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4 Reasons Why “Gold Has Entered A New Bull Market”

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– 4 reasons why “gold has entered a new bull market” – Schroders
– Market complacency is key to gold bull market say Schroders
– Investors are currently pricing in the most benign risk environment in history as seen in the VIX
– History shows gold has the potential to perform very well in periods of stock market weakness (see chart)
– You should buy insurance when insurers don’t believe that the “risk event” will happen
– Very high Chinese gold demand, negative global interest rates and a weak dollar should push gold higher

This week gold broke through the key resistance of $1,300. For some time market commentators have been signalling this level as the point of entry for a new bull market.

Often price can be distracting when it comes to trying to figure out what is going on. Two Schroders fund managers called the new bull market in gold about a week before the price broke through the key level.

Gold has entered into a new bull market. As we have discussed previously, there are four main reasons for our stance:

  1. Global interest rates need to stay negative
  2. Broad equity valuations are extremely high and complacency stalks financial markets
  3. The dollar might be entering a bear market
  4. Chinese demand for gold has the potential to surge (indeed, investment demand in China for bar and coin already increased over 30% in the first quarter of 2017, according to the World Gold Council)

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Goldman Sachs CEO Thinks Markets Are Too High

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Original Link | Motley Fool

Analysts and commentators are often derided for saying that stocks are overpriced and due for a correction. Behavioral economics, the fad at the moment, holds that making predictions is like throwing darts at a dartboard with a blindfold on.

But what happens when a growing chorus of the best investors in the world all start to say exactly that? Should these people also be treated like Greek mythology’s Cassandra, who could see the future but couldn’t persuade others about her predictions?

The latest example is the chairman and CEO of Goldman Sachs (NYSE:GS), Lloyd Blankfein. At an industry conference this week, Blankfein expressed concern about the current state of the markets, saying that the situation “unnerves” him.

“Things have been going up for too long,” he said. “When yields on corporate bonds are lower than dividends on stocks? That unnerves me.”

The head of Goldman Sachs, which has been among the most omniscient of trading firms on Wall Street in recent history, adds his name to a growing list of other high-profile financiers that have publicly expressed concern.

Here’s what Howard Marks, co-chairman of Oaktree Capital Group (NYSE:OAK), wrote in a memo to clients in July:

[I]t’s essential to take note when sentiment (and thus market behavior) crosses into too-bullish territory, even though we know rising trends may well roll on for some time, and thus that such warnings are often premature. I think it’s better to turn cautious too soon (and thus perhaps underperform for a while) rather than too late, after the downslide has begun, making it hard to trim risk, achieve exits, and cut losses.

Since I’m convinced “they” are at it again — engaging in willing risk-taking, funding risky deals, and creating risky market conditions — it’s time for yet another cautionary memo. Too soon? I hope so; we’d rather make money for our clients in the next year or two than see the kind of bust that gives rise to bargains. (We all want there to be bargains, but no one’s eager to endure the price declines that create them.) Since we never know when risky behavior will bring on a market correction, I’m going to issue a warning today rather than wait until one is upon us.

Here’s Jeffrey Gundlach, co-founder and CEO of DoubleLine Capital, a fund with $110 billion in assets under management:

If you’re waiting for the catalyst to show itself, you’re going to be selling at a lower price. This is not the time period where you say, “I can buy anything and not worry about the risk of it.” The time to do that was 18 months ago.

Here’s Warren Buffett, the chairman and CEO of Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B), intimating the same thing in a letter he penned earlier this year to the shareholders of Berkshire Hathaway:

Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.

And here’s Ray Dailo, the co-founder and chief investment officer of the world’s largest hedge fund, Bridgewater Associates, writing recently in a LinkedIn post:

When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don’t have a unique insight that we’d choose to bet on. Most importantly, we aim to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes. We like to hedge our bets, though we are never completely hedged. We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and Treasuries) would benefit, so if you don’t have 5%-10% of your assets in gold as a hedge, we’d suggest that you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us).

In short, one can be as dogmatic as one likes about predictions, but when investors and financiers like these start expressing concern, it’s probably not such a bad thing to listen.

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Alphabet Is Getting Squeezed, but a Breakout Is Coming: Chart

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Alphabet (GOOGL) shares have successfully retested a nearly four-month support line and are prepared to make a volatile move higher. This is just one of a number of technology stocks that have recently retested support lines, and have the potential to return to previous pattern resistance levels or to new highs.

Alphabet should be a leading indicator for the space. It is positioned on a well-tested support level and undergoing a volatility squeeze. The level of buying interest this move attracts should be a gauge on the general sector.

There are several ways to identify a potential volatility squeeze in a stock. One indication is when the upper and lower Bollinger bands move inside the Keltner channel boundaries. Bollinger bands are measures of standard deviation around a moving average. Keltner Channels are a measure of standard deviation using average true range.

It is unusual for the Bollinger Bands to contract to a point where they enter the Keltner channel and this reflects a level of extremely low volatility. Periods of low volatility are often resolved by periods of high volatility, and in the case of Alphabet, the resolution should be higher.

Google is a holding in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio.Want to be alerted before Cramer buys or sells GOOGL? Learn more now.

Moving average convergence/divergence has made a bullish crossover and the stochastic oscillator has crossed above its center line. These indicators reflect positive short-term price momentum and potential trend direction. The stock has broken above short-term resistance in the $945 area, and is retesting its upper Bollinger band.

It appears the breakout is underway and the first upside price objective is to fill the July downside gap by returning to the resistance level of a large horizontal channel.

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4 Home-Improvement Stocks to Buy Post Harvey Mayhem

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Harvey, the first major hurricane to hit the U.S. mainland in almost 12 years, has put vast areas under water. The onslaught of the torrential rainfall followed the storm, which originated in the Gulf of Mexico. While it is too early to gauge the financial impact of the hurricane, some experts are calling for losses in the double-digit billions.

Meanwhile, many are gearing up to rebuild homes, which drove demand for home-improvement equipment. In fact, the tropical storm is set to dump more rain in areas such as Houston, TX, which propelled shares of home-improvement retailers. This calls for investing in such stocks for solid gains.

Harvey Wreaks Havoc

Hurricane Harvey claimed almost 10 lives and injured many more. Houston, the fourth largest city in the United States, has been flooded. The city received more than 30 inches of rain, as per National Weather Service. Starting Saturday, the city plunged into the torrential waters and the rain is not likely to subside before Aug 30.

Numerous residents are trapped in the floods, while many fled to higher shelters. Many residents sought help on social media and even made efforts to save their pets. Dramatic rescue operations took place, with the Coast Guard saving dozens of lives.

Houston’s health care infrastructure, in the meantime, took great efforts to heal the affected. In fact, many nursing home residents were stuck in waist-high waters before they were rescued. Governor Greg Abbott of Texas said the region won’t recover soon and called the storm “one of the largest disasters America has ever faced”.

Why It Was the Worst So Far

The rainstorm originated from a tropical depression which rapidly ballooned from a Category 1 hurricane to Category 4. It worsened due to a lethal confluence of meteorological events.  Scientists say that warm water in the Gulf of Mexico intensified the downpour and lack of winds in the upper atmosphere that could have steered the hurricane away led to the intense damage.

Hal Needham, a storm surge expert and founder of the private firm Marine Weather & Climate in Galveston, TX, said that a “two- or three-foot storm surge alone would not have been catastrophic.” He added that “it was all these ingredients coming together” that made the hurricane so destructive. Dennis Feltgen, a spokesman for the National Oceanic and Atmospheric Administration’s National Hurricane Center in Miami added a note of caution and said that additional rains of 15 to 25 inches are expected to pour over parts of Southeast Texas. Some areas might even witness as much as 50 inches of rain.

Why Wasn’t America Prepared?

As the storm isn’t over yet, people are keen on finding out about failures in policy, planning and execution. Politicians are expected to come with the usual answer that Harvey was just too devastating and not much could have been done to minimize the losses.

But clearly, there are Meta problems that have turned this natural hazard into a full-blown mega-catastrophe. In such a case, looking into the condition of green space and wetlands could have reduced the impact of the storm. Proper runaway development plans and existence of large-scale mitigation projects like seawalls and levees would have helped as well.

Home-Improvement Companies Rally on Harvey Deluge: 4 Picks

Nevertheless, Harvey continues to wreak havoc, while Houston’s flood-prone metropolitan area may have to bear several days of rainfall, adding to property damage. As home owners face damaged properties, likelihood of rebuilding efforts will gain momentum. This in turn will drive the demand for home-improvement equipment and materials, including temporary electricity generators.

Home building and furnishing retailer Home Depot Inc (HD – Free Report) saw its shares climb 1.2% to $151.39 on Aug 28, while peer Lowe’s Companies, Inc. (LOW – Free Report) gained 0.6% to $73.80. Lumber Liquidators Holdings Inc’s (LL – Free Report) shares, in the meanwhile, were up 4.4% to $38.70.

As shares of home-improvement retailers rallied, we have selected four stocks to boost your returns. These stocks flaunt a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Home Depot is a home improvement retailer. The company sells an assortment of building materials, home improvement and lawn and garden products, and provides various services. The Zacks Consensus Estimate for its current year earnings increased almost 1% over the last 60 days. The company’s estimated growth rate for the current and next quarters are 12.6% and 10.2%, respectively. The company has outperformed the industry in the past month (+1.2% vs -1%).

Lumber Liquidators Holdings is a multi-channel specialty retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Zacks Consensus Estimate for its current year earnings increased more than 40% over the last 60 days. The company’s estimated growth rate for the current and next quarters are 105% and 130.6%, respectively. The company has outperformed the industry in the past month (+56.6% vs -1%).

Kirkland’s, Inc. (KIRK – Free Report) is a specialty retailer of home decor in the United States. The Zacks Consensus Estimate for its current year earnings increased 5.7% over the last 60 days. The company’s estimated growth rate for the next quarter is 5.2%. The company has outperformed the industry in the past month (+21% vs -1%).

Tempur Sealy International Inc (TPX – Free Report) is a bedding manufacturer. The company develops, manufactures, markets and distributes bedding products. The Zacks Consensus Estimate for its current year earnings increased 3.5% over the last 60 days. While the company is expected to grow in the current and next quarters, it has outperformed the industry in the past month (+4.3% vs -1%).

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