Juggling Dynamite

Danielle was a guest on This Week in Money with Phil Mackesy, you can listen to an audio clip of the segment here.

Marc Faber, Gloom Boom & Doom Report, explains why he believes the rally could end badly this year.Here is a direct link.

This chart of the S&P 500 price performance since late 2012 versus other key markets such as copper, Emerging Markets, China, the TSX and the Canadian Venture Exchange underlines the “decoupling” risk that Faber refers to in the clip.

Chart source:  Cory Venable, CMT, Venable Park Investment Counsel Inc.

Weakness in heavy equipment maker to the world–Caterpillar–shown here offers another red flag.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

For Canada–hardware store to the world–the Venture Exchange has traditionally led our broader market by 3 to 4 months, so the continued divergence over the past year is alarming.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Whenever I feel weary of this charade and frustrated by how long it is taking US stocks to reflect economic reality, I think about the thousands of Perma-bulls who are celebrating recent US highs and dominating business media, but in reality have made zero and negative returns now for more than 15 years!! No wonder they live in a permanent state of denial.  Admitting the alternative–that they are useless at preserving and growing capital–indeed worse, that they have actually been harmful to capital and clients for more than a decade now–must be too painful to admit.

The sovereign debt crisis in Cyprus marks the fifth European nation to need a bailout in recent memory, but this crisis is unique because European Union regulators are taking the unprecedented step of taxing bank deposits to finance part of the bailout for the nation’s banks. Lee Buchheit, sovereign debt guru and architect of Greece’s bailouts, tells Bloomberg Law’s Lee Pacchia that despite the drastic measures taken, the endgame for Cyprus might be another round of restructuring: “I’m not sure this is over…They have certainly changed the rules of the game for future Eurozone bailouts…The situation is spiraling down…they’ll need more money because the economy is worse, tax collections less, deposits will flow out when they can flow out.”

Here is a direct link.