Harry S. Dent Jr.'s Blog, page 137

IES 2015: That’s a Wrap!

I love to travel, but I hate flying. Especially with a torn muscle that makes walking next to impossible. Even more especially when American Airlines just couldn’t seem to decide which plane we were going to take off in from Dallas. Better yet, which spot in the airport. They changed our gate – twice.

After damn near 24 hours of traveling, I’m happy to be home in South Florida. But I’m no less grateful to have had an enriching experience in Vancouver

IES Day 3: Strategies for a Bear Market

Alright – we’ve got one last day of the Irrational Economic Summit inside the stunning Fairmont Hotel Vancouver! The first two days have been outstanding. And this last day promises nothing less. Today, we get to hear from David Stockman! He’s going to talk about why the 25-year global bubble is over and done. I’ll share some of what he says with you this afternoon, but for now, let me just run through some of the highlights from yesterday afternoon…

Funny-man Barry Potekin hopped on stage after our lunch break to the enjoyment of everyone in the room. I saw two guys in the back cracking up at every other thing the man said.

I don’t want to get too detailed here as I plan on stepping in on his workshop later today, but his message was simple: being diversified is the best way to ride out the coming financial storm. “I’ve made a lot of mistakes in my career,” he said. “But I’ve never made the mistake of having all my eggs in one basket.”

Speaking on behalf of the RBM Group, Barry’s firm deals in the business of individually-managed futures – which, as he says, have the potential to do well in both up and down markets. Like I said, I’ll add more after I crash his workshop later!

After Barry, John Del Vecchio took the stage to offer

Three Great Men, Three Hours, and More Information Than You Can Absorb in One Sitting

Yesterday was a special day. We kicked off our third annual Irrational Economic Summit with a bang – beginning with our senior and founding editors, Harry and Rodney… our Chief Investment Strategist, Adam O’Dell… and our keynote speaker, the wonderfully funny P.J. O’Rourke.

Since joining with Dent Research back in March, I’ve worked with Harry, Rodney, Adam, and all the other guys quite a bit. I’ve watched a fair number of their recorded presentations, but I’ve never actually seen the guys speak LIVE.

Here’s the thing I like about Harry: there’s no bullshit. Man, does he just say it as it is!

As for Rodney, the guy’s a textbook. He’s so chock-full of information. The man’s just brilliant.

Then there’s Adam, who’s 100% dedicated to his research and absolutely full of wisdom. So much so, it’s palpable. He’s a nice guy to boot! On our way downstairs, he escorted me all the way to the conference room in my wheelchair. (Yes, I’m cruising through the conference in a wheelchair after injuring my right leg in a freak accident about a week ago. As a colleague put it, I’m the youngest guy in the room and the only one in a wheelchair!)f

We launched the conference with an introduction from each of our 15 speakers, then Harry took the stage…

When it comes to Harry… let me just tell you, I’ve spent countless hours on the phone with the man, and we always, always cut to the chase. It’s no different with anyone else. One-on-one, on national TV, or in front of a live audience of 300 men and women, he’s exactly the same. Demographics, cycles, bubbles ­– he lives it. It’s just who he is.

Within his first five seconds on the stage, he had the crowd rolling with his “I am a happy camper” line – happy because the bubble he’s been on-and-on about for years FINALLY looks done. And as he explained, that’s just the half of it.

At the crux of his argument lies what he calls: “The 5th Convergence.”

I’m not kidding when I say it’s as spooky as it sounds!

As he put it to the 1,000-plus Irrational Economic Summit viewers yesterday, the four greatest financial crises of the past two centuries have occurred when all four of his key cycles – the same ones he uses to predict economic booms and busts decades in advance with startling accuracy – were pointing down. And those four key cycles are pointing down again!

He went on to list a number of triggers that could open these floodgates. I recommend you watch the full presentation if you’re not physically here or watching via LIVE Stream. You can do so by accessing our IES 2015 On-Demand Recordings of the event.

After Harry’s presentation, Rodney took the mic to ask an important question: “Given everything that is wrong with our economy, why aren’t politicians talking about… I don’t know… THAT?!”

Probably because politics have absolutely little to do with reality, but that’s beside the point.

Rodney listed a number of very real issues threatening our economic well-being entirely beyond the already grim macroeconomic perspective of Harry’s cycles. The student-loan system is a catastrophe waiting to happen. The tax system is a multi-billion dollar industry that makes little sense. And there’s page after page of bogus regulations that make running a small business near impossible, because who knows what mal-practice some random citation officer might nail a small business owner with!

My favorite part of his presentation was this telling detail: in 2008, when the housing market was crashing, when the stock market was crashing, and the whole financial landscape was in a landslide, politicians were concerned about steroid use… in baseball.

Whatever gets votes, right!?

After a half-hour coffee break, Adam offered his recommendations for investing in global markets during this period of high volatility.

This presentation got technical at moments, but Adam has a knack for breaking down complex topics.

In it, he covered the average gains you could expect to earn in the S&P 500 by just buying and holding over the next year, as well as the stock markets in 15 of the top world economies. Simply put, we’re looking at a different market environment where that won’t work. There’s too much volatility and too much risk. That’s why a trend-based strategy like he uses in Cycle 9 Alert is a much better alternative. This was a very detailed and highly informative presentation that you need to watch.

Finally, after a long afternoon packed full of insight from three great men, our keynote speaker P.J. O’Rourke closed out the day with some much-needed humor. Like he said, the only things worth laughing about are those with the greatest consequences… and that’s what we’re all here in Vancouver to discuss.

Seriously, what a chilling first day! By the end of the cocktail reception, we were all a little bleary-eyed, but still amped up from all the terrific speakers.

Today, we hear from Harry’s favorite economist Dr. Lacy Hunt on the characteristics of extremely over-indebted economies, Dr. Keith Jurow on why NOW is the best time to sell your investment real estate, Chris Gaffney on how to tell if your portfolio is insured for the next global financial crisis, and many more.

I’ll send the highlights to your inbox later this afternoon.

‘Til then, reporting to you live from IES 2015, Vancouver…



P.S. I’m particularly interested in hearing Keith speak today. We only recently discovered him, but as he put it, he’s the only other analyst besides Harry who, in the past five years, has said our so-called housing recovery is an illusion. He’s promised me some pretty terrific graphics. From what I can tell, he seems like a rather dynamic speaker. Catch his presentation here.

The 2015 Irrational Economic Summit Has Begun!

We’re about to kick off our third annual Irrational Economic Summit.

As I write this, attendees are buzzing around the registration desk, the speakers are itching to take the stage, and we’re all anxious to hear what Harry, Rodney, the 13 other experts, who’ve gathered here in the luxurious Fairmont Hotel in Vancouver for the next three days, have to say.

My job for the next couple of days is to listen to everything they’re saying and share the crucial details with you. As the “on-the-ground reporter,” you can think of me as your eyes and ears here in Vancouver.

If you weren’t able to be with us in person, if you’re joining us via LIVE Stream, or even if you’re one of the hundreds of readers enjoying the fine Canadian weather with us, my emails over the next several days will be your window into the world of IES 2015.

The event comes at an interesting time this year, with U.S. stocks stuck in a

The Global Financial Crisis Is Only Just Beginning

I just landed in Vancouver for our third annual

The Global Markets Today: It’s Enough to Make Your Head Spin!

As I walked through Lowe’s last weekend, I was struck by the presence of Halloween decorations. At the risk of sounding like a cranky old man, I couldn’t help but tell my wife: “It’s not even September yet!” And then I thought how 2015 seems to be flying by. Maybe I actually am a cranky, getting-old, man.

I have the same take as I read through the financial papers. Things are moving at light speed. From crashing equity markets to falling commodity prices, there’s a lot to contemplate at one time.

The U.S. economy isn’t crashing (yet), but growth is modest. Median income remains stagnant, while costs beyond energy are rising. To add, the Fed might raise rates next week for the first time in nine years, putting fixed income investors in a quandary.

Over in China, the equity market is flaming out and investors are leaving the country in droves. The yuan requires daily CPR from the government. While the country’s economy isn’t in reverse, it is slowing down.

The problem is that the old saying about the U.S. now applies to the Middle Kingdom as well. When that country sneezes, the rest of the world catches cold.

Indeed, several economies that have been red hot are suddenly cool to the touch. Canada and Australia, heavy commodity exporters, are looking for different customers as China scales back its orders. They’re left with the difficult task of replacing demand from the second largest economy on the planet. That will be hard, if not impossible.

Germany, which enjoyed shipping BMW’s, Audi’s, and a myriad of other goods to China has the same problem. So does South Korea.

The pace of change and seismic shifts in the global economy and world financial markets is enough to make your head spin. It’s time to take a breath.

As we leave the summer behind and move toward the fourth quarter, now is the time to take stock of where we are, and plan for the months and years ahead. Our 2015 Irrational Economic Summit couldn’t come at a better time.

Later this week in Vancouver, Harry Dent and I have the privilege of sharing the main stage with the likes of Lacy Hunt and David Stockman. Along with presentations from the many other industry and investing experts that are joining us, I’m looking forward to an information-packed conference to help separate the signal from the noise. Attendees can expect clear analysis and forecasts from the group instead of the normal “it-could-go-up-if-it-doesn’t-go-down” conclusions drawn by so many in the field.

As the name of our meeting suggests, we keep the notion that economic behavior is irrational front and center.

In both daily consumer choices and investor sentiment, ours is a world that at its core is driven by individual choices. Central banks can bend the lines, but they can’t change the choices we make.

Exhibit A is the $4 trillion of new money the Fed created through QE. According to any typical economic model the U.S. economy should be exploding, driven by cheap money. But it’s not.

Instead, consumers are holding back, moving at a pace and in a direction determined by their own needs, not the financial machinations of the central bank. How this plays out in the months and years to come is always a main topic when we get together.

Speaking of noise, over the next year or so we’ll be bombarded with political double-speak. Given the amount of money the candidates are raising, we won’t be able to escape their ads.

This makes the presentation by our Keynote Speaker, P.J. O’Rourke, particularly timely. With his biting humor and insight, I’m sure he’ll give us some ideas to chew on, as well as an entertaining take on the political hurdles we face today.

So for all of you joining us in a few days, I look forward to seeing you! I expect the presentations, conversations, and weather to be spectacular.

For those who couldn’t make it, all is not lost! While you won’t get the benefit of Vancouver in September, you can still get the benefit of the information through our LIVE recording of the event. Like I said, with all the economic obstacles we face, the event couldn’t come at a better time. If you’d like to tune in, you can

This Labor Day, Remember Those Who Don’t Get to Choose

Contrary to what we see on television, the Internet, and in newspapers, Labor Day wasn’t created to increase the consumption of beer and barbeque, or to generate more sales at department stores. It’s not called Redneck Hangout Day (which I, for one, would be glad to celebrate) or Consumption Day. It’s Labor Day, a time for recognizing the contribution made by laborers to the success of the nation.

Most everyone I know works at something, but this day was specifically designated to separate the owners of capital and managers, who aren’t celebrated, from those earning hourly wages.

When it began in the 1800s, it was a time of Robber Barons, Industrialists, and Scientific Management Experts who did their best to squeeze greater efficiencies out of workers.

The unions were pushing back. Demanding a holiday in honor of workers was a logical way to raise awareness of how much the nation relies on this group.

I agree. I also think that managers and working owners of capital bring a lot to the table as well. But there’s a fundamental choice made before any of this celebration can occur. People choose to work.

More specifically, we get to choose to work. Our labor is of our own accord. While many people might not like their jobs, or aspects of their employment, they still have the right to show up or not.

For millions of people, this isn’t the case. Today there are between 27 million and 36 million slaves on the planet. In 1860, at the height of the slave population in the U.S., there were four million.

While human slavery has been outlawed in all nations, the practice continues, just under different names – debt servitude, indentured, etc. The effect, however, is the same.

People existing under these conditions are forced to perform labor without pay, are held against their will by force, are given subsistence levels of food and shelter, and cannot secure their freedom.

The pretense of a debt that is owed or other price to be paid merely gives the situation a thin veil of legitimacy. These people cannot secure their own release no matter how hard or how long they work.

They are, in essence, owned.

Some labor is sexual, such as when girls and women are trafficked. Other times is it hard labor in mines or fields. It can even be domestic labor, cooking and cleaning.

The biggest perpetrator by number is India, with an estimated 14 million slaves. These people are typically listed as indentured servants. Their forced labor is required to pay off a debt that in some cases is generations-old.

Benjamin Skinner, a modern slavery researcher, found a man in India who was enslaved for a debt of $0.62. It was incurred by his grandfather. For three generations his family remained in slavery because of that debt. But they earn no money, so there is no foreseeable repayment.

Mr. Skinner tells of another instance closer to home. In Haiti he was offered a 10-year-old girl for $100. He would own the girl. She would keep his house and his bedroom. Skinner talked them down to $50.

UNICEF estimates there are 300,000 child slaves in Haiti. Dan Harris of ABC’s Dateline was skeptical of this claim. He went back to Haiti with Mr. Skinner and within a day negotiated the purchase of three different girls. Of course he did not go through with the transactions, but merely proved that it was possible.

The recent success of ISIS, the terrorist group staking territorial claims in the Middle East and enslaving or murdering anyone who disagrees with them, is just the latest and most brutal example.

Even in the U.S., there are an estimated 14,000 to 17,000 slaves, most under the label of human trafficking for prostitution.

Americans, like most people around the world, recoil at the idea of slavery, and yet it persists right here, on our soil.

In Brazil, it is used by unscrupulous miners and loggers. In India, as well as Haiti, it is often the outcome of parents selling their children due to abject poverty.

Still, the outcome is the same. A human being with no freedom who is forced to do another’s bidding for the rest of his or her life for no benefit.

So while we celebrate the role of labor in our society today, we should also celebrate the freedom we have to choose our labor. And we should remember those among us, both here in the U.S. and abroad, who aren’t so fortunate.

Rodney

Follow me on Twitter @RJHSDent

Venom Therapy: Who Knew a Wasp Could Cure Cancer!

For most, it’s never a good day when you get stung by a flying insect. Especially a wasp, whose potent venom can have lasting effects after the initial sting.

In a rare twist of fate though,

The Casino Economy: Here’s How the Fed Lost Half Its Bet in 1 Week

Since the financial crisis, central banks have injected trillions of dollars into the global economy. Their goal: to offset the natural downturn from slowing demographic trends and the crushing debt loads of the greatest credit bubble in history.

The Federal Reserve alone has created $4 trillion in QE since late 2008. They tried to solve an unprecedented debt crisis by adding more debt.

A toddler can tell you how backwards that is!

It’s killed investors looking for safe, long-term yields, while empowering Wall Street and hedge funds to lever up at low costs, and bet the casino on never-ending Fed stimulus.

Likewise, corporations buy back their own stocks to increase their earnings per share. It’s bogus accountant voodoo magic. It’s got nothing to do with fundamentals like growing your business. What a novel concept!

And yet, this is the world we live in today: a world in which governments buy back their own bonds, corporations buy back their own stocks, and Wall Street lives on speculation rather than real lending and investment.

As the Fed and other central banks bought trillions of their own bonds, they drove down interest rates to encourage more borrowing and spending.

But as it turns out, they were a little late to the party!

Consumers and businesses had already over-spent and over-borrowed in the great bubble boom leading up to the financial crisis.

As David Stockman puts it, we had already reached peak debt and excess capacity by 2007. Since we can’t go any higher, there’s just one direction left: building up financial bubbles, then deflation when they inevitably burst. It’s happened every single time in history!

I’m sure Lacy Hunt would agree! He has the most astute understanding of economic history of anyone I know. Both he and Stockman are speaking at our Irrational Economic Summit next week (which you can tune in via live streaming if you didn’t get a seat for the event).

But despite this peak debt, central banks can create more free money at no credit rating limitations. And the largest, most credit-worthy corporations can borrow at near-zero long-term rates easier than we mere consumers or small businesses can, especially after the great recession.

So, these corporations buy back their own stocks to increase earnings per share, even if such earnings are slowing. Even if earnings remain the same, if you reduce the numbers of shares outstanding ­­– bam! More earnings per share! All it takes is rigging the system.

Stock options further incentivize the top executives to do this. If the stock goes up, they benefit, whether they expand the business or not.

What a sweet deal! Why didn’t we think of this before!?

Probably because, decades ago, this mal-practice was quasi-illegal. Corporations used to be prosecuted for this downright manipulation of their stock prices. But not now, when the Fed needs anything to keep this out-of-control bubble going and consumer and investor confidence rising so Humpty Dumpty doesn’t fall again.

These guys will look like idiots in a few years. They’ve bought their own stocks near the top of this bubble, and increased their debt burdens at the worst time in history. They’re not setting themselves up to win, as the challenging downturn ahead will quickly determine which companies survive, and which thrive – just like the 1930s.

The only time the Fed did QE to a substantial degree was during World War II when we had to raise a boatload of money to support a war during a time of rising inflation.

That was a true emergency effort worth taking the risk for. We won the war and moved into one of the greatest peace-time booms in history. We had booming demographics and demand. We paid the high debt ratios and QE off rapidly.

This is not such a worthy effort. And such a recovery won’t happen this time around. We have slowing demographics through the next several years, and a weaker boom to follow.

It was one thing to use QE for a short period to keep the banking system from overreacting and breaking down.

It’s another to make it a long-term policy that perverts everything our free market’s been based on since the Industrial Revolution – the economy won’t be able to rebalance as it’s meant to!

So, let’s add it up…

The Fed creates near $4 trillion in free money to stimulate the economy by buying their own bonds and pushing down longer term yields to near zero risk-free rates…

As a direct effect, corporations buy back their own stocks to the tune of $2.3 trillion…

The oil frackers and other high-risk ventures borrow money at super-low rates to take greater and greater risks for another $1 trillion mal-investment…

And in late August, the first 10% crash in stocks that bubbled up dramatically as a result of QE, sees over $2 trillion of wealth disappear in one week!

HALF of the QE lost in ONE WEEK. Think about that.

Does it sound like the Fed’s $4 trillion bet will pay off? Does this sound like a plan to you?

I think stocks alone will lose $7 to $10 trillion in the years ahead. Don’t even ask me about real estate and junk bonds.

And don’t get me going on China. What they’ve done is much, much worse. Talk about excessive debt and overinvestment!

Every credit and financial asset bubble in history has crashed. Some in a few years. Some a matter of months.

Get safe now on any bounces in the market. The great crash has already begun.

Harry

Follow me on Twitter @harrydentjr

Buyers Beware: The Market’s in Bear Mode

The wild ride in the market continues. Last week, my inbox was bursting at the seams, from invitations to conference calls, to market strategists wondering what to do next. I’ve had more conversations than I care to count that have amounted to little more than hand-holding, trying to soothe professional investors’ fears.

It just makes me wonder – if the professional investors were freaking out, what was the average investor doing?

What I can’t get over is, this all came after a 12% decline that none of these guys I’ve talked to saw coming.

I’m just wondering… how did they not?

Exactly a week before the selling started,