Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

“Sell In May and Go Away” Might Be a Good Idea for Conventional Assets

Stock-Markets / Financial Markets 2015 May 20, 2015 - 09:30 PM GMT

By: MoneyMetals

Stock-Markets

Clint Siegner writes: Volatility in the currency markets, bond markets, and stock markets likely has a lot of people on Wall Street feeling a bit worn out. Taking a summer vacation in the Hamptons might just be their best idea.

The coming months promise to be anything but quiet and predictable. Here are a couple of items that may yield profound implications for stock, bond and currency investors before summer ends...


The Threat of an Official Recession Is Looming

The next few months are critical for the U.S. economy. The official definition of recession calls for two successive quarters of negative GDP. First quarter GDP came in barely positive, initially estimated at 0.2%, but it will be revised twice before July. Some experts expect it will wind up in negative territory.

The U.S. trade deficit recently came in much larger than expected. The higher deficit will, setting other factors aside, translate to lower GDP. Investors will get a look at 2nd quarter GDP in late July and pessimism among forecasters is growing.

So far U.S. equity investors are hoping for the best, or at least hoping the Fed will reverse course on tightening. Stocks are shrugging off bad news and powering higher with price-to-earnings valuations climbing into the nosebleed section.

It is hard to imagine valuations at these levels holding if investors and high frequency trading algorithms must grapple with an official recession. Of course, should the Fed announce some new form of stimulus in response to bad news then all bets are off.

The End Is Nigh for Greece

The Greek government is running out of tricks to avoid a default. Last week, officials there paid €750 million Greece owed to the IMF by borrowing €650 from the IMF; a last resort gimmick they won’t be able to repeat.

Absent finding an agreement with lenders to modify loans and dramatically reduce what is owed, the Greeks will be in outright default as early as next month. This summer should tell the tale on Greece’s future within the European Union.

Should Greece default and exit the EU, it will be the first event of its kind, and it has the potential to open a Pandora’s Box. There will be bank failures within Greece and pain for anyone holding Greek debt. It could pave the way for bankruptcy and an exit in a number of other nations where finances are also in shambles. And no one can confidently predict the outcome in derivatives markets where banks and hedge funds have been making highly leveraged bets.

Should the Greeks manage to reach an accord with lenders, markets will have to contend with a different set of challenges. You can bet other overly indebted nations including Ireland, Spain, Portugal, and Italy will aggressively pursue similar deals. The pain for bond holders isn’t likely to end with Greece.

The EU has a flood of bad debt swirling around its knees, but officials there continue to pretend they stand on solid ground. Regardless of whether Greece defaults outright or manages to cut a deal, it looks like the pretending will have to stop – and soon.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2015 Clint Siegner - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 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