Tags: Biderman | stocks | gold | shares

TrimTabs’ Biderman: Both Stocks and Gold Are Buys

By    |   Thursday, 18 April 2013 07:47 AM

The trend for stocks is upward, at least for the next couple of weeks, because of a classic supply and demand equation — more money is going after fewer shares, according to Charles Biderman, CEO of TrimTabs Investment Research.

Biderman cited three primary reasons why he predicts stocks will rise.

“First and most important, the [Federal Reserve] keystrokes $4 billion of phony money into existence each and every trading day,” he wrote in his TrimTabs blog.

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

“Second, companies keep buying back shares. Third, billions of tax-oriented cash flows into stocks after April 15 each year. Combine these three factors and what you get is more money chasing fewer shares.”

Biderman also plugged his own long position in gold.

“I hope gold has bottomed, which is why I personally bought some more this morning. My best guess as to why gold plunged was that some central bank somewhere made a big forced sale of gold,” he noted.

“Whenever some previously off-the-market bullion gets sold in size, it makes a big splash, but the bounce back is also big.”

In the macro economy, Biderman said the most important factor he is watching is the fact that wage and salary growth fell to a 2.3 percent yearly growth rate in early April, down sharply from an earlier 4 percent pace.

“So after the tax hikes, wages and salaries and now barely growing after inflation,” he lamented.

Biderman said the Federal Reserve’s quantitative easing policy is adding $1 trillion in newly printed money annually, even as the government spends about $1 trillion more than in collects in taxes.

“What that $2 trillion of fake money has done is boost the market cap of all U.S. stocks by almost $3 trillion since the Fed last September announced the current version of quantitative easing,” he explained.

“The Fed pump has bubbled up stock prices by about $10 trillion. However, at some point when the bubble eventually bursts, watching $10 trillion or so in market value disappear will be real theater.”

In an analysis of the U.S. stock market, Chinese news agency Xinhua declared that “questions remain over whether [the rise this year] accurately reflects an economy still clawing its way back from the worst downturn in decades.”

Daniel Hanson, a researcher at the American Enterprise Institute, told Xinhua the surge of the stock market in the first quarter was spurred by pent-up global demand from firms with extra cash.

"What we saw over the last few months was sort of a catching up, where the stock market didn't really grow for quite a long time," he said.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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The trend for stocks is upward, at least for the next couple of weeks, because of a classic supply and demand equation — more money is going after fewer shares, according to Charles Biderman, CEO of TrimTabs Investment Research.
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2013-47-18
Thursday, 18 April 2013 07:47 AM
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