Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The US Economy and Stock Market are in Trouble

Stock-Markets / Financial Markets 2016 Oct 08, 2016 - 04:35 PM GMT

By: David_Chapman


The US economy may be approaching its 28th consecutive quarter of growth from the end of the 2008-2009 recession, but all is not as it seems. Shadow Stats shows that, because of changes to the way GDP is calculated dating back to the 1980s, the US economy, instead of growing since 2000, has largely been trapped in a series of rolling recessions. According to Shadow Stats, the US economy is in its 45th consecutive quarter of negative growth. Stagnant income growth largely benefitting the top 20% of the working population; the collapsing labour force participation rate that results in a gross understatement of the real unemployment rate; a large army of part-time workers; many not counted as a part of the labour force just because they have been out of work a year or longer and are no longer counted; half the working population earning less than $30,000 annually; millennials burdened with record student loans and unable to form households as they cannot find the jobs; and a retiring baby boomer workforce, many of them unprepared for retirement, are just some of the reasons the US economy continues to underperform even as officialdom touts growth.

The Stock Market is in Trouble

By numerous measurements, the current US stock market is overvalued. The S&P 500 Case Shiller P/E ratio is at levels seen prior to the 2008 financial collapse; S&P 500 earnings are down from their highs and earnings growth has turned negative just as it did prior to the 2008 financial collapse; NYSE margin debt, while off its highs, remains historically high, even when compared to the levels seen prior to the 2000-2002 high tech/internet crash and the 2008 financial crash; and volume remains abnormally low for a bull market in stocks. All of these and others are pointing to potential trouble ahead for the stock markets, yet most are not paying attention.

Deutsche Bank (sigh) Again

Deutsche Bank cannot stay out of the news. Some believe it is technically bankrupt. There is concern about its huge derivatives portfolio, even as most likely under 10% and even under 5% of it is high concern. Derivatives are a notional amount, not a real amount like loans, yet many continue to quote its derivatives as if they were real loans and securities. Even so, credit default spreads on Deutsche Bank have soared back to highs seen earlier in the year. The risk for Deutsche Bank is its huge loan portfolio to other banks, particularly the insolvent Italian banking system, and loans to corporations in Eastern Europe, Ukraine and Russia.

Weekly Market Review


It’s October and something scary might happen in the markets. October is the month of crashes, but it is also the month of important bottoms. The S&P 500 continues to roll over, but it has not as yet broken down. The patterns remain negative, and a potential huge ascending wedge triangle points to the potential for the US stock markets to fall back to their January/February 2016 lows, near 1,800 for the S&P 500. We await a confirmation. We also look at the Bloomberg article that potentially points to a Trump victory in November.


If all is well in the bond markets, why is the TLT breaking down? It hasn’t fallen under its next support line yet, but the pattern suggests it should. Yields have been rising. Yes, there is more talk once again of a Fed rate hike at the December 2016 FOMC, although we find that difficult to believe, given the IMF has come out with a report that lowers the GDP growth forecasts for not only the US, but a number of other countries as well.


The US$ Index enjoyed an up week, but it was not because of a fall in the euro that constitutes 57.6% of the US$ Index. No, it was because of a sharp fall in the British pound over Brexit, and a sharp fall in the Japanese yen because the market wanted more QE. Both the US$ Index and the euro continue to trade in a neutral fashion within the context of their forming triangles. The break could come either way, or the US$ Index could just waffle through the apex of the triangle and continue its meandering.

Gold and Precious Metals

It was the week from hell for gold, as someone on Tuesday, October 4, 2016 unloaded 1,000 tonnes of paper gold on the market at the open. Only large or official institutions could pull that off. Manipulation? Most certainly, but remember that manipulation is a part of all markets, and it works in both up and down markets. Still it came as a shock, and it took out weak longs as well as creating bit of a mini panic. Targets, however, are not that far away at around $1,240. Watch this Friday’s commercial COT for clues as to whether they covered some of their large short position on this plunge. The likelihood is yes. Gold and silver’s fundamentals remain strong, and Elliot wave counts suggest this is just a correction to the up wave that got underway back in December 2015, topping in July 2016. Sentiment indicators plunged to levels not seen since the lows of December 2015. 

Download your copy of this week's Gryphon Review

David Chapman is Chief Economist with Bullion Management Group Inc. He regularly writes articles of interest to the investing public. David has over 40 years of experience as an authority on finance and investment, through his range of work experience and in-depth market knowledge. For more information on Bullion Management Group Inc., BMG BullionFund, BMG Gold BullionFund and BMG BullionBarsTM, visit, email, or call 1 888.474.1001.

© 2016 Copyright David Chapman - 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.

© 2005-2019 - 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