LOS ANGELES – Stocks were up again yesterday – 120 points on the Dow.
Hold on just a cotton-picking minute. Honest investors are getting out of the stock market. There have been net withdrawals of $80 billion from U.S. equity funds so far this year.
This is a speculator’s market. And the No. 1 gambler is playing with an infinite amount of chips.
We’re talking about central banks – who create money on demand.
Now, alarmed by Brexit and the worldwide slowdown, they’re buying assets at the fastest pace since 2013.
Just look at the chart below from Citi Research. As you can see, central bank-issued liquidity tracks the stock market almost perfectly.
We have our answer: Central bank stimulus, more than any other factor, is responsible for pushing up stock prices.
So, let’s get this straight…
Central banks are using counterfeit “money” that no one ever earned or saved… to buy stocks at record high prices… while real investors head for the exits.
Does this sound like a winning program, or what?
We’ll have to go with the “or what” on that one. But exactly how or when it comes to an end, we don’t know.
Theoretically, central banks can continue indefinitely buying stocks and bonds with fake money. And stocks and bonds can continue to go up in price even as the economy goes down.
We’ve come out to the West Coast to see our daughter in Los Angeles.
Then we will drive to Las Vegas to join Mark Skousen’s Freedom Fest, where we will be participating in a couple of panel discussions.
We explained to Mark that we were not really fans of “freedom.” We are all prisoners of our own myths, delusions, demons, and dementia. Without them, we’d be lost… with nothing more than our brains to guide us.
As G.K. Chesterton said of a crazy man, he had “nothing left but his sense of reason.” We trudge happily in our own chains; we just don’t want to submit to someone else’s.
Nevertheless, Mark asked us to take part in a panel of “libertarian CEOs,” along with Steve Forbes and John Mackey of Whole Foods. (Readers who would like to attend can register here.)
We haven’t confessed this to Mark yet, but we join the panel as an imposter…
As a libertarian we are a complete counterfeit. We don’t really believe in the creed; we merely practice it when it suits us.
And as a CEO, we are an even bigger fraud. We are not, nor have we ever been, a real businessman. That would take far more organizational skill and force of personality than we have at hand.
Instead, we might more accurately be described as a “clumsy entrepreneur who was lucky enough to find real business people to help build a company.”
But the libertarian CEO stretches the truth even further.
Steve Forbes, John Mackey, and Charles Koch are the real McCoys. They apply the principles of libertarianism to business management in a serious and organized way.
We do not. We realized long ago that we were far too incompetent to try to tell anyone what to do, let alone undertake any serious central planning.
Laissez-faire is what you get when you shirk your responsibilities and fail at management.
But we left off yesterday with a promise. We said we would explore that den of foxes in Lower Manhattan: Wall Street…
We were describing how cronies and zombies – Republicans and Democrats – work together and use government for their own purposes.
They are the insiders… the elite… the Establishment – represented by Hillary Rodham Clinton in this upcoming election.
To bring new readers more fully into the picture, public policy is not directed by our elected representatives… who wisely and prudently debate the issues as they arise.
Congress is more like a three-ring circus than a real legislative institution. You will find freaks and grotesqueries aplenty. (Many members of Congress have hidden tails; we’re sure of it.)
You also see stunts, legerdemain, and bombast – all gaudy and solemnly fraudulent.
The tourists who come to visit are impressed by the marble, the smoke, and the mirrors. But they have no more idea of what is really going on than members of Congress do.
They’re too busy raising money from cronies… or glad-handing their constituents… to seriously consider the bills they vote on; they rely on staff (more or less permanent inside-the-Beltway apparatchiks) to tell them how to vote…and what to say.
And don’t bother to get into a deep discussion of the Fed’s zero-interest-rate policy… or central bank asset buying (QE)… with your congressman.
More often than not, he will have only the slimmest, most superficial, and self-serving grasp of the details… and no idea whatsoever of the theories.
He will understand – barely – only the myths of modern central banking, based on a few “talking points” provided to him by his aides.
More to come…
By Jeff Brown, Editor, Exponential Tech Investor
Flexible display technology has long been the stuff of science fiction. The ability to have compact, light, and flexible display screens opens up incredible potential for consumer electronics.
Think about pulling out a device the size of a small magic marker and unrolling it to read your newspaper…
Or having a workout display embedded into a wristband for when you exercise.
HP’s flexible display
These kinds of devices are coming much more quickly than you might think.
Last year was a turning point for the flexible display industry as Korean companies Samsung and LG, as well as Taiwanese company AU Optronics, released new technologies.
Samsung’s flexible Windows Phone 8 device
The market forecasts for these displays show exponential growth during the next 10 years. By 2025, this will be a $30 billion market.
One U.S.-based company is perfectly positioned to benefit from this trend…
Corning has been a primary supplier to Apple since the iPhone was first released in 2007. Today, it is one of the world’s largest manufacturers of fiber optic cables, photonics, glass panels, and display technology. Its flexible display technology is called Willow Glass.
Corning is an excellent addition to a large capitalization high technology investment portfolio. It has a 2.66% dividend yield and is expected to generate almost $1.4 billion of free cash flow in 2016.
Furthermore, Corning’s forecasted revenues for 2016 are $9.6 billion, up 5.6% from 2015 and 20% from 2012.
In my Exponential Tech Investor newsletter, I tend to focus on small capitalization, leading-edge technology companies that are growing exponentially.
I am currently researching a few, smaller, less-known companies that specialize in display and photonics technology. And it’s likely that some of these will be “the next Apples” or “the next Googles.”
I’ll be covering this topic for the rest of the week in my special online training series. The sessions are completely free. Just register here for instant access.
Is the Party Over for Gold Bugs?
Precious metals have been one of the best places to be in 2016. But watch out. All commodities – including gold and silver – may be in a long-term bear market that could last at least another decade.
British Government Report: U.S. Allies Secretly Funding ISIS
The Deep State’s overseas cronies are up to no good. A British parliamentary report has concluded there is “historical evidence” that ISIS received funding from some of America’s closest allies…
A Good Way to “Hide” Your Money in a NIRP World
Brexit and negative interest rates are pushing investors into survival mode. Here’s how one digital currencies expert says you can “hide” your money in a NIRP world…
Monday’s Diary, “Helping Robots Find Jobs,” really struck a chord with some readers…
The displacement and replacement of humans by machines which are becoming ever more sophisticated. It’s yet another trend most people blithely ignore it at their peril.
We live in a world where the human population is exploding. And more people are finding themselves either unemployed, or under employed due to automation. It doesn’t take a rocket scientist to see that this trend leads only to disaster.
Remember 2011, and the Arab Spring? Do you recall what the impetus was for the uprisings that shook the Middle East that year?
It was hordes of highly-educated, but unemployed, young people who grew sick of the hopeless situation they found themselves in. They said, "Enough is enough!” And four countries were thrown into turmoil that still continues to this day… with millions of Syrian refugees pouring into Europe and threatening the stability of the European Union.
The "Brexit" vote is only the first of many dominoes yet to fall.
– Dale A.
Let’s look further into the horizon to see the real ramifications of it all. 3D-printing technology is capping hourly wages at under $20, which is the hourly cost of a 3D-metal, plastic, and powder melting with a laser beam-printer.
Anyone in the metals or plastic manufacturing business will replace a skilled parts machining employee (earning more than $20 per hour) with a 3-D printer.
Once printers are producing the quality tolerances deemed acceptable for consumers, the last hurdle is won.
With all these people being replaced by robots, who will have sufficient savings left over for basic needs? After all, robots don’t eat, watch movies, need homes, drive, shop, travel, or do anything except produce. Who will replace the lost demand when people are unemployed? Will “helicopter money” spread to people being terminated?
Basically, the movie The Matrix is unfolding in real life… and we’re getting there fast.
– Alain V.
Today, Jeff Brown released part 1 of his special interview series with Amber Lee Mason… where he reveals his three rules for finding hyper-growth tech stocks…
He also explains why many of the safest “blue chip” stocks of today will likely go bankrupt (or will suffer massive 50% – 70% losses) in the next five years.