Archive for business cycle

Dr. Charles Nenner’s Thoughts June 2019 – An Interview with Michael Douville

Posted in #PaulthePoke, Michael Douville, Trend Update with tags , , , , , , , , on June 18, 2019 by paulthepoke

Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven…

Dr Nenner is not only brilliant, but gracious spending almost an hour of his time discussing current conditions in the Financial World.  As one of the most influential Cycle Researchers in the World, Charles Nenner shared his most recent research and discussed the Cycles of Stocks, Bonds, Interest Rates, and the safer harbor for Income Investors, Real Estate.

Dr. Charles Nenner

As Dr. Nenner repeatedly states all things change. Good times end, Bad times end and everything cycles from Seasons to Interest Rates. Nenner Research indicates the Globe may be about to experience a profound change of Cycle. Soon, the US Business Cycle will be setting a record for expansion surpassing the 120 months of growth experienced in the 1990’s;  setting a record implies this is unusual, as it normally does not  last this long! The expansion is so old and so long many have forgotten that Business Cycles complete, they change! The Business Cycle transitions from Expansion to Contraction slowly, then all of a sudden. Charles Nenner’s research has predicted the slowdown. It is now no longer a prediction, but fact and the Economy of the World is poised to get worse, much worse. Excesses still unresolved from 2009 added to the inevitable malinvestment of the current Cycle presents the potential for a downturn worse than the Great Financial Crisis!!

Excesses still unresolved from 2009 added to the inevitable malinvestment of the current Cycle presents the potential for a downturn worse than the Great Financial Crisis!!

Charles Nenner’s Cyclical Research forecasts declining US GDP in 2019 to a year end level of less than 1%;  GDP for 2020 may be contracting to below 0. Currently,  Industrial Production, Manufacturing and Factory Orders are declining in the US.

Auto sales are falling,

Retail has not recovered from one of the worst Christmas Seasons in 20 years and retail store closings and shopping mall closures are at a record pace. 

 My favorite asset class, Real Estate, is in a mid cycle correction and has experienced 14 months in a row of declining Existing Home Sales with prices in some markets notably New York City, Seattle, San Jose actually beginning to deteriorate. 

Dr. Nenner foresees a Stock Market decline accompanying the softening Economy starting in earnest mid to late July. Unfortunately, Dr Nenner’s Research does not indicate a short drop and quick recovery, but a more prolonged period of slow Economic activity. Those in retirement or approaching retirement should take heed;  an extremely conservative approach or an exit strategy might be discussed with their Investment Advisor.  Losses incurred from a Stock portfolio may require a very long time to recover. Many Baby Boomers do not have that time! Avoiding loss should be the goal, not squeezing out the last dollar of profit. Lose 40% or more and the “Golden Years” are not so golden!

For a free trial offer of Charles Nenner’s newsletter, go to www.charlesnenner.com and mention this interview.

In Prior slowdowns, Investors could transfer Wealth into Bonds when the Stock Market plunged. Charles Nenner sees higher rates from July going forward that will eventually lead to significant losses and much higher rates in just a few years. Dr. Nenner also envisions Global Deflation; Deflation is much more difficult to manage than Inflation prolonging the contraction. Deflation often refers to the destruction of Credit and Debt through non-payment or defaults. Obviously, as Risk of Default or possible Debt restructure rises, Investors demand to be compensated for the Risk and Rates rise. This is counter intuitive to a slowing Economy which speaks to the predicament of Extreme Global Debt.  Individual US Treasury Bonds representing the safest investment in the world issued by the Global Reserve Currency will receive unprecedented demand; Capital seeking safety.  Dr Nenner’s Cycles for the 30 year Treasury Indicate demand pushing Treasuries to possible new low yields.  A bifurcated Bond Market?

Bonds and debt without the implicit guarantee of the US may suffer loss of principal in  a World engulfed in Global Deflation and Contagion.

Bond funds and ETF’s  which unlike simple bonds, never mature could incur losses of 70% or more in a rising rate environment. Further,  Deflation may cause huge losses in lower quality Bonds and Debt instruments. Estimates are as high as $2.5 Trillion in Corporate Bonds could already be just one notch above JUNK!  A recession could double that. Downgrades and Defaults will cause massive Bond losses.

Consistent income will help mitigate the turmoil that is coming.  The S&P dividends yield less than 2% and the risk of monumental loss of value dictates avoidance.  Bonds and Debt instruments are facing the potential of devastating losses as well. The current Income provided is not much more with the 10 year Treasury yielding less than 2.2% in an Inverted Yield environment.  Any increase of Interest Rates will devastate a Bond Portfolio. Fortunately, Real Estate provides consistent, conservative, and monthly Income.

Conservative single family residential rentals provided cash flow month after month through the Great Financial Crisis.  As a separate asset class from both Stocks and Bonds, Real Estate barely correlates with Wall Street;  estimates are in the 8-9% range. Real Estate, although cyclical, is also very Regional in Nature. There are several truly great Real Estate markets in the US that are experiencing both Organic growth and Demographic growth causing demand for Housing. Las Vegas and Phoenix are both exploding adding over 100,000 new residents each in 2018;  one cause is the Exodus from California, a Mega Trend that will last for years. This population increase is creating jobs and an enormous demand for rentals. Dr Nenner believes that investing in Small Units and Entry Level Single Family properties will generate Income through the economic downturn and may prove to be a very prudent investment. Investors will receive useable cash flow while waiting for the Real Estate Market recovery which may bottom as soon as 3rdquarter 2020.  Just beyond the current Real Estate correction is the “Explosive Phase” of the Real Estate Cycle where Fortunes are born! Not just Cash Flow, but much higher prices.

Will rising HOME prices coincide with the 30 year Treasury declining to historical low rates? Will the US experience Negative Rates and barely positive mortgages as our European Cousins? Will Risk expose struggling Corporations, Munincipalities, Counties, States, and maybe even Sovereign borrowers to much higher rates based on Credit downgrades? The next few years promise to be very interesting; is that a Chinese curse????

Rental Cash Flow may be one of the few Income Streams that will be monthly, consistent, and actually grow in a downturn; a fiscal Lifeboat! Risk has entered the Market. As a separate asset class, Real Estate may provide a safer asset for your Wealth. Always discuss with your Financial Advisor before Investing. 

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Signs of a Late Business Cycle… Michael Douville

Posted in Michael Douville with tags , , , , , , , on February 4, 2019 by paulthepoke

Luke 14:28-30 For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish.’

Jesus is offering advice on many levels with the verses above. First piece of advice is to “sit down” and have a plan. Second is “count”. One needs to know what they have. Third is have a “foundation”. The fourth is have enough to finish the plan.

Do you have a plan for your life let alone a plan for a house or structure? Where are we in the economic cycle? Do you have a plan for the financial times we live?

The economic slowdown continues. The home builder Pulte is slowing. Harley Davidson is selling fewer motorcycles. These are the signs of a late business cycle.

Check out Michael’s latest video entry with fresh up to date economic data.

Why would the Federal Reserve put interest rates on hold? Debt is spiraling out of control. Check out Michael’s comments below on the debt load around the globe.

Do you have all your money in stocks and bonds? What happens if we see a sharp reduction in the markets. Have you prepared your life boat? Michael talks about alternate ways to make income without worrying about the markets.

Michael is a syndicated writer for the Wall Street Greek. This is Wall Street quality research for free. Michael knows his craft.

Have a plan…

Prepare for a Housing Correction

Posted in Michael Douville with tags , , , , , on October 29, 2018 by paulthepoke

Ecclesiastes 3:1 For everything there is a season, and a time for every matter under heaven:

Ecclesiastes 3:3b a time to break down, and a time to build up…

 

https://michaeldouville.com/

This is not good news. As you know by now, I have been in the Real Estate business for over 45 years and I have experienced first hand the effects of the Business Cycle and the Real Estate Cycle. My first experience with a Cycle Completion taught me to respect   the sheer and unforgiving power of the Cycle and I have been a Student ever since.  I will share what I have learned.

Michael Douville’s website

There is a Cycle to Everything; rain, drought, moon, eclipse, orbits, Sun Spots, and what I am concerned with today, the Real Estate Cycle. Edward R. Dewy, Phil Anderson, and several contemporary researchers have identified the 18.5 year cycle for housing.  The Great Financial Crisis and the bursting of the unsustainable Housing Bubble is an indelible period burned in many Investors memories.  The decline started really in 2007 and accelerated into 2008. My Home market is the Phoenix MSA ; one of the 4 most adversely affected markets in the Nation. I definitely remember! What is harder to pinpoint is the bottom of the trough as it becomes a process drawn out over several months. However, in the Phoenix MSA, bottom was achieved sometime in the very late 2009 to very early 2010. Virtually all of the troubled markets seemed to bottom  together. In my Conferences, I use January 1, 2010 as the turning point. Researchers and statistics indicate the Real Estate cycle is 18.5 years which places the next bottom July 1, 2028; in a perfect world. That is almost 10 years from now: so what?

Get out of Debt, Raise Cash, Sell any marginal Property NOW!!! Review Financial Vulnerabilities to Equities and Bonds. Reduce Risk!

housingcorrection

The Real Estate Cycle keeps repeating itself over and over again. Cycle data in the US recorded as far back as 300 years; to pre-revolution!  Also repeating in the data is a period of vulnerability for a Housing Correction 7.5 to 9.5 years from the bottom. This corresponds to July 2017 to June 2019; the current time frame!  These corrections can be very vicious or relatively mild. My personal concern is for an Epic Correction.  When investing, these cycles become exit and entry points for Capital Deployment as well harbingers for Economic Distress for Real Estate Slowdowns seem to be always accompanied by a Stock, Bond, or Economic corrections which will affect jobs, interest rates,  Foreign Exchange,  and therefore businesses and families. Forewarned is forearmed. I have been warning about this vulnerability for 18 months; advising  to raise cash and reduce debt. Nationally, Existing Home Sales have dropped for the last 7 months and September sales plunged! Indeed, as an example, the very vibrant Denver Market experienced a 30% drop in sales across all price ranges in a 30 day period from August to September. Declining sales is the preview to declining prices. The Correction in Housing has probably begun!

This graph, courtesy of ECRI, clearly shows the decline.

Someday, the cause of the decline will be researched, but now coupled with the Housing Correction is a Global Economic Slowdown underway causing turmoil overseas and ravaging the Emerging Markets. The Slowdown had been recognized by very few and the effects have not become apparent in the US yet.

However, Ned Davis Research has released their recent findings with a 92% certainty that a Global Recession has already started or will very soon. Should a Recession arrive, employment and business will certainly suffer. However, Rental Properties actually improve. Cash flow from conservative rentals should provide a consistent Income Stream for you and your family. As buyers are removed from the Buying Market, the Rental Market actually improves as the demand for housing remains, but the ownership changes. A prepared Investor can actually make purchases at discounted prices and quickly lease them as demand for housing should remain.

https://michaeldouville.com/books/embed/#?secret=g2bRsyIha4

Get out of Debt, Raise Cash, Sell any marginal Property NOW!!! Review Financial Vulnerabilities to Equities and Bonds. Reduce Risk! Baby Boomers should look for cash flow from more conservative assets as the typical Stock Portfolio loss from a recession is 39.6%; at my age, an unacceptable loss. A vicious recession can put stock losses in the 60-90% range. Certainly a game Changer!  Rentals should be assessed for tenant quality rather than maximizing Rental Rates. Mortgages should be reviewed for refinancing to fixed rate encumbrances. Core properties especially should be debt free or extremely low LTV’s to provide Income and act as a Lifeboat in any Turmoil. Protect your capital, Protect your Credit, protect your FAMILY!

https://michaeldouville.com/

 

 

The Next Recession will be EPIC! Featuring Michael Douville

Posted in Michael Douville, Uncategorized with tags , , , , , , , , , , , , , , , , , , on May 24, 2018 by paulthepoke

Ecclesiastes 3

1 For everything there is a season, and a time for every matter under heaven:

2b a time to plant, and a time to pluck up what is planted;
3b a time to break down, and a time to build up;
5a a time to cast away stones, and a time to gather stones together;
6 a time to seek, and a time to lose; a time to keep, and a time to cast away;
7 a time to tear, and a time to sew…

MichaelSomething has changed! A Global down turn is underway; it can be seen in the Industrial statistics, the”Yield Curve” Spreads, the Baltic Dry Index. The slowdown can be seen in declining  Home Mortgage Applications and increasingly higher Auto loan delinquencies;  much, much higher credit card debt with slower repayments. Not surprisingly, the Spring Real Estate market in many regions of the US are exhibiting slowing sales when Property sales should be seasonally expanding. These are all signs of an aging Business Cycle.

This happens in Free Markets; it happened in 2010, 2012, and a longer decline in 2015. Each decline was met with Global Central Bank interference in the form of massive Liquidity injections via purchases in the Equity Markets and massive purchases of all forms of Bonds and Debt Instruments. Maybe a not so “Free market”.

Something has changed! Instead of ZIRP (zero interest rate policy), rates are rising! Instead of Massive Global Central Bank purchasing in a declining market, the Federal Reserve is actually selling! In April of 2017, the Central Banks were purchasing at the rate on $1.7 Trillion Dollars; tapering in April 2018 to an alleged big fat ZERO! The ECB is still caught supporting the European Markets as is the Bank of Japan for the Japanese Markets. The simple reason is that no else is willing to enter theses markets; no one entering at the current reduced and manipulated rates!

Something has Changed! Without the Financial Credit Pulse of coordinated Global Central Banks, Volatility and RISK have reappeared. The support has been removed and The Federal Reserve has announced not only are they NOT purchasing, but they are selling; $8 Billion Feb 5, 2018 alone. It is time to Pay Attention!!!

Recession-ahead

Your Wealth is at Risk! Americans 55 years and older  have a 70% of their Nest Egg in the Stock Market and 20% in the Bond Market; rising rates devastate Bond Funds! Those approaching retirement age are not “in it for the long Haul!” There is not enough time to recoup losses before the funds are needed.  There are times to be Aggressive and times to be Conservative; the Fed has transparently announced their intentions. This may be a time to be very conservative. In fact, one does not need to be fully invested 100% of the time. Without support, the Markets are free to act the way Markets are suppose to act. The next downturn could be EPIC!

Something has changed! Your Future is at stake! Now might be a very appropriate time to review your goals and concerns with your Financial Professional. Maybe an “Exit Strategy” should be developed with a goal to transfer into different asset classes.

https://michaeldouville.com

michael@michaeldouville.com

 

How to Make HUGE Profits without even Trying!…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , , , on October 4, 2017 by paulthepoke

MichaelMatthew 16:2-3 He answered them, “When it is evening, you say, ‘It will be fair weather, for the sky is red.’ And in the morning, ‘It will be stormy today, for the sky is red and threatening.’ You know how to interpret the appearance of the sky, but you cannot interpret the signs of the times. -Jesus

Fortune 500 firms have had a few very good Quarters: sell product in Euro’s, Pounds, Yuans, Kronas, Swiss Francs, and even Rubles then convert them to US Dollars! Sheer Genius! An explosion in profitability without any improvements in Productivity, Innovation, or the time honored increases in Plants and Equipment! No additional employees are needed that would affect the profits; just devalue the US Dollar. Consider the fact that the beginning of the year, the US Dollar Index fluctuated between 102 and 103 and now is hovering around 93; a decline or devalue of 9.7% The Euro stood at 105 January 1st of this year and as of Oct 1, 2017 it is 118; a gain or strengthening of 12.3%.   What this means is Ford can sell a car for $30,000 Euros and convert to US Dollars with a Year-Over-Year gain of better than 12%: Genius! All of the multinational firms which are most if not all of them are experiencing this phenomenon! The Equity Markets are up 15% YTD, the US Dollar has devalued 12%. Could there be a Correlation? Could the decline of the dollar force the Stock Market higher? Further, Economies outside of the US receive the added bonus of Loan Repayments repaid in much cheaper Dollars discounting the Debt! Everyone wins! However, everything cycles! The US Dollar cycle IS forecast to go much lower, but buckle up and hold on, not necessarily in a straight line and not necessarily for just a few months!

The Business Cycle is getting tired and the accumulation of Debt has been Historic. In tough times or perilous times, the US Dollar becomes the currency of choice creating demand; demand will raise the price which will have the opposite affect of a declining Dollar: Markets will drop and Economies stall. The Globe would be vulnerable to a Recession, which would enhance the race to the US Dollar. Debt would become more expensive and much more difficult to service, possibly precipitating defaults of weaker entities. Once started, the completion to the Business Cycle will finish; a brutal cleansing will take place. Those that recognize the Portends and Prepare will not only survive, but have intact resources to purchase Assets that may be discounted to levels that will not be available for Generations, possibly never again.

The completion of this Business Cycle could be very scary. It could affect millions of families. Business revenues could decline precipitously; many will fail. We have been through this before and will go though it again in our lifetimes; in each case Income was paramount to survival. Further, over-leveraged, debt burdened entities were the greatest at risk; there is still time to pay debt. Although there are no guarantees in Life, Good Times do not last nor do Bad Times; this cleansing cycle will give way to incredibly better times. There are many Top Analysts that expect the Dollar to eventually cycle to new lows over the coming years, which might cause the Stock Market to explode to much higher levels and Real Assets skyrocket to new levels creating Generational Wealth.

In the Great Recession, the rental portfolio was a Lifeboat providing consistent cash flow month after month even though the general Business climate was very poor. The paper cash value declined, but the Income fluctuated well less than 10% and the vacancy factor dropped, the maintenance factor dropped, the taxes and insurance all dropped mitigating the slight decline in Rental Revenue. The current Investment Horizon is a minimum of 7 years which should be well beyond any crisis and the goal is to catch the bottom of the Dollar decline and the peak of the current Real Estate Cycle. Please consult with your advisor, but please consider re-allocating a portion of your portfolio to very conservative, residential rentals for consistent monthly Income.

Contact us at 480.948.5554 or michaeldouville0@gmail.com.  Your first consultation is always free and check out our website for more information at michaeldouville.com. Michael’s book “How to Create a Real Estate Money Machine and Retire with Income” is available on Amazon. Thank you.

 

PaulthePoke

Prophecy Watch & Bible Study

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