How often can the same bubble burst?

Wednesday, 30 May 2018
Melbourne, Australia
By Bernd Struben

  • Making millions
  • Brexit derailed?

If you’re one of the 31% of Australians who own their own home outright…congratulations.

Or maybe you’re one of the growing number of renters. That figure has reached 30.9%, according to the 2016 Census.

In that case, you may be hoping to see property prices ease downward. Not crash, as that would wreak havoc on the stock market and see unemployment soar. But a gradual decline while you squirrel away enough savings to take out a mortgage.

Then you can join the other 34.5% of Australians, who are still paying off their mortgages.

(Note that these numbers do not add up perfectly. With the official homelessness rate at 0.1%, your humble editor can’t account for the other 3.5% of Australians. Direct your queries to the Census department of the Australian Bureau of Statistics.)

If property prices keep heading higher, folks with mortgages will generally be in fine shape. Assuming, of course, interest rates stay low and their payments remain manageable.

If dwelling prices decline slightly, that’s also manageable…especially if you’re living in your home.

But what if you buy a house only to find yourself owing more than twice as much on your mortgage as your house is worth?

That’s the situation facing 713,000 US home owners. And aside from those owing at least twice the value of their house, an additional 4,382,044 households owe somewhat more than their home is worth.

From Bloomberg:

A staggering number of American homeowners remain under water on their mortgages a decade after the housing bubble burst.

Almost 4.5 million households — or 9.1 percent — owed more than their homes are worth in the fourth quarter of 2017, according to data firm Zillow, with an estimated 713,000 owing at least twice as much as their property’s value.

While the percentage is declining, families in communities with stagnant property values are “trapped in their homes with no easy options to regain equity other than waiting,” said Aaron Terrazas, a senior economist at Zillow.

Admittedly these figures surprised me.

You see a lot of headlines about the strength of the US construction and housing sectors in the mainstream financial news. Yet 9.1% of US households owe more than their home is worth!

Is this cause for concern here in Australia?

According to legendary economic forecaster, Harry Dent, yes.

Very much so.

Dent has historically focused on the US. But in bringing the Harry Dent Daily eletter to Australia, he’s now unleashing his forecasting talents Down Under. And he’s actually remarkably bullish on Australia. Though not until after the coming bust.

As he says, ‘You are on the cusp of what we see as the next great opportunities for investments…after the inevitable global crash.’

Dent also writes, ‘The epicentre of this new crisis…like so many economic crises that have come before…will be the United States of America.’

Harry Dent Daily is an entirely free eletter. One Port Phillip Publishing is proud to add to our prestigious line-up.

To begin receiving Harry Dent Daily simply click here.

Now to the markets. Brace yourself. It’s not pretty…

Markets

Overnight the Dow Jones Industrial Average closed down 391.64 points, or 1.58%.

The S&P 500 fell 31.47 points, or 1.16%.

In Europe the Euro Stoxx 50 index finished down 54.50 points, or 1.56%. Meanwhile, the FTSE 100 fell 1.26%, and Germany’s DAX shed 196.95 points, or 1.53%.

It’s the second day running for hefty losses across the major European exchanges. And investors can thank the political chaos unfolding in Italy.

From The Australian Financial Review:

European shares fell for a second day on fears a new election in Italy, which could become a proxy referendum on its euro membership, might renew the risk of a euro zone break-up.

Italy’s main stock index closed down 2.7 per cent and hit a 10-month low.

Italian Bank shares slumped 4.9 per cent to a fresh 13-month low, bruised by a sell-off in Italian government bonds, a core part of the banks’ portfolios.

Banco BPM, Banco Generali, Unicredit BPER Banca, fell between 5 per cent and 6.7 per cent.

“It’s a market that is totally in panic”, said Giuseppe Sersale, a fund manager at Anthilia Capital Partners, who noted “a total lack of confidence in the outlook for Italian public finances” as Italian bonds suffered their worst day in more than 25 years.’

Whenever you hear about bonds having their worst day in a quarter century, it pays to take notice. Though, even if Italian voters decide they’d like to separate from the Eurozone, would they be allowed to?

If Brexit is any indication, the answer may well be no. (More on that below…)

In Asian markets, Japan’s Nikkei 225 is down 369.47 points, or 1.41%. China’s CSI 300 is down 1.53%.

In Australia, the S&P/ASX 200 is down 38.16 points, or 0.63%.

On the commodities markets, West Texas Intermediate crude oil is US$66.42 per barrel. Brent crude is US$74.84 per barrel.

Gold is trading for US$1,300.66 (AU$1,734.91) per troy ounce. Silver is US$16.40 (AU$21.88) per troy ounce.

One bitcoin is worth US$7,531.79.

The Aussie dollar is worth 74.97 US cents.

Making millions

Moving from overindebted households to the secrets behind how successful traders make millions, I had a chat with trading veteran Jason McIntosh last week.

Jason, as you may know, is the talent behind the premium trading service, Quant Trader.

As mentioned above, investors around the globe are getting riled up about a possible Italian meltdown. But Jason’s proprietary algorithmic trading system is still calmly searching for the next stocks likely to shoot higher…or fall lower.

While most of the gains Jason logs in Quant Trader’s portfolio come from long trades — buying shares —  his system also hunts for stocks to short. That is, stocks it expects will see their share prices fall.

This gives subscribers greater flexibility — and an element of insurance — in their trading strategies.

So what are the secrets behind a successful trading strategy?

Here’s what Jason wrote to his readers:

People often believe successful trading is all about secrets. They think that the best traders have some special knowledge that regular people can’t access.

I’ve seen many traders get lost in a maze of indicators and theories. They jump from one method to the next in search of the Holy Grail.     

But do you know what?

There is no Holy Grail or “secret”.

The strategies the best traders use are nothing new. They’re mostly variations of the same winning tactics that have been in use for decades, if not centuries.

Many beginner traders make the mistake of focusing on one thing: when to buy.

Yes, entries are important.

But they’re just one cog in the machine. 

The difference between success and failure are the rest of the cogs. Sadly, many people lose their trading capital before figuring this out.

So how do some of the best traders make millions?

Well, it essentially comes down to five rules: 

  1. Trade with the trend
  2. Have many relatively small trades
  3. Cut losses early
  4. Give winners room to run
  5. Be slow to take profits

Successful trading isn’t about secrets. It’s about steps.

Get the process right, and the money should follow.’

One of the things I enjoy about Quant Trader is that Jason takes the time to really share his hard-earned trading knowledge. He doesn’t hold back.

For example, he explains each of the five rules listed above in great detail in his weekly updates.

At the end of the day — or a year or two as a paying subscriber — he’s happy if some readers walk away. Not because they’re dissatisfied with the performance of his trade recommendations. But because they now feel empowered to go it alone.

Whether you’re already an experienced trader or just getting started, I recommend taking some time to learn more about Quant Trader. You can do that right here.

Brexit derailed?

We’ll leave off today with a quick look at the continuing woes hampering Britain’s divorce from the European Union.

As with most divorces, the only folks seeming to get anything from the process so far are lawyers and bureaucrats. And it’s beginning to look increasingly likely that Brexit may not be allowed to go through at all.

Long time readers may remember Kris Sayce made that call shortly after the 23 June 2016 referendum. Although 51.9% of voters wanted to leave the EU, Kris wrote that powerful vested interests would never allow Britain to leave the EU’s embrace.

And when it comes to vested interests, you can’t get much more powerful than this man:



chart image

Source: LensaMalaysia
Click to enlarge


According to the PAA newswire:

‘[George] Soros is reported to have given about STG500,000 ($A880,000) to Best for Britain, which was set up last year by anti-Brexit campaigner Gina Miller.

The group is expected to publish its campaign manifesto on June 8, calling for a second referendum.

Speaking in Paris, the 87-year-old said: “Brexit is an immensely damaging process, harmful to both sides”…

“Best for Britain fought for, and helped to win, a meaningful parliamentary vote which includes the option of not leaving at all. This would be good for Britain but would also render Europe a great service by rescinding Brexit and not creating a hard-to-fill hole in the European budget.’

There you have it. A second referendum with the full power of the Deep State — and the deep pockets of players like George Soros — already lining up to rescind Brexit. And rescind the will of the majority of British voters.

There’s one bit of Soros’ logic I don’t follow here though.

If Brexit is so harmful for Britain, how is it creating this big ‘hard-to-fill hole in the European budget’? I’d think all that money that was once filling that EU budget hole would find its way back into UK businesses and taxpayers’ pockets.

No?

Mailbag

I’ll do my best to get to some of the emails languishing in the mailbag tomorrow. In the meantime, if you have questions or comments, send your email to letters@portphillipinsider.com.au. If we publish your letter we’ll only use your first name.

Finally, this from The Australian Tribune:

 ‘US Turns Up Heat on China Over Islands

China may have thought it could steamroll over its smaller, weaker neighbours and lay claim to the majority of the South China Sea.

But the Chinese government appears to have underestimated US resolve to uphold international law. A resolve that should come us welcome news to Southeast Asian nations, including Australia.

US Defense Secretary Jim Mattis says…’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd