Juggling Dynamite

Risk sellers have deservedly seen their wealth manglement arms lose billions under management in the past 5 years as clients realized that their “advisers” were actually looking out for their own profits and self-interests ahead of the client and capital preservation.

This revelation has not been forgotten despite unprecedented central bank efforts to try and convince us all that thinly participated, largely unregulated, hugely leveraged, soaring stock markets are stable, safe and prudent places for investment. The past 14 years of this secular bear have served to hurt the revenues of financial firms that charge much higher fees on client capital in stock markets than capital in bonds or cash. And so as US stock prices have moved back to cycle peaks, and the last financial crash has moved into the rear view mirror, fee desperate firms are literally pounding the table to get cash back into stocks. Trouble is this time, their twice bitten, thrice shy, most lucrative “high net worth” customers, just aren’t taking the bait: multimillionaires are now holding a record 30% of their net worth in cash (along with a further record 2 trillion in cash being parked in corporate bank accounts).

Shake shinny lures all they want, the only thing that will attract savvy cash piles into risk markets from here, will be much lower, investment worthy prices. This clip is a beauty, see: Credit Suisse to ultra rich: Shed that cash! Here is a direct link.

Global stock markets have weakened since May 22, but many especially in the US remain egregiously over-valued. Even assuming continued QE liquidity, negative earnings and revenue trends are weak and likely to undermine popular belief that the economy is improving and revenues and earnings will rebound in the second half. Special dividends and share buy-backs have served to mask the deterioration in corporate guidance moving into Q2. To date 81% of S&P companies reporting have projected negative guidance for the second quarter.

“Over the past five years, an average of 62 percent of S&P companies that have issued earnings-per-share guidance have given projections below the mean EPS estimate. But research company FactSet reports that for the second quarter, 86 of the 106 S&P companies have projected below the mean, meaning that 81 percent of the guidance has been negative. In the materials sector, a whopping 88 percent of guiding companies have issued negative guidance…

Analysts, for their part, have slashed their earnings growth expectations over the course of the second quarter. Whereas they have previously expected earnings growth of 4.4 percent for the S&P 500, analysts now expect growth of just 1.3 percent, FactSet reports.

In the battered materials sector, analysts used to expect earnings growth of 9.4 percent. But since the second quarter began, analysts have cut earnings growth expectations so that they now anticipate materials companies to report a 3 percent decline in earnings.”

See: Look out, S&P companies warn about Q2 earnings

But then this is a Tuesday, and everyone knows that in our Fed and Algo driven markets stocks always finish up on Tuesdays (this would be the 21st consecutive up Tuesday), so fundamentals just don’t matter. Until one of these days…nothing else will.

Dr. Michael Klaper, MD and practitioner of nutritional medicine, is a vibrant and vigorous advocate for healthy lifestyle choices. In this 5-minute video he talks about his awe of the human body and the pleasure he derives from helping his patient’s restore their health from the inside out. Here is a direct link.

Also see Dr. Klaper’s one hour talk here on Foods that Kill. Here is a direct link.