From the category archives:

U.S. Economy

Bear market–phase 2

by Bull Bear Times on June 7, 2010

in Stock Market,U.S. Economy

In 2008, the U.S. faced a significant credit crisis and was saved only by the Federal Reserve Board pouring in trillions of dollars.  Now, the second phase of the credit crisis has begun.  Greece was the starting point to be followed by Central Europe, Eastern Europe and other countries.  Contagion is spreading and will eventually be global.  There is no bailout possible for all this debt.  The Central European banks face a major risk.

What do I see for 2011-2012?

  1. New stock market lows – below 6600 on the Dow Jones in this second phase of the global bear market. Bear markets will continue for the next several years. Sell all rallies.
  2. Global deflation will grow and be especially harmful to commodities, real estate,      and other tangible assets.
  3. A double dip recession worldwide is very likely because the U.S. money supply is declining at a very dangerous rate.  Central banks have put in an estimated 3 trillion dollars for support, but losses are estimated at 25 trillion dollars.
  4. Credit will continue to drop as there is no trust between borrowers and lenders and between banks. De-leveraging will stay as the focal point along with risk aversion.
  5. More Government intervention, additional new programs, and higher taxes will slow economic growth. Unemployment may reach 20%.
  6. Globally, world economies will slow as monetary contraction in Asia (China and India) and fiscal contraction in Europe continues.
  7. The U.S. dollar will stay king for a while as the Euro heads for 90 cents.

Critical Time in Stock Market and Economy

by Bull Bear Times on May 17, 2010

in Stock Market,U.S. Economy

Economies extend excess credit until a bubble occurs. The results: excess leverage and after an extended period of time, de-leveraging and credit contraction start. This is where we are today.

Now, after a large down move in 2007-2008 in stocks and the economy, we had a very sharp counter trend bounce that is ending. The next phase down is just starting and should be much longer in duration and more severe in price.

The global stock markets have major risk as we enter the second half of 2010 through 2012.

1. Where stocks bottomed in March 2009, now in March-April 2010, you see the opposite–the mirror image.

2. Three things caused the 2009 rebound: a) the government stimulus, b) a weak U.S. dollar, and c) massive cost cutting. All of these have ended.

3. Government intervention into all areas of our economy will continue to restrict economic growth.

4. The U.S. dollar will continue higher most of this year and cause negative effects for most commodities.

5. Risk aversion by investors will result in a move to cash and cash equivalents.

6. Government debt defaults–as in the Greece default–will be a greater problem than the sub prime problem of 2007 and 2008.

7. Watch the Dow Jones– a close under 9800 will be a major warning.

8. Deflation risk is very high as credit availability is limited and higher taxes return.

9. Emerging markets have extreme risk. The Chinese economy is likely to contract under current government restrictions.

Economic recovery should slow in 2010

November 29, 2009

An imminent debt default in Dubai looks unlikely at this time. Expect stock and commodity market rallies to continue through end of year. Use all rallies to sell into–liquidate securities and commodities as markets rally. Signs of deflation–where prices go down rather than up– should be much more prevalent in 2010. Commercial real estate refinancing [...]

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The U.S. Dollar–a long-term depreciating asset

November 11, 2009

The U.S. dollar continues to be the key to most investment markets. A weak dollar policy by the U.S. government (where the value of the dollar goes down) accomplishes the following: It makes our real estate and stocks cheaper for foreign investors. It makes our goods cheaper for export. It helps our large multi-national companies [...]

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Unemployment not an easy fix

October 20, 2009

Key findings from “The Anguish of Unemployment”–a report conducted by the John J. Heldrich Center for Workforce Development at Rutgers, The State University of New Jersey–reveals the economic and personal costs of prolonged joblessness. This national survey conducted among 1,200 Americans nationwide who have been unemployed and looking for a job in the past 12 months, [...]

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Corrective down move in process

October 18, 2009

After the S&P hit 1,096–close to the overhead resistance, starting at 1,100–the markets turned down on Friday and should continue down early this week. Third quarter earnings will continue to be reported over the next ten days so volatility should continue. Only buy on weakness–buy stocks on pullbacks over the next couple weeks. For those [...]

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Weak economy. Why strong stock and bond markets?

October 11, 2009

The economy seems to be recovering, but at a slow pace. The stock and bond markets, however, are charging ahead. For example, the stock market closed on Friday at its high for 2009–the Dow is up nearly 50% from its March low. So why are the stock and bond markets so strong? One of the [...]

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Small business employment–key to the recovery

October 4, 2009

According to CNNMoney.com, “Roughly half the nation’s workforce is on the payroll of a small business.” Yet, the National Federation of Independent Businesses reports: “Over the next three months, 16 percent plan to reduce employment (up 3 points), and 7 percent plan to create new jobs (unchanged), yielding a seasonally adjusted net negative 4 percent [...]

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Unemployment rate continues decline in September

October 2, 2009

The latest Employment Situation Summary released today by the Department of Labor Bureau of Labor Statistics shows a continuing negative trend in unemployment. Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today. The largest job losses were in [...]

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Existing home sales fall

September 25, 2009

According to the National Association of Realtors, existing home sales in August fell 2.7% from their July level–following four monthly gains– but remain above year ago levels. “Existing home sales–including single-family, townhomes, condominiums and co-ops – declined 2.7 percent to a seasonally adjusted annual rate of 5.10 million units in August from a pace of [...]

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