Put your cash behind the right investment
Michael Belkin advising investors where to put their cash now by predicting the market
- Duration 8:12
- Date Jun 25, 2012
Michael Belkin advising investors where to put their cash now by predicting the market
Also in this playlist...
This transcript is automatically generated
There but first of -- -- start off with Michael -- and he is a -- -- Advising -- fund managers hedge fund managers mutual fund managers Michael thanks for joining us and end very bearish take here.
This bring your early out on the call.
Per usual -- the last turns here in the bubble.
Yeah a lot of people seem to be surprised by that the daily.
-- headlines coming out of Europe you've been anticipating this a while -- is your forecast still.
Bearish this Italy's for the next three to six months.
I -- I think it's important for people to keep the business cycle in mind you know I worked on Wall Street is Solomon Brothers I was in proprietary trading.
Back in the eighties and nineties and one of it -- all the stories in the book is.
Stocks go down when the economy contracts.
And my forecast now -- quantitative forecasting my -- -- hedge funds sovereign wealth funds.
Is -- the group the global economy is going into recession.
And therefore we can look forward to you earnings reports that are disappointing.
And that -- Wall Street strategists and analysts will not anticipate because there.
Forecasting street had growth in excel spreadsheets.
So you know my recommendation is that investors sell into rallies.
Not buying into -- but when they're so when the markets up you know usually you have people on when the markets up and they say oh it's going up is going not.
I would say the opposite when the market rallies I think that's a great opportunity to unload get neutral and try to keep your 401K for becoming a 201 K.
In them in the market for downturn that I'm not forecast and its -- that.
Lot of people may be caught off guard last Thursday you know second round of disappointing PMI is from around the globe.
We've seen that -- -- but last month and several times this brings some disappointments here.
And -- -- -- not just a Germany and Europe or us about China Brazil.
Here in the US even -- catching some people off guard big downturn on Thursday we -- the rally on Friday.
It looks like some people are taking your -- us selling into that rally Friday if you look at the markets today.
Yeah we'll -- -- entire global growth story that.
Drove the boom now I was bullish starting back in April 2009.
You know the market -- have.
The Fed was expanding its balance sheet there -- -- for -- economy to recover and the markets to rally for a long time.
That's stories over if you look at -- at them at the global boom it's over China.
Is he going into contraction while -- growth is slowing down anyways -- -- Europe is in the deep contraction in the whole emerging markets story is just put it.
Brazil Russia you know that that -- idea and to make things worse the dollar is strengthening and that means that earnings per US companies.
Which had dependent on export earnings those earnings are going to be worth less because the dollar is strengthening.
Now there a couple of barometers.
As far as economy -- that individual investors should maybe -- denial of these manufacturing report seem to be one of them the market really responds to.
Particularly coming -- recession the ISM there was of strong correlation.
For manufacturing here in the US let us aside from the manufacturing -- keeps an eye on the headline.
The unemployment rate but I they're to a three that that you're really zero -- and advise individuals to juvenile.
But yes -- the EC RI Economic Cycle Research Institute as a weekly leading economic index and that's been ticking down week after week.
On the two most important things driving the US economy our retail sales and industrial production.
And -- both declined.
In the last report you know in the last few weeks and I have a forecasting model in the next twelve months points down.
And not there are a lot of companies that are exposed so I'm basically telling my clients hedge funds to short the market basically to sell into rallies and go short and the things.
That I am recommending to be short -- -- for individual investors it's -- -- short.
For instance apple you talked about Starbucks I think Starbucks is expanding into Europe and China had exactly the wrong time in the cycle.
Apple is everybody's favored -- stock the other products are great.
But Apple's stock could have and still being an uptrend so the price of apple shares has just simply gotten out of whack and we should we went out -- long term trend.
-- we should -- you look at very long term -- -- you're talking 200 week averages as opposed to the twenty day averages that some intraday traders types would look at.
Right at 200 week average that now -- to keep that in perspective.
-- could -- to -- three week average is still be in a long term uptrend.
That 200 week average is down 52%.
For -- for apple and nobody short apple that the short interest is -- 1% of the float.
And you know I went around New York I recently saw my -- from clients and still.
One of their favorite -- it's a big hedge fund holding so all that tells me is that there's a lot of people out there that.
That it will that could be forced to sell apple stocks that are bubble stocks apple Starbucks stocks like that it would every individual investors -- -- yes.
-- because they -- -- also -- -- Iowa and apple hit its high we saw the selling in catch a lot of people off guard and it fell 400 dollars very quickly per share.
Right well there are inverse.
ET apps that are easy for for individual investors to do -- PSQ.
Is a negative ETF on the NASDAQ.
It's one for once -- the NASDAQ goes up 1% it goes down 1% the NASDAQ was down 1% it goes up 1%.
I think those are the kind of things that makes sense it if the markets can go into it extended downturn.
And try to -- I'd like to say something about -- Bernanke and the Fed you know.
-- -- just wrote the she was a coauthor with Milton -- -- monetary history the United States she just died.
In her obituary in the New York Times she opposed Bernanke's reappointment.
And this is what she said an article in New York Times.
Bernanke seems to know only to amounts zero and trillions.
Why is easy monetary policy such as soon.
It increases the severity of the recession that inevitably follows when the bubble bursts now the Fed has something called the portfolio balance channel.
They deliberately forced people into you.
Equities and junk bonds might not lowering interest rates is the deliberate policy it's not a it's not you know.
It's not some scheme or something that I made up an assortment -- -- next guess I should say because he's trying to legal battle inflation because you're not getting paid anything by your bank.
It's -- savers are being punished by.
Some not critics.
Well that I think was a big big mistake and no less than the -- of monetary history the United States says that that policy is in the state.
And I think a lot of people you know like I said for a one -- become a 201 K.
Just like happened and that and that housing bubble we have above -- in the stock market and a bubble in the economy and people should really.
Take great care and limit their risk from the market downturn that's my advice to individual investors.
Leon Morgan Stanley element as saying -- that -- extending twist basically just -- the -- the hands of policy that's it has little benefit as they put it.
But the one the other side -- that -- is.
Is there concerned that that your forecast.
Could be caught off guard by 'cause it's an election year we know the Federal Reserve generally does everything they can to make to boost the economy we've seen historically and the government that's in power remaining years did Democrats for the most part -- the White House.
And -- with a sense to stay in power did that -- could just open the -- more and that could boost risk assets moving into year end.
Good question and I'm going to guess that I'm going against that and I I have a lot of credibility on the line here young I'm taking -- very -- -- And I'm not permit there don't get me wrong.
That I just think that they lost control basically the global economy with the advance in Europe.
In the events coming out of China are going are much more powerful on what is going you know it -- affecting was going to happen in the US.
And business conditions in the US it's only four months until the election so.
You know in the stock market looks ahead though.
And thank you know the global markets are down a lot more than US markets nasdaq's only down about 5% from its high it topped out at the beginning of April global markets topped out in the middle of march.
So I think that we're going to have a steady downtrend.
In stocks and again I just say sell the rallies I don't sell -- it out when it's when -- down a lot that we need get a chance when the markets up 20% after a few days three -- -- or something.
That's the time to lighten -- and and moving into.