"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra: Buy Gold and China. Sell short on pretty much everything else. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

Twitter: @kherriage

Twitter: @kherriage

Karl Bessey

Mary Dee

Mike Budny 
Friday
Nov212014

VRA Update: Just In Case You Needed a Reminder - Life Today VS Where Life SHOULD Be Today

Quick question: Where would the US economy be...growth/health wise...without the FED's Quantitative Easing (QE) of the last 5 years? In other words, without the more than $4 trillion in freshly printed fiat currency by the US Central Bank ($15 trillion + globally)...money that will soon come back to all of us as rampant inflation first, followed by hyperinflation...what kind of economic shape would the US be in today??

Answer: In 2009-2010, the initial hit to the economy, real estate, and to stock markets would have brutal....no question about it. Without the FED's interference, there is zero doubt in my mind that panic in the investment markets would have ensued...far worse than it was. MANY weak banks would have failed...same thing with many of Wall Street's gambling investment houses. Both groups used massive amounts of leverage... 30-100 to 1....which means THEY SHOULD HAVE FAILED. Instead, they were rewarded with taxpayer bailouts through the $700 billion TARP (troubled asset relief program). 

END RESULT: Each of the monied, criminalized financial groups that were at the time considered "Too Big to Fail", are now 100%+ LARGER than before 2008...and would have either failed completely or been forced into mergers with healthier companies. To steal a title from Little River Band, this would have been a very "Cool Change".  In addition, any honest investigation of the smarmy miscreants in each of these financial behemoths would have found unrivaled levels of financial criminality. And, just as Iceland acted to put their own banking criminals in jail for 10-30 year sentences, an "honest" US legal system would have done the same on our shores. Instead....there have been ZERO convictions...freaking ZERO! Just in case you had any doubts that the fix was in...now you know for certain. All made possible by your and my tax dollars...thank you very much.

Without the FED's ongoing manipulation, yes...US real estate prices would have dropped 30-60%. Oh wait...that's exactly what DID happen! So....there would have been ZERO difference in our real estate/housing situation throughout the US. In fact, this situation would have allowed "honest" buyers of real estate...you and me... to swoop in and buy phenomenal pieces of real estate/homes at true "value level prices". Instead, here's what HAS taken place. These same banking and Wall Street criminal masterminds took OUR taxpayer funded bailout money...combined with the FED's ZIRP (zero interest rate policy...as in ZERO percent interest rates for 5 years) and bought 90% of available real estate right at the very bottom. Sure...if you acted quickly, you could have also picked up some deals...but pretty much only if you were an expert at real estate already. If not....too late...the big boys took it all. Scam < Understatement.

Finally....what about the stock market and the jobs market? History is VERY clear on this subject...so this is a really simple answer. In past economic shocks, history shows time and again, that WITHOUT government/FED intervention,  economic shocks like these are OVER in 6-12 months...with an incredibly strong recovery following that lasts for years...in other words, a REAl recovery...not this crappy, negative growth (trust me, the real numbers are negative) economy we all face today. 

So...yes, the stock market may have dropped by more than 50% and the unemployment rate may have spiked to 20%. Wait....again, this is EXACTLY what did happen! 

But folks, jus think for a moment about the type of economy and overall US we would have had today...without all the trillions in new debt and fiat currency that we will be faced to deal with through the coming Greatest Global Depression. 

Dealt with honestly and with character (what we do when no one is looking) these same criminals would be in jail, where they belong. We would have seen an economic revival for the record books....with REAL jobs, rather than "money jobs" that create nothing, harm the world far more than any fictional global warming ever possibly could (another Wall Street creation by the way....I witnessed it first hand on Wall Street), and, best of all... the good people of the US would run things going forward.

Instead....well, we know what we are left with...the stench is beyond putrid.

Anyone with a Forest Gump IQ or higher knows deep down exactly where this is headed. 

GOT GOLD????

For those that are prepared....wow....talk about massive levels of never before seen opportunity. 

And folks....deep down...this is what the VRA has always been about. Always will be.

Until next time, thanks again for reading.

Kip

Wednesday
Oct152014

VRA Ebola Update: Exact Steps to Take and Participate in 375% Returns

Before we get to this most important Ebola update, let's take a quick look at exactly what the VRA predicted 3 weeks ago (Sept. 19th), as the VRA was the ONLY Wall Street expert or Investment Newsletter to call the EXACT top in the stock market…and did so within 5 minutes of the all-time high.

**Sept. 19, 2014

"First, Alibaba (BABA) just opened, and is currently trading at $93/share....but it reached almost $100 right after the open. Just stunning....

I believe this marks a significant top in the overall market....right here right now. The Russell 2000 is getting hit hard, while the overall market holds on to slim gains. Make sure you own SRTY (3 x bearish ETF for Russell 2000)....the breakdown in the broader market does not look healthy. Have you seen housing stocks....the chart looks as poor as it gets....big rounding top. Same thing throughout the mid-cap to small-cap market....this tells us that the smart money is heading for the exits. It's time to be a contrarian folks....its time to make some money on the downside….”

Since this time, VRA Subscribers are up a full 375%!

********

VRA One-Time Offer: If you would like to participate in the 375% gains that VRA Subscribers have picked up in just the last 3 weeks, make sure and take advantage of our one-time offer at the end of this update. After Friday, it will be gone.

 

VRA Ebola Update – Exact Steps to Take Now

The markets are getting clocked today....at day lows right now with losses of more than 440 points in the Dow (2.75%)

While no one should personally panic about Ebola at this point, unless of course you are infected or at risk of infection, here's the reality of what's about to take place: 

1) Air travel and most mass transportation is about to ground to a halt. Airline stocks are ramping lower but this is just the beginning. More on this later in update. 

2) Hospital, and health clinic workers, may soon cease going to work...not all or most certainly, but a large enough percentage that it will be a very large problem. 

3) Energy prices will continue to collapse. 
Just a few minutes ago I heard an airline head ask "how many Typhoid Marys do we now have among us"...wow. The most at-risk group in energy? Every green energy stock....solar, wind, etc.....with oil prices about to plummet even further, the rational for green energy makes even LESS sense. Watch as FSLR and SCTY collapse in price.

4) Folks...the move lower in stocks is just now starting. This is going to take us at least 10% lower quickly on all major exchanges...and likely much more. 

Best moves to make, right now:

1) Keep buying **** and ****...they are the very best ways to profit....and are up another 28% combined today alone, and a full 200% in the last 3 weeks (for Subscribers only).

 

2) Options premiums have exploded.....making any new put recommendations highly risky. 

 

3) Those that want a pure play on Ebola risks? You can short Southwest Air (symbol LUV). It's down just 18% from its annual high and still 80% higher from annual lows. LUV could easily fall below $20 (last trade $29). 

 

4) But again...**** and **** are our smartest moves, financially speaking. Plus of course, the continued purchase of precious metals.

 

5) Finally, your best non financial move? Avoid air travel at pretty much all costs...apologies if this appears as a scare tactic...but no way anyone in my family is flying until we know MUCH more about how this virus is actually transmitted. 

 

VRA ONE TIME OFFER:

Purchase a full year of the VRA at 90% off the annual fee….this offer is good until this Friday.

Go to: VRALETTER.COM

Use Promo Code: verticalpromo

 

Until next time, thanks again for reading. Stay safe, stay smart. 

 

Kip Herriage

Wednesday
Oct012014

VRA Update: If This Isn’t a Depression, What is?? Plus, VRA Just Booked Gains of 135% and 70%...In Less Than A Week

Before I get to this investment update, I have to share something that is shocking to even me…and increasingly, it’s becoming much more difficult to shock me.

The Eurozone's youth unemployment rate (18-25 years old) was just released and it is beyond terrible. Figures out today put this rate at 23.3%...and remember folks, this is the EU “official” rate….I have read credible sources that place the actual unemployment rate at 35-40% How bad does it have to get before Europe is actually forced to call this what it is…a depression!

Incredibly, this figure has not even dropped by a percentage point since its peak in February of last year, even with the trillions put to work in Europe’s own version of Quantitative Easing, or QE (nothing more than fiat money printing and debt issuance/debt purchases). This is a nightmare for the Eurozone's governments, and the future of their economies. 

As Eurostat reports, “youth unemployment in some countries is actually off the charts. Greek unemployment for people aged under 25 is still at 51.5%, it's now second to Spain, which comes in at 53.7%. 

The long-term effects of youth unemployment are brutal…it's hard to see any hope for the Eurozone here. The incredibly weak growth the bloc is seeing at the moment is just not enough to significantly reduce youth unemployment, and this is a comparatively good period for the area — better than the preceding years of crisis and recession, at least.”

_________

This is just another reason why the ECB meeting this week will almost certainly result in additional rounds of US style QE. Importantly, this is what’s supporting global markets to a large degree…everyone knows the meeting is coming, and it has been the primary reason for the markets ability to stay afloat. Again, if this is the best news that stock market bulls can muster, then we could be in real trouble here. Keep the end of this week in mind…more to follow on this at the end of the update.

Here are the biggest concerns that I have right here right now…these are the reasons that this week could bring massive losses going forward.

1)   The protests in Hong Kong continue to be huge….and these will only grow. This mornings reports have more than 200,000 in the streets already! Wednesday is National Day in Mainland China and Hong Kong, and an official holiday. Everyone is off from work and the crowds are enormous…and this worries China’s communist leaders more than anything else. If they allow this to spread to the Mainland, they could likely become the next Middle East…just not the Arab Spring kind…instead, the current Middle East, with those that have little to lose rioting in the streets. Wonder how many ghost cities they plan to announce to quiet this uprising??

2)   Russia just announced that they either get paid the more than $3.5 billion they are owed from Ukraine, or they will cut off their gas for the winter…a real problem since more than 90% of Ukraine’s gas comes from the Russian Bear. In addition, fighting has broken out again on the Russia/Ukraine border…it’s highly doubtful that things get better here. The fact that the sanctions against Russia aren’t working, but in fact, making them even bolder, is not a good sign for the West or their economies.

3)   Speaking of both Russia and Europe, the impact on global economic growth is already being felt. Ford just preannounced earnings yesterday and their stock plummeted. Ford announced that their earnings will be a billion dollars lower than expected…due mostly to guess what…slowing global growth due to Russia, Europe and South America. In fact, Brazil’s stock market is getting slammed hard. As oil prices drop, their most profitable industries are suffering big time, with 18% plus stock market losses in just the last 30 days.

4)   U.S. co’s begin reporting earnings for the 3rd quarter in the next few days, and here’s what we should look for; instead of their earnings for this most recent quarter, let’s watch closely for what company’s project going forward…this is exactly what the smart money will be watching, and so should we. Regardless of good numbers from the 3rd quarter, the stock market will be projecting numbers out 3-6 months. I believe this is exactly why the markets have been dropping…and it’s why things will only get worse.

The market lost over 230 points today….again, everyone is hoping for great news from the ECB and additional QE.

How crazy is this. The markets head higher due to such massive amounts of economic weakness, that it’s actually good news that trillions more in QE will be necessary? Talk about an upside down world.

Finally, Ebola is now officially here.

As I’ve been writing, the fears of an Ebola outbreak…beyond just a few people…are scaring traders as much as anything we have seen recently. The governments medical experts continue to tell us that this will be contained…and it most likely will…but this is the definition of “fear and greed” controlling investors emotions. The fear of the unknown taking over.

Our illustrious Governor (tongue in cheek for “sometimes embarrassing”) here in Texas, Rick Perry, just said something quite interesting. Apparently, Texas is just one of 13 states that actually test for Ebola. Surely this can’t be true….??

Important point: while everyone is talking about Ebola, there’s another virus that will kill up to 50,000 in the US this year alone…and we have all had it at some point. Yep…the flu. Does help to put things in perspective. However, I will NOT be taking an annual Ebola shot each year.

Finally, the VRA just booked over 200% in gains, just this week. If you count yourself among the millions that are fed up with losing money via so-called Wall Street guru's, you owe it to youself to subscribe to the VRA. For the next 3 days, the VRA has a special offer for new Subscribers. Simply email us at: verticalresearch@mindspring.com and we will share this info with you.

Make no mistake about it....dark days await the vast majority...they are simply not prepared for what is coming.

At the VRA, you will not only lock in massive profits as stocks collapse, but you will be prepared for the most important NEW recovery that will follow. It's about much, much more than just making money.

Until next time, thanks again for reading.

Kip

Saturday
Sep202014

VRAletter.com Update: Emerging Risks Surround the Planet - Action Steps to Take Now

This weeks reversal higher in the markets came on the heels of even more money printing news out of China. I cover this in more depth later in this update as well, but here’s the gist of it; The Central Bank of China (PBOC) announced another newer and even better round of quantitative easing (QE), this time in the amount of CHY 500 billion (roughly USD $84 billion). These freshly printed digits are being deposited in the 5 largest Chinese banks, in equal amounts, which they say will “encourage Chinese banks to lend more money“.  Let’s hope so…their stock market just had its worst day in over 6 months and the economic news out of China has been dismal at best.

When we look at the global economy over the past 6 years, following the onset of financial collapse in 2008, it is absolutely stunning how large a role China has played. They have consistently purchased at least 50% of the world’s most important commodities (iron ore, grain, cotton, oil, gold, etc). These figures are mind blowing to say the least, but what kind of financial shape have these massive expenditures left them in?  A precarious one, at best.

Sure, China’s news today turned around a poor stock market, but the BIG question that every top expert that I know and trust is asking remains the same; “how much longer will the global economy be on life support, where additional trillions in fresh currency and debt are needed each and every year just to keep the patient alive??”  

 

IS ALL OF ASIA A BLACK SWAN EVENT WAITING TO HAPPEN?

One of the many, and most serious, global black swan possibilities is of course Japan’s ongoing economic demise, something I have written about in the VRA a great deal over the years. As a top 3 global power (along with the US and China), the coming collapse in Japan’s government bonds will send tsunami-sized shockwaves throughout the entire world, while turning this once great and proud country into the next Zimbabwe.

For those that may have forgotten, Zimbabwe was our modern day Weimer, Germany. In 1923, and as a result of missing a single debt reparation payment, Germany began its epic financial collapse…which ultimately led to the rise of power for Adolph Hitler and of course, World War II.

From 1999 to 2013, the inflation rate in Zimbabwe averaged 54,912 %. And yes, this was the average over a 14-year period. As incredible as this number may be to believe, the worst level of inflation actually occurred in July of 2008, when it hit an all time monthly high of                2,660,522 %! These are the official numbers as reported by the Reserve bank of Zimbabwe. I keep a Zimbabwe $100 trillion dollar note in my day timer, as a reminder of what happens when government finances go horribly wrong. By the way, that $100 trillion note was barely enough to cover the cost of a local newspaper.

You’re probably asking “but that was Zimbabwe…could this really happen in Japan, or to another major global economic power”?

Trust me….the leaders of both Zimbabwe and Germany never believed that it would happen to them…and these two countries are by no means alone in hyperinflationary collapse history.

Amazingly, 32 countries have experienced the total collapse of their currency due to hyperinflation over the last 100 years, with 21 countries having experienced it in the past 25 years and 3 countries in just the past 10 years(Madagascar, Romania and Zimbabwe). The United States is actually one of the few countries to have experienced not one, but TWO currency collapses during its history (1812-1814 and 1861-1865). With our current level of fiat money printing and ongoing monetary destruction, many experts believe that a third currency collapse is in the cards once again…count this author in that camp. It’s a question of when, not if…

Back to Japan. With debt to GDP now surging past 230%, Japan is well past the danger zone and as a result, the government has resorted to desperate economic measures…truly, Japan has become a financial twilight zone. In fact, Greece (by several measures) is actually in much better fiscal shape than Japan!

But as hard as this may be to believe, Japan’s financial picture is in actuality far worse than even this. Instead of measuring fiscal health using GDP figures, a better comparison is to examine each country’s debt to tax revenue, since that is the government’s source of income. This also offers a better comparison because different countries have very different levels of taxation. A country with high taxes can afford more debt than a low tax country. Debt to GDP ignores this difference. Comparing debt to tax revenue reveals a much truer picture of the burden of each country’s debt on its government’s finances.

When we use these figures, Japan is in the worst shape of every developed country, with debt as a percentage of tax revenue at a shocking 900%! In fact, they are twice as bankrupt as even Greece, which is in second place at 475%.

What about the U.S.? We have now jumped up to third place on this illustrious list, with a debt to income measure of more than 400%. If the U.S.were a family, it would have needed serious financial planning long ago. But boy oh boy does it help to have the world’s reserve currency, which forces other countries to convert their own currency into US dollars before transacting much of their international business…and for essentially all commodities, including oil, gold, silver, etc.

Not to be left off of the list is previously mentioned China. Even with today’s $500 billion (Yuan) QE, Hong Kong's index fell for an eighth session in a row overnight. In the mainland,China's two major share indexes posted their biggest daily loss in more than six months to an 8 week low, after a slew of weak economic data generated fresh worries about China's economy and prompted their latest round of QE.

China's lack of monetary growth (relative to past extremes) is a fact, and it’s resulting in the slow unwind of the entire previous boom. We’ve all seen China’s ghost cities and read about their ongoing real estate issues, but this is only the beginning.

Continue to avoid Chinese stocks. Their version of a free market system, something they call “state sponsored capitalism”, is really not much different from what we see here domestically. The U.S. ran trillion dollar plus annual deficits for 5 straight years, and while record tax revenue has helped a great deal of late, we continue to run up our unpaid tab. Through August our deficit was already at $598 billion, with 4 full months to go.

China's central bank, the People's Bank of China, continues to announce short-term boosts in credit, what we call QE, however these are minor efforts that will only slow the ultimate collapse, with little chance of reversing it.

STEPS TO TAKE NOW

While no one knows exactly how much longer QE will continue to be well received by the markets, we have all the evidence that we need to know it cannot bail out the global economy forever. At some point, much sooner than later, trillions upon trillions in new debt will have to be resolved. Unfortunately for Japan, China and the US (along with all of Europe), once interest rates begin to spike, making these payments will be more and more difficult. This is when the bond market vigilantes will pounce.

For now, make sure you have zero exposure to China and Japan….this includes Australia as well.

Sell any investment that is bond/debt related, where the maturity is longer than 3 years.

Continue to dollar cost average into precious metals and the miners....mining stocks are trading at rediculously low levels...and are as oversold as at any point in memory. 

(The VRA Portfolio has a complete list of recommendations)

Next up, be ready for an explosive move higher in the VIX (the fear index). As we head into the always crazy October time frame, look for serious volatility to return....and currently, there is next to zero fear in the market, which is very interesting considering we are starting our NEXT war in the Middle East, talk of WWIII due to Russia's aggression in Ukraine and the fears of destabilization elsewhere in Europe.

The stock markets next moves are critical in determining the overall health of this market…which as I’ve written looks shaky at best, judging by almost all of the internals that I follow (momentum, sentiment, leadership and breath).

The risks surrounding us today have never appeared greater, and to top it off we now have an Ebola virus outbreak that has already claimed more than 2700 lives. The CDC and WHO are now saying that this is nowhere near over and that the worst still lies ahead, with 500,000 being infected within a few short months. In fact, the CDC just began telling US hospitals that they should expect Ebola to hit our shores, along with the specific steps to take. Scary stuff for sure. Even scarier for the 3000 US soldiers that our President just ordered to Liberia…the epicenter of the Ebola outbreak. Why our young hero's must be forced to do the worlds heavy lifting is anyones guess...just another example of Rome burning.

The stock markets of the world have ridden all of these negatives up the proverbial wall of worry…and when the central bank led buying frenzy ends, there will be hell to pay….and we will be prepared to make fortunes. 

Until next time, thanks again for reading.

Kip Herriage

VRAletter.com

 

Wednesday
Jul092014

All is Fine – Tech is Great - No Need to Worry & WAR’s New Book

Jul 07, 2014

It’s an incredibly special time in the US and niche-specific parts of the globe.

That is, IF you are among the 1% that is closely connected to major money center banks, investment houses, and/or governments around the world. The “money cartels” control literally 90% of all paper money in circulation, and unfortunately, carry that “Master of the Universe” over-sized, unchecked ego’s to go with it. They also have full access to top leaders in government, illegall inside information, high speed trading tech, and some of the most toxic derivatives ever invented, which then allows these corrupted 1% moneymen to make money off of US on a daily...nearly 100% of the time effective basis as well.  

What’s that old saying? “Power corrupts; absolute power corrupts absolutely”….yep.

Stock markets are at or approaching all time highs, the job market is supposedly getting better (as long as you enjoy part time/minimum wage incomes), and speed of light increases in new technology…in order to make our lives easier and more efficient…keep coming at breakneck pace. Advancements in technology…especially the kinds that we are witnessing right before our eyes… are the stuff right out of science fiction movies from just a decade ago. Crazy. And this has to be good, right?

Well, “probably so”. To play devils advocate on one of the most important conversations of our lifetime, consider the following (and I believe incredibly insightful) quote from a most infamous person.

“It is not possible to make a LASTING compromise between technology and freedom, because technology is by far the more powerful social force and continually encroaches on freedom through REPEATED compromises. Another reason why technology is such a powerful social force is that, within the context ofgiven society, technological progress marches in only one direction; it can never be reversed. Once a technical innovation has been introduced, people usually become dependent on it, unless it is replaced by some still more advanced innovation. Not only do people become dependent as individuals on a new item of technology, but, even more, the system as a whole becomes dependent on it.

When a new item of technology is introduced as an option that an individual can accept or not as he chooses, it does not necessarily REMAIN optional. In many cases the new technology changes society in such a way that people eventually find themselves FORCED to use it.” 

Regardless of your personal position on advancements in technology, I doubt anyone can seriously disagree with the above quote…maybe not even when you find out who wrote it….none other than Ted Kaczynski. You know, the mad-man that came to be known as the “Unabomber”, having forced the NY Times to publish his "Manifesto", along with his promise that he would stop bombing people if they would publish (he bombed and killed 3 and injured 23 from the late 70’s to mid 90’s).

Long story short….the FBI tracked this mental case down through Kaczynski’s own brother, who recognized his writings, following the Times decision to publish.

Sorry folks….not to go all Ted Kaczynski on you today, but he makes a compelling case about the future of global cultures, personality “adjustments”, and the future of mankind’s freedoms and prosperity….most all due to technological innovation.

Final point before we leave this discussion behind. Even if you disagree with every single thing that this insane murderer had to say, maybe remember this as well;

If you work in traditional retail and your company is similar to a Radio Shack, JC Penney….or pretty much ANY local mall type business….how have the advances in technology helped you and your job security? Your income? Your safety net? Your retirement?

And of course, as time goes on, the dislocations from tech advancements will only increase; One robot doing the work of 50 men/women…driverless cars/trucks that make the driver “optional”….or consider the wisdom of what Larry Page (Google CEO) had to say just this weekend on the subject of advances in technology and the resulting job destruction;

"You just reduce work time," Page said. "Most people, if I ask them, 'Would you like an extra week of vacation?' They raise their hands, 100% of the people. 'Two weeks vacation, or a four-day work week?' Everyone will raise their hand.”

Yep….my hand is up Larry. I would also like for my children’s colleges to accept in payment my eternal gratitude and best wishes, in lieu of actual money.

Page continues….

“Most people like working, but they'd also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have (part-time) jobs."

Brilliant stuff here Google CEO….must be nice to be worth $100 billion. Heck, I might even say stupid sh*t like this if I had that kind of bank roll. The truly interesting part of all of this is that other "next level thinkers” seem to agree with Page. Folks….here’s the reality….Page and other major leaders in tech are well aware of the job losses coming from technology displacement. They’re just giving us fair warning… now.

But hey, that’s long term stuff right? All is well now….it’s back to business as usual….time to forget those ugly last 7-8 years.

However, since I enjoy being a fair and balanced reporter, let’s take a quick look at the flip side.

Jobs and the Economy

Great “headline” unemployment number out this past Friday. Turns out we are down to a 6.1% unemployment as the US added well over 280k jobs in June. Let’s freakin’ celebrate, right? Hmmm…..as it turns out, the US actually LOST 500k FULL TIME jobs….while adding about 800k PART TIME jobs…..you know, those benefit-less 20-30 hour work week jobs that “may” pay you $10/hour. Have fun paying your ever increasing gas, electricity, rent and food bills (thank you currency inflation) with these awesome new jobs….which our fine Prez will no doubt be bragging about all over the country as he tries to save his bacon as the LOWEST rated President in the last 70 years. Kudo’s BHO…you’ve been a true unifier of the country…without question, you absolutely represent all of us.

The Reality of the Stock Market & The Madness of Crowds

First, what we are witnessing is not real. What I mean is this; yes….stocks are in fact going higher, no one could question that. Here’s what’s not “real” about it.

The propellant of higher equity prices had it’s origin in something we all know well….the Federal Reserve/Central Bank fiat currency printing press. But we’ve known this for years. This grossly manipulated, financial Frankenstein, cannot and will not last. Folks….its always “different this time”….until its not.

Here’s what’s driving prices higher NOW….there’s a massive merger and acquisition boom spreading across the planet….of course all due to cheap and easy central bank money. Fortune 500 co’s (and more) are now issuing debt at all-time low interest rates, then using the proceeds for either share-repurchase programs, or much more commonly now, to simply buy out their weaker (but important) competition. Sounds great right….like smart business…and maybe it is. But there’s a larger and much more important question to ponder.

What’s the first thing to take place following a merger/buyout?? You guessed it….corporate downsizing! Or, what my boss at my Wal-Mart told me at the age of 17 (when I requested time off for a senior graduation trip); “Son….if you do this, we will have to let you go”. So yes, I went on the trip….and yes, he corporate downsized me.

And this is the harsh reality of the M&A binge now….FAR more  full time employees losing their jobs. And yes, this is one of the increasingly important reasons why the Labor Force Participation Rate will continue to climb to new highs, which very sadly stands at a 35 year high, with more than 92 million adults out of work here in the good ole USA. Come on BHO….let’s hear you tell this truth just ONCE. I think we all know the odds of this happening. About the same as the odds of finding a single person that knew BHO or ever saw him on the campus of Columbia U. Don’t believe me? Think I’m being a right-wing hater?

Just ask our good friend Wayne Allyn Root…..BHO’s classmate at Columbia for the same 4 year period (as in exact). I don’t want to steal too much of Wayne’s thunder, so let me encourage you to BUY Wayne’s new book….out July 14th…”The Murder of the Middle Class”…on Amazon or Wayne’s site (pre-order til next week). The primary title sounds a bit depressing, I know, but the bi-line makes it a must read; “How to Save Yourself and Your Family From the Criminal Conspiracy of the Century”. I’m halfway done with my advance copy now and Wayne really delivers with this focused and spot-on, in your face effort. Of course, I would have been blown away surprised if he hadn’t. W.A.R. is the single most consistent, common sense and passionate conservative that I have ever had the great pleasure of knowing. He’s also become a close personal friend, and someone that’s always under-promised and over-delivered for us.  Let’s support our good friend and invest $25 or so into a great book …you can thank me later.

Final Thoughts and Actions to Take

First, shorting this market takes big brass ones….which is probably exactly why we should be short this over-heated bull right now….except for this old-time market adage; “the market can stay irrational much longer than we can stay solvent”. Talk about words of wisdom.

Folks, at this point EVERYONE is bullish. At least all the regulars you’ll see in print and on TV. Probably a good time for anyone serious about money management to read “Extraordinary Popular Delusions and the Madness of Crowds” by Charles McKay (1841). This book allowed me to get out of the dot-com crazed stock market mania in late 1999….just months before that HUGE top was in place….which saved my Wall Street clients a ton of money (and ultimately led me to start the VRA, in 2003).

What is it that Buffet says? “We should be greedy when others are fearful and fearful when others are greedy…”. My educated guess is that Mr. B is taking profits right now on many of his holdings….which we won’t find out about of course until the end of the quarter (when Berkshire Hathaway files).

VRA Recommendation?  By my count, there are more than 10 black swan probabilities, and literally anyone of them could take place tonight. And, if just one does, the Dow Jones opens down 1000 points. So….I’m gonna pass on any long reco’s, others than those in the VRA Portfolio of course. I’ve seen this movie before….it doesn’t end too well for most of the sheeple, which love to invest right at the top.

By the way, did you notice the VIX index today? It rose by 10% on a fairly quiet day….something I find quiet interesting. The VIX looks ready to pop higher - big time.

Also, continue to buy gold and silver with every chance you get. Inflation is coming….of this there can be no doubt. How do I know this with absolute certainty? One, the very definition of inflation is an increase in money supply/printing….check. Two, I can see currency inflation end-results everywhere I go. Sure, IPhones and IPAD’s may be dropping in price, but amazingly, it’s still tough to eat these (where’s Job’s when you really need him).

And, with inflationary prices, bond prices will be destroyed from current levels…meaning that bond yields must head higher. Folks, before long, we will begin to see skyrocketing rates.

Until next time….thanks again for reading. Stay Frosty.

Kip