Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Gold Stocks Benchmark Battle - 30th July 16
Top 10 Pokemon GO Playing Tips, Tricks and Secrets! - 30th July 16
Asset Bubbles Tend to Crash with a Vengeance - 29th July 16
Retirees Are Risking Their Life Savings on Junk Bonds - 29th July 16
The Next Recession is Coming - Expect Around 0% Returns for the Next 7 Years - 29th July 16
SPX is Shaking and Rolling - 29th July 16
Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - 28th July 16
FOMC Interest Rates and Their Impact on the US Economy - 28th July 16
The State Of The Economy - 28th July 16
Elliott Wave Crash Course - 3 Ways the Elliott Wave Principle Enhances Your Trading - 28th July 16
Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? - 27th July 16
Monetary Zika - The Insidious Nature of Credit Expansion - 27th July 16
Gold and Pork Bellies - 27th July 16
Silver Is Insurance Against The Worst Part Of This Depression - 27th July 16
Don’t Buy The SPX Hope Stock Market Rally! - 27th July 16
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Financial Crisis in the Making that QE-4 Can’t Stop!

Stock-Markets / Financial Crisis 2016 Jan 20, 2016 - 08:42 AM GMT

By: Chris_Vermeulen

Stock-Markets

The “Great Credit Crisis” of 2007 led to “The Great Recession”, and yet the FED still repeated the same mistakes. The FED kept the “easy money” policy in effect, and not only that, but, it also introduced “Quantitative Easing” and handed over FREE money to the large banks and corporations. Apparently, they have not learned anything from the last crisis and it looks as though they are on the path of pushing the economy into a deep recession, again. The dangerous part about this, is that they have already used up all of their ammunition, and there is now none left. In order to deal with the forthcoming “financial crisis” that we are presently facing in 2016.


How Wall Street led the US Fed to do what it wants:

How Wall Street led the US Fed to do what it wants

The chart above is self-explanatory. It is very clear from the chart above, that throughout, Wall Street has dictated what it wants and the FED has obliged. Each rise has been supported by the FED. This indicates that the “real economy” never recovered in order to support the lofty valuations of the SPX, while all along, it was merely the “easy monetary policy” which kept the markets “elevated”.

The markets are again prodding the FED and other bankers to act:

The markets are once again taunting the FED. Sources indicate that some FED governors are already voicing concerns that raising rates were a mistake. However, many believe that, if the market continues to fall, which it will, it is only a matter of time before the FED announces new measures in order to support the markets.

Why the rate cut will not sort out the problem:

Why the rate cut will not sort out the problem

The above chart shows the growth of the American economy from 2006 and onwards. After the initial recovery from depressed levels, “real growth” has never taken off. The growth keeps slipping into negative territory which indicates that the QE and the rate cuts have not benefited the “real economy”. All of the benefits have been accrued by the bankers and stockholders of publicly traded corporations.

What are the latest GDP forecasts ?

What are the latest GDP forecasts

According to the chart above, the records for 2015, Q4, real GDP is down The trend continues to fall, making the economic outlook appear dismal, in the upcoming financial quarters.

The Fed Fund Future suggests a minor hike ( if any in 2016):

The Fed Fund Future suggests a minor hike

The market participants have already toned down their expectation of any FED rate hikes occuring in 2016. As many as 33.9% of people believe there will be NO HIKE, however, the number is likely to rise within the coming few weeks. I believe that instead of any rate hikes, the FED will be looking to correct their mistake of raising rates, while the world economy was/is still “fragile”.

The San Francisco FED President John Williams, admitted, “We got it wrong” (in reference to the earlier statements by FED officials regarding oil being good for the economy).

Is the FED the only one who has followed “easy money policy ?”

Is the FED the only one who has followed

No! Along with the US FED, the ECB, the Bank of Japan, People’s Bank of China, the Bank of England and various other nations, have resorted to maintaining an easy monetary policy, for far too long. Presently, it is impossible to correct the original forces that created these problems, many years ago.

forces that created these problems many years ago

Compare the expansion of the balance sheet of the respective central banks with their GDP, the numbers are freighting!

the numbers are freighting

Even with concerted efforts of the entire world, the world growth is struggling and going into “economic contraction”. With China likely to continue to enter into a slow growth trajectory, US forecasts are also reflecting a slowing growth. Chances are extremely high that the growth in 2016, is going to be much lower than what has been currently reported.

The Global Reset”

The world leaders as well as the central banks, around the world have merely placed a bandage on their bleeding economies rather than enduring the pain, and pumping money into the “real economy” to generate long-term growth, they have opted to appease the stock markets, thus, creating a large “Asset Bubble”, today. The outcome of their actions, have placed the world economy in jeopardy, which is evident by the collapse of the commodity markets which are being lead down by collapse of oil and currency wars among nations, etc.

The only way we can get out of this predicament is to do what is now required, and let the markets implement “The Global Reset”. Growth has always returned to the economy after the excesses have been ironed out.

Conclusion:

It is going to be a sordid year for the stock markets! The US markets have just finished their worst two weeks of the New Year that have ever been recorded. This is an indication of what is to come in 2016. The FED is likely to panic and try to correct their past mistake of raising rates, of last December 2015. They will most likely do whatever it takes, but this time, the markets will not be receptive to their actions, mostly.

The best investments are going to be in gold and US Government Bonds, which I will share in my next post. Continue to follow my analysis and trade signals so as you know when the best time to invest in them is, and how to invest in them, SUCCESSFULLY.

Join Fellow Trades and Myself at: www.TheGoldAndOilGuy.com

Chris Vermeulen

Join my email list FREE and get my next article which I will show you about a major opportunity in bonds and a rate spike – www.GoldAndOilGuy.com

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com.  There he shares his highly successful, low-risk trading method.  For 7 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets.  Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return.

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

© 2005-2016 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

Catching a Falling Financial Knife