Stock Market
by
Chris Martenson
Bob Wiedemer, author of the best-seller The Aftershock Investor: A Crash Course in Staying Afloat in a Sinking Economy, regards the 2007 puncturing of housing market prices and the 2008 financial market swoon as the precedents to two much larger and much more dangerous bubbles.
These more pernicious threats are the dollar bubble ("printing money") and the government debt bubble ("borrowing money"). While both are expanding at a sickening pace, in the near term they deceptively make things seem much better than they are.
But, like all bubbles, they are unsustainable. And when these collapse, they are going to take the entire financial system, and very possibly the currency, with them (a.k.a. the "aftershock")
Bob predicts that the rupture of both these bubbles will most likely happen in the next 2-4 years and accelerate astonishingly rapidly once it begins.
Robert Wiedemer: Awaiting the Aftershock
by Chris MartensonBob Wiedemer, author of the best-seller The Aftershock Investor: A Crash Course in Staying Afloat in a Sinking Economy, regards the 2007 puncturing of housing market prices and the 2008 financial market swoon as the precedents to two much larger and much more dangerous bubbles.
These more pernicious threats are the dollar bubble ("printing money") and the government debt bubble ("borrowing money"). While both are expanding at a sickening pace, in the near term they deceptively make things seem much better than they are.
But, like all bubbles, they are unsustainable. And when these collapse, they are going to take the entire financial system, and very possibly the currency, with them (a.k.a. the "aftershock")
Bob predicts that the rupture of both these bubbles will most likely happen in the next 2-4 years and accelerate astonishingly rapidly once it begins.
by
Gregor Macdonald
Executive Summary
- Why household balance sheets are worse off than advertised
- Why the recent rosy BLS jobs numbers actually mean bad news
- How the Fed is squeezing investor capital out of other traditional asset pools and into the stock market
- Expect to see the stock market moving higher in 2013; that is, until QE3 fails
- What to expect if QE3 fails sooner than anticipated
If you have not yet read Part I: The Future of Gold, Oil & the Dollar, available free to all readers, please click here to read it first.
Market historians have recently started to point out that the current advance in the S&P500 is now 40 months old and has made gains of over 115% since the March 2009 lows. In other words, the doubling from the lows in price and the duration of the advance now late in its third year together suggest that a cyclical top is near. Furthermore, despite some noise in U.S. macro data – which has been briefly more hopeful, yet remains well within the phase of stagnation – earnings estimates have been coming down as the world economy continues to shift into lower gear.
Perhaps for the first time in a while, we can actually say that the Fed's decision to start QE3 was moderately anticipatory, in contrast to its ad-hoc and reactive policymaking over the past five years. It is not merely that the Fed soberly accepted that the economy was not getting better. The stagnant, tractionless macro data over the past year has spoken quite loudly to that fact. Indeed, the U.S. economy is merely treading water, and the Fed's move to QE3 serves as a sharp retort to those who would relentlessly attempt to portray stagnation as recovery.
Where Stock Prices Are Headed Over the Next Year
PREVIEW by Gregor MacdonaldExecutive Summary
- Why household balance sheets are worse off than advertised
- Why the recent rosy BLS jobs numbers actually mean bad news
- How the Fed is squeezing investor capital out of other traditional asset pools and into the stock market
- Expect to see the stock market moving higher in 2013; that is, until QE3 fails
- What to expect if QE3 fails sooner than anticipated
If you have not yet read Part I: The Future of Gold, Oil & the Dollar, available free to all readers, please click here to read it first.
Market historians have recently started to point out that the current advance in the S&P500 is now 40 months old and has made gains of over 115% since the March 2009 lows. In other words, the doubling from the lows in price and the duration of the advance now late in its third year together suggest that a cyclical top is near. Furthermore, despite some noise in U.S. macro data – which has been briefly more hopeful, yet remains well within the phase of stagnation – earnings estimates have been coming down as the world economy continues to shift into lower gear.
Perhaps for the first time in a while, we can actually say that the Fed's decision to start QE3 was moderately anticipatory, in contrast to its ad-hoc and reactive policymaking over the past five years. It is not merely that the Fed soberly accepted that the economy was not getting better. The stagnant, tractionless macro data over the past year has spoken quite loudly to that fact. Indeed, the U.S. economy is merely treading water, and the Fed's move to QE3 serves as a sharp retort to those who would relentlessly attempt to portray stagnation as recovery.
by
Gregor Macdonald
The ability of reflationary policy to mute the worst risks of debt deflation has been a source of enormous frustration for stock market bears ever since the 2008 collapse. Yes, the initial moderate rally out of the S&P500’s black hole was perhaps not so surprising in 2009. Bombed-out stock markets can always manage some sort of rally. But the ability of the rally to continue through 2010, and then 2011, and now 2012 has been quite vexing and painful for bearish investors.
Indeed, the entire post-2008 market phase has now produced an era of consistently poor performance for hedge funds. Recent data, for example, shows that an incredible 90% of hedge funds are underperforming the S&P500 through mid-September.
Will the pain continue?
The Future of Gold, Oil & the Dollar
by Gregor MacdonaldThe ability of reflationary policy to mute the worst risks of debt deflation has been a source of enormous frustration for stock market bears ever since the 2008 collapse. Yes, the initial moderate rally out of the S&P500’s black hole was perhaps not so surprising in 2009. Bombed-out stock markets can always manage some sort of rally. But the ability of the rally to continue through 2010, and then 2011, and now 2012 has been quite vexing and painful for bearish investors.
Indeed, the entire post-2008 market phase has now produced an era of consistently poor performance for hedge funds. Recent data, for example, shows that an incredible 90% of hedge funds are underperforming the S&P500 through mid-September.
Will the pain continue?
by
charleshughsmith
Executive Summary
- Technical analysis offers methods for identifying long-term trend changes
- Introducing the Coppock Curve
- Why the Coppock Curve indicates a coming decline in the equities markets
- If correct, it may take 8-15 months to hit the bottom of the decline before a recovery begins
- Global markets are likely to all go down together, making finding "safe havens" more challenging
If you have not yet read Part I: When Will Reality Intrude and the Stock Market Hit Bottom?, available free to all readers, please click here to read it first.
In Part I, we explored the correlation between the stock market and the real economy (tenuous in times of massive intervention) and the probability that the economy’s next trough lies between 10 and 30 weeks in the future. We then looked to Japan’s Nikkei stock market index as a guide to equities’ performance in eras dominated by debt and deleveraging, and found that the Nikkei’s history suggests a bottom in U.S. stocks could be as far as a year away, in mid-2013. This aligns with the possibility that the real economy hits a recessionary bottom in late 2012 and the stock market finally reflects that weakness six months later in mid-2013.
As we look at other evidence supporting a significant decline in stocks, we must keep Part I’s caveats firmly in mind:
- It’s possible that equities could rise to previous highs or even reach new highs in the near term, despite the recessionary stagnation of real incomes and growth, as stocks tend to be “lagging indicators” of recession.
- Massive monetary easing and fiscal stimulus could push “risk-on” assets (such as stocks) higher, even as the real economy weakens.
- Global Corporate America could continue generating profits that would support stock market valuations even as the bottom 80% of U.S. households sees further deterioration in their real incomes and balance sheets.
These three factors could support a decoupling of the stock market from the “main street” economy as measured by real (inflation adjusted) incomes and household balance sheets.
Predicting the ‘When?’ & ‘How Far?’ of the Next Market Decline
PREVIEW by charleshughsmithExecutive Summary
- Technical analysis offers methods for identifying long-term trend changes
- Introducing the Coppock Curve
- Why the Coppock Curve indicates a coming decline in the equities markets
- If correct, it may take 8-15 months to hit the bottom of the decline before a recovery begins
- Global markets are likely to all go down together, making finding "safe havens" more challenging
If you have not yet read Part I: When Will Reality Intrude and the Stock Market Hit Bottom?, available free to all readers, please click here to read it first.
In Part I, we explored the correlation between the stock market and the real economy (tenuous in times of massive intervention) and the probability that the economy’s next trough lies between 10 and 30 weeks in the future. We then looked to Japan’s Nikkei stock market index as a guide to equities’ performance in eras dominated by debt and deleveraging, and found that the Nikkei’s history suggests a bottom in U.S. stocks could be as far as a year away, in mid-2013. This aligns with the possibility that the real economy hits a recessionary bottom in late 2012 and the stock market finally reflects that weakness six months later in mid-2013.
As we look at other evidence supporting a significant decline in stocks, we must keep Part I’s caveats firmly in mind:
- It’s possible that equities could rise to previous highs or even reach new highs in the near term, despite the recessionary stagnation of real incomes and growth, as stocks tend to be “lagging indicators” of recession.
- Massive monetary easing and fiscal stimulus could push “risk-on” assets (such as stocks) higher, even as the real economy weakens.
- Global Corporate America could continue generating profits that would support stock market valuations even as the bottom 80% of U.S. households sees further deterioration in their real incomes and balance sheets.
These three factors could support a decoupling of the stock market from the “main street” economy as measured by real (inflation adjusted) incomes and household balance sheets.
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