vacations are over. It remains to be seen if European leaders can make good on their promises earlier this summer – I doubt it. From there we look at the latest US economic reports, which were a mixed bag. Next, we consider Fed Chairman Bernanke's speech last Friday and the probability of QE3 when the Fed next meets on September 12-13.

    We end today with some of my thoughts on the Republican National Convention last week, which I thought was very good. It remains to be seen how the Democrat Convention will go. I find it very odd that Hillary Clinton will not be there at all. And finally, I once again recommend that all of you go see "2016: Obama's America" movie. It's not what you think it will be.

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  • A "Trillion" is Mind-Boggling: No, Even Worse!

    I would wager (with odds) that very few Americans understand just how mind-bogglingly enormous $1 trillion is. The analogy I will share with you today will knock your socks off! It certainly did mine.

    Yet our government is running trillion-dollar annual budget deficits like it’s no big deal. And it’s not just Obama – the first trillion-dollar deficit, which was incurred in FY2009, was actually the result of President George W. Bush’s budget, one of the few legitimate things Obama really inherited from “W.”

    I begin today by summarizing a recent eye-opening analysis - a great video, actually - that concludes that our continued trillion-dollar deficits will send us into the abyss. I realize that this is nothing new to many of my readers, but we need to continually remind ourselves how we are willingly and knowingly sending our country into economic and financial ruin.

    You will definitely want to watch this video and forward it on to others!

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  • Spain & Weak US Economy Dominate Markets

    Stock markets around the world have been pummeled in recent weeks amidst the growing reality that we’re in a global recession, especially in Europe. Fears that the US will also fall into recession have intensified, particularly in light of last week’s very disappointing economic reports.

    At the same time, the European debt crisis has once again raised its ugly head, this time with the spotlight on Spain. Spain’s own Prime Minister has admitted that the country is in a state of emergency, and money is gushing out of Spanish banks. Interest rates have soared once again to levels that led to the European Central Bank’s €1 trillion bailout package late last year and early this year.

    Last week, the yield on Spain’s 10-year bonds spiked to 6.7%, a whopping premium of more than 5.5% above the yield on the 10-year German bund at the time. Meanwhile, short-term rates in Germany fell to zero as new money seeks a safe haven there and in the US where 10-year Treasury-note yields fell to a post-war record low of 1.45% last Friday.

    Spain is facing a full-fledged banking crisis and knows it. Yet Spain's leaders do not want a bailout and the accompanying loss of sovereignty. They see that such bailouts in Ireland and Portugal have not gone well. Still, Spain is running out of money fast, and the country is largely shot out of the credit markets. How this plays out is uncertain, but it won't be pretty.

    Following that discussion, I will address the fact that consumer confidence is dropping like a stone in the US. This has prompted new hopes that the Fed will unleash QE3. We will know soon enough as the next Fed policy meeting is June 19-20.

    We end up today with a suggestion on my part that the current swoon in stocks is a BUYING OPPORTUNITY. No one knows where the bottom is, of course, but consider this. If the Supreme Court renders Obamacare unconstitutional later this month, and I think it will, we could see a MONSTER RALLY in stocks. The High Court's decision is scheduled to be announced on June 25. This is why I think you need to be getting back in the market now, while it's down. And I offer two excellent suggestions on just how to do that at the end.

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  • Greece Poised to Default & Exit the Euro

    Greece is coming dangerously close to defaulting on its debt, especially if the next round of bailout loans doesn't happen. Those loans are predicated on Greece continuing its austerity programs to balance its budget. Greece will hold its next national elections on June 17, and the party that is expected to win vows to roll back the austerity measures mandated by the EU and the ECB. At the least, it looks like we're headed for fireworks just ahead.

    The burning question: Is there any way that Greece can default on its debt and withdraw from the euro without causing a global financial crisis. Some believe there is. Today, I present such a plan that was suggested by Nouriel Roubini last Friday. But I will also tell you that I don't believe that the EU, especially Germany, will go along with Roubini's plan. Germany's Chancellor Andrea Merkel reportedly made that clear to President Obama last Saturday in a private meeting following the G-8 summit in Chicago.

    No one knows what will happen with Greece just ahead, but a debt default and an exit from the EU and the euro are now quite likely later this year. This is even more of a threat if the Left Coalition in Greece wins the elections on June 17. Obviously, this is having a very negative effect of the stock markets, making it all the more important to have investment professionals on your team.

    On Thursday we are hosting our latest online WEBINAR featuring Yacktman Capital Group, the latest money manager to make it onto our recommended list. The Webinar will be this Thursday at 1:00 p.m. Eastern Time. Yacktman's founder, Brian Yacktman, will talk about his successful "value-investing" strategy and how it works. There will be time for questions from audience members. With the recent decline in the stock market, now may be an excellent time to consider putting some money with Yacktman Capital Group.

    You can attend the free Webinar on Thursday at 1:00 p.m. Eastern by CLICKING HERE. I hope you'll join us!

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  • Buy Low, Sell High - Any Questions?

    There's no doubt about it, investors are scared. After soaring upward in the first quarter of 2012, the S&P 500 Index has now plunged based on worries about the US recovery as well as continued Eurozone woes. Many investors are paralyzed on the sidelines while others are seeing their buy-and-hold portfolios look more like a roller coaster than an investment portfolio.

    However, there is an investment strategy that has the potential to take the market's lemons and make lemonade. Renown investor, Warren Buffett, follows a value-style investment strategy and has done so successfully for many years. For such investors, market uncertainty can actually mean opportunity to scoop up the stocks of good companies at discounted prices.

    This week, I'm going to review value investing and how it can bring some stability and growth potential to a portfolio. After that, I'll introduce you to Yacktman Capital Group, a value-style money manager right in our backyard here in Austin. Yacktman has improved upon Buffett's approach to value investing and we are excited to offer this emerging manager to our clients. If you are out of the market or heavily invested in buy-and-hold strategies, you owe it to yourself to check out Yacktman's Concentrated Composite Strategy.

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  • European Debt Crisis Never Went Away

    Since December, the European Central Bank has loaned over 1 trillion euros to banks in southern Europe. These were three-year loans with an interest rate of only 1%. The banks used most of this money to buy up sovereign bonds of their home countries. This served to drive down bond yields around the region, and most observers assumed that the European debt crisis had been solved - at least for a while.

    Yet over the last few weeks, the unexpected has happened: bond rates in countries like Spain and Italy have started to rise again to dangerously high levels. Ten-year Spanish bond yields climbed to the highest level since the ECB started allocating three-year loans in December. Yields rose above 6% last Friday and yesterday, which sparked new concerns that Spain may need yet another ECB bailout. Making matters worse, Spain's economy slipped back into recession in the 1Q.

    Interest rates are also rising in Italy, and its economy appears to have dipped into a recession as well. All of this news has accelerated concerns that the financial crisis in Europe is back. Yet I argue today that the debt crisis never went away! Don't be surprised if this problem returns to center stage over the weeks just ahead, and if it does, this will not be good news for equity markets around the world.

    While US stocks are enjoying a very strong day today, there's a critical government bond auction in Spain on Thursday; Italy has a big bond auction on April 27; and Spain has another large bond auction on May 3. If interest rates continue to rise and/or if Spain and Italy have trouble finding enough buyers, this will be bad news. That's our topic for today.

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  • European Debt Crisis - Is This Really The End?

    I have written a great deal about the European debt crisis over the last several months. Today I thought I would give you the latest analysis of the crisis from The Economist, the widely respected, London-based forecasting giant. I've been reading the Economist for almost 30 years, and I think you'll find their latest views on the European crisis interesting (if not scary).

    Following the analysis from The Economist, we take a look at how some of the world's largest banks are preparing for what could be the end of the euro. While most large European banks are in denial about the possible end of the euro, other large banks around the world are scrambling to reduce their exposure. I have also linked to a very good article on this very subject at the end of today's E-Letter.

    Next, now that the Super Committee has failed, the automatic spending cuts of $1.2 trillion over a decade are set to kick in starting in January 2013. The media is warning that such draconian cuts will devastate the Defense Department. Well guess what? $1.2 trillion over 10 years is only $120 billion a year. The federal budget is projected to increase by more than $120 billion a year over the next decade. In that case, there will be no net new spending cuts, just a slowing of the rate of increase. That's the dirty little secret the media is not telling us!

    Finally, if this extremely volatile stock market has rattled your nerves, I have a suggestion for you. I suggest that you consider investing with Metropolitan Capital Strategies, one of my favorite professional money managers. Metropolitan has the option of going 100% to cash (money market) in extremely volatile times such as we see today. We are hosting a free live WEBINAR with Metropolitan Capital Strategies this Thursday, December 1 at 2:00 EST.  I highly recommend that you join us!

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  • On the Economy, Europe & the Super Committee

    We begin this week with the latest GDP report which came out this morning. The Commerce Department reported that Gross Domestic Product rose only 2.0% (annual rate) in the 3Q, down from 2.5% in its previous report last month. This was below pre-report estimates but still suggests that the economy is not falling into a new recession. A new report from Credit Suisse estimates that the chance of the US economy going into a recession next year have dropped from 36% in September to only 24% today.

    In another new report, Fitch Ratings warned that large US banks face "serious risk" in regard to the European debt they hold. Specifically, Fitch claims that the six largest US banks had at least $50 billion in loans to Portugal, Ireland, Italy, Greece and Spain at the end of September. This suggests that the European debt crisis could cause serious problems for US banks if any defaults occur in the Eurozone. This should not come as a surprise to my regular readers - I've been warning about this since July.

    Next, we revisit the so-called "Super Committee" which announced late yesterday that it has failed to reach an agreement to reduce federal deficits by at least $1.2 trillion over the next decade. This, too, should not have come as any surprise to my readers. There are those who believe that the (not so) Super Committee was designed to fail from the beginning. I happen to be one of them. The Super Committee was an embarrassment! Our national debt will continue to explode.

    Finally, with this being Thanksgiving week, I close with some personal thoughts on what I'm thankful for.

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  • European Bank Woes & the Super Committee

    A recent study from Credit Suisse revealed some alarming information about Europe's largest banks. We already knew that Europe's largest banks are mired in so-called "sovereign debt," that owed them by the various government's of the Eurozone. The Credit Suisse study found that in addition to sovereign debt, most of Europe's largest banks still have billions in toxic assets that were acquired prior to the credit crisis in 2008. Most of these toxic assets are related to real estate/mortgages, CDOs, etc. that were bought prior to the recession and are now presumably worth far less than face value. In short, European banks have done a lousy job of cleaning up their balance sheets and writing off troubled assets.

    Following that discussion, we will revisit the so-called "Super Committee" that is trying to find at least $1.2 trillion in deficit reduction over the next decade. As you might expect, the committee of six Republicans and six Democrats is deadlocked as this is written, and the real deadline is next Monday, November 21 when the committee needs to present its deal to the CBO for scoring. The bottom line: I don't think the Super Committee is going to agree on $1.2 trillion in spending cuts. Read on and I will tell you why.

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  • Greek Soap Opera Continues to Roil Markets

    While Greece is but a small country, its debt crisis continues to influence financial markets around the world on an almost daily basis. It is not unusual for news from Greece to send the global stock markets up or down 2-3% in a single day. Events in Greece are unfolding daily, including the resignation of its Prime Minister, George Papandreou, just last Sunday. As this is written, a new coalition government is being formed in Greece to pave the way for the latest €130 billion ($180 billion) bailout package agreed to by European leaders late last month.

    In addition to Greece's troubles, the European debt crisis is spreading to other Eurozone countries. Italy appears to be the next domino to fall, and Spain may not be far behind. Italy has the eighth largest economy in the world based on GDP and the fourth largest in Europe. If Italy has to be bailed out, it would likely spark another global financial crisis that could make 2008 look tame. The latest G-20 summit in France failed to do anything to avert another financial crisis in Europe. Surprise, surprise!

    Given the deteriorating situation in Europe, expect stock market volatility to remain very high in the months ahead. Investors are scared by the events unfolding in Greece and the rest of Europe and are herding out of stocks and equity mutual funds in droves. I can't say that I blame them. Near the end of today's letter, I offer some advice on what these investors on the sidelines should consider doing with their money that is no longer invested in the stock markets.

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  • Is the Debt "Super Committee" Doomed to Fail?

    The so-called congressional "Super Committee" that was set up during the debt ceiling battle back in August is charged with finding $1.5 trillion in federal spending cuts over 10 years, and the deadline to do so is November 23 - just over a month from now. If the Super Committee fails to come up with $1.5 trillion in cuts, then some nasty triggers come into play to automatically cut spending across-the-board at the beginning of 2013.

    Obviously, the Super Committee has a gargantuan task ahead of it and on a very short fuse (i.e. - Nov. 23) to find $1.5 trillion in spending cuts over the next 10 years. Will the 12 committee members (6 Republicans and 6 Democrats) be able to reach such a historic agreement in time before the mandatory triggers and spending cuts go into place? Frankly, I doubt it.

    The mainstream media has been largely silent in recent weeks on this looming controversy. So, in today's E-Letter I will succinctly get you up to speed on the pertinent issues surrounding the Super Committee and the challenges it faces. This is definitely something you need to know about and understand as the debate in Washington unfolds in the weeks just ahead.

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  • Fed Offers Bailout of European Banks

    Last Thursday we learned that the US Federal Reserve has decided to make unlimited US dollar loans (swaps) to the European Central Bank (ECB) and directly to European money center banks that are in trouble, at least through the end of this year. And what will the Fed get in return as collateral? Eurodollars that are quickly falling in value as of late. So even as our own economy may be falling back into recession, the Fed sees fit to bail out the European banks that are sinking in sovereign debt from the likes of Greece, Ireland and Portugal.

    All eyes are on tomorrow's Fed Open Market Committee policy statement. The Fed is expected to announce its so-called "Operation Twist" strategy that is intended to lower medium and long-term interest rates, which may or may not work. Some people expect the Fed to comment on its latest decision to make unlimited US dollar loans to European banks, but I will be very surprised if they mention a word about it. They're keeping it very quiet (which is another good reason to read my E-Letters and blog postings).

    Speaking of blog postings, I will write about tomorrow's Fed policy decision on my blog before the end of the day tomorrow. Go to www.GaryDHalbert.com and subscribe to read my take on the Fed's announcement.

    Following the Fed discussion, I will bring you the highlights of the latest report on US poverty from the Census Bureau. Poverty is now at an all-time high. Ditto for the number of Americans that depend on food stamps, according to the Department of Agriculture. These two reports are very troubling.

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  • Who’s Worse Off - America or Europe?

    We touch on several topics in today's letter, but the main theme is the question of who is worse off financially speaking, the US or Europe. I have written extensively about the growing European debt crisis in recent weeks, which I considered much more important than the debt ceiling circus that played out in Washington in July. It is now obvious to even the man on the street that there is a debt crisis in Europe, of late including even Spain and Italy, with rumors swirling about France as well. A real solution is not yet in sight.

    Yet the US has plenty of debt problems of its own, with a national debt of $14.4 trillion, by far the largest of any nation on the planet and a president who thinks that trillion-dollar annual budget deficits are no big deal. Thus, it is only natural for observers to ask which is in worse shape - Europe or America? I will give you my thoughts on the question as we go along today. In a nutshell, Europe is worse off today, but the US is not far behind and is gaining ground at warp speed, sadly.

    Following that discussion, we will explore whether or not Ben Bernanke and the Fed are cooking up another round of quantitative easing (QE3), and if they are, when we might first hear about it. Think August 26 - I'll tell you why below. Next, I will give you my thoughts on gold, and specifically why I don't think most gold buyers today have any idea how much risk they are taking. I trust that my readers are not jumping into gold at today's nosebleed levels, but I will tell you why that might not be a good idea in any event.

    Lastly, we revisit the issue of Standard & Poor's recent downgrade of US debt from AAA to AA+ when none of the other credit rating agencies felt so inclined. Could there have been some political motivation behind the S&P's unilateral move? Surely not - wink, wink. Did the S&P mean to send a message to Congress about cutting spending? Maybe. Or was the S&P just trying to salvage its tarnished reputation after rating subprime mortgages AAA in the years leading up to the financial crisis? It should be an interesting discussion.

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  • The European Debt Crisis is Spreading

    The debt crisis in Europe is intensifying with Italy and Spain falling into the mix, as I predicted in my July 19 E-Letter. You may recall that the European Union formed a bailout fund in June 2010, but as I will point out today, that fund is nowhere large enough to handle this crisis. Now even the European Central Bank has pledged to buy bonds from Italy and Spain, as well as the other PIIGS, but the ECB is also too small to vacuum up all of the troubled debt in Europe.

    In my July 19 letter, I wrote the following warning: "If this [Greek default] happens, I would expect the US stock markets to plunge again, perhaps as they did in 2008. And this could happen at any time." While I don't have a crystal ball, I had a strong sense that the markets and the investment public were all too focused on the debt ceiling battle and not on the deepening credit crisis in Europe. Unfortunately, my warning was right on the money.

    Equity markets around the world started falling severely last week, and yesterday's action saw the Dow Jones plunge by 635 points in what was one of the worst market days in history. Investors are selling stocks and equity mutual funds with abandon and are herding into Treasury funds and gold. This may prove to be a bad move since interest rates can only go so low, and gold has a long history of falling off a cliff whenever it turns down.

    The US stock markets moved higher this morning. The Federal Reserve met today and did NOT announce a new round of QE3 as was widely expected. As a result the stock markets all reversed sharply lower for a time. But as traders read that the Fed plans to keep short-term interest rates near zero until mid-2013, the markets reversed again to close sharply higher this afternoon. The wild market ride continues!

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  • Why Greece Matters to You and Me

    The sovereign debt crisis in Greece is rapidly spreading to much of the rest of Europe. In addition to Greece, Portugal, Spain and Ireland, Italy is now in question. Italy has the third largest bond market on earth behind the US and Japan. Today I bring you a sobering assessment of the European debt crisis from our old friends at Stratfor.com, which is one of the most alarming analyses I have ever read from them. I also bring you an even more alarming evaluation from GaveKal Research, a leading forecaster based in Hong Kong.

    The bottom line is that another global financial crisis may be just around the corner, in weeks or months, and I believe this could spark the next major bear market in the US and global stock markets. I suggest you read today's E-Letter very carefully and begin to think about what you need to do to protect your investment portfolio and your retirement nestegg. Time may be very short as events in Europe are unfolding very rapidly, and no one knows for sure what will happen next. This may be one of the most timely E-Letters I have ever written.

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