Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Wither the U.S. Dollar, Gold and Dow in Transition Mode

Stock-Markets / Financial Markets 2009 Oct 16, 2009 - 12:55 AM GMT

By: Christopher_Laird

Stock-Markets

Best Financial Markets Analysis ArticleNow that the credit/bank crisis is two years old, and the Dow around 10,000, gold is at highs over $1000. One would think that with $3 trillion of direct US Fed bailout cash, plus $17 trillion of various guarantees and singlehanded support for the US mortgage/financial markets would do something.


After the ‘Cash for Clunkers’ stimulus, and all the other money thrown into the banking system since the collapse of Lehman a year ago, one would expect some kind of economic rebound.

The financial pundits are all making a big deal out of the Dow rally to 10,000. Will it stick? Or will it falter, if the economic data in the US and Western economies again sputter?

Tepid data

Case in point, the New York Empire State manufacturing index posted at 34.6 compared to 18.9 in September. Readings above 0 indicate manufacturing is growing.

US unemployment applications ‘fell’ to 514,000 compared to 524,000 expected. It’s the ‘lowest figure since January 2009’.

Scary data

Or try this: Sumitomo Bank just stated the USD will fall to 50 yen in 2010, due to an expected double dip recession, and lose its status as the world reserve currency. They stated that central banks cannot stay ahead of a falling USD, hence their prediction.

Or consider that just recently when the USD broke first below 77 on the US Dollar index currency basket, that the Far Asian central banks got together to support the USD and it temporarily rallied above 77 and stopped the slide. Well, that major intervention lasted about a week, with the USD now at 75.71 on the USDX. Gold fell off a bit from its recent $1070 highs, but is still around $1050.

Big change?

One gets the feeling that there is a fundamental change going on here. We are not in the financial panic of a year ago, that was followed by a massive drop in world economic production in the last two months of 2008, and the first two of 2009.

The economic rebound after February 2009, which led to the March stock rally to its present levels around 10,000 on the Dow Index gives hope out there.

But interestingly, many people have not yet returned in a big way to stocks, as mutual funds are sitting on $2 to $3 trillion of cash accumulated since the Fall 08 Lehman bank crisis. Supposedly now that the Dow is at 10,000, they will come back in…it’s speculated.

But the tepid ‘improvement’ in the US employment numbers (510,000 unemployment applications is improvement?) and the manufacturing data which really reflect a bounce from the utter collapse in latter 2008 into early 2009 are not convincing. This ‘recovery’ reflects the huge stimulus from the central banks, and zero interest rates.

And, zero interest rates tend to force idle money back into financial markets, as people lose patience. Investment funds cannot sit on cash for long.

I think the economic ‘recovery’ is bunk. All that happened is a bounce from the total collapse in world production after Lehman. But a bounce to what level? A US unemployment rate of about 10%, which is really more like 18% if it was calculated the same way when Clinton was first elected is not exactly a rosy scenario.

Is 10,000 Dow going to carry forward, and are people going to start moving money back into stocks now?

What do you want to believe?

You have to be careful of what you want to believe. It’s a matter of perception. There are a lot of retired people who want to believe in a stock recovery, and they cannot let their money sit idle – so they say.

But actually, even though we believe that the US ‘recovery’ is nothing more than a blip and will be forgotten, we are open to alternative interpretations. I always look for contrary views to my beliefs, to try and avoid getting stuck in a mental viewpoint that does not recognize change afoot.

Am I bullish now? No. But I do consider alternatives. One is that there may be a surprise Mid East peace treaty with Israel that calms the fears over Iran. It’s merely an educated guess on my part, but if it were to happen, markets would likely rally worldwide for a good while. But that treaty has to happen first. We also might get a go it alone Israeli attack.

So, I am open to out of the box developments. I have my reasons for this possible treaty scenario, no I don’t have any secret information. It’s all a bit of prognostication.

In any case, we came up with 7 fairly big prognostications for the next 2 to 3 years in our latest newsletter. Some we already know, but they are part of this changing and chaotic and dangerous financial market. We also have some simple to execute USD hedging alternatives we have discussed as well.

I thought I would post an email from one of our subscribers who states that her dilemma in trying to keep track of all the financial information coming at us in the Internet – about why she subscribes to PrudentSquirrel:

“I am not expecting a reply....it just exemplifies my difficulty in holding a consistent view.

 The internet is a wonderful tool....but I am constantly being whipsawed by all the sources of information!

Guess I have to stick with the analysts who have worked for me - like you for instance - and then get out more.

Your work is excellent, though terrifying to read from time to time.

Many thanks for bothering with this subscribers occasional enquiries. It is much appreciated.” Jennifer

Internet is information overload

Even though that is flattering to me, I honestly believe her dilemma is exactly why I do what I do. There is so much financial information on the internet every day that, unless you spend full time tracking it, you have no way to keep up. Even I have problems with the amount of information. Frankly, most people can definitely use a good analyst.

But as a case in point, I would like to point out two predictions we made that were critical, and that no one to my knowledge was even close to by months. One was that the USD would rally in Summer 08; we predicted that around April 08, and that the general commodity complex would sell off hard. We know commodities and gold all fell hard during Summer 08 into Fall.

The other was that gold bottomed in late Nov 2008. We know how that turned out too. The HUI was around 270 at the time.

Also, in this latest subscriber newsletter, we introduced a new dimension to our analysis, and it was very well received. It is pretty far out. If you have ever wanted to check us out, go take a look this week. You will be stimulated, I am sure. It’s all big picture stuff, something that we have been complimented on for years.

We invite you to stop by our site and have a look.

By Christopher Laird
PrudentSquirrel.com

Copyright © 2009 Christopher Laird

Chris Laird has been an Oracle systems engineer, database administrator, and math teacher. He has a BS in mathematics from UCLA and is a certified Oracle database administrator. He has been an avid follower of financial news since childhood. His father is Jere Laird, former business editor of KNX news AM 1070, Los Angeles (ret). He has grown up immersed in financial news. His Grandmother was Alice Widener, publisher of USA magazine in the 60's to 80's, a newsletter that covered many of the topics you find today at the preeminent gold sites. Chris is the publisher of the Prudent Squirrel newsletter, an economic and gold commentary.

Christopher Laird Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules