The primary driver of stock prices over the last three years has been the anticipation of more monetary stimulus from Central Banks…[and if one] were to remove the market moves that occurred around Fed FOMC meetings (the times when the Fed announced new programs or hinted at doing so), the S&P 500 would be at 600 today. [As such,] by announcing a program that will be on going in nature, the Fed has removed the anticipation of future Central Bank intervention from investors’ psychologies. This could become highly problematic, especially if these latest announcements turn out to be duds. [Are you doing what needs to be done to protect yourself?] Words: 682
So says Graham Summers (www.gainspainscapital.com) in edited excerpts from his original article* entitled Could It Get Worse Than 2008?
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Summers goes on to say, in part:
Looking around the economic and financial world today, I see countless negative developments and virtually no positive developments to speak of. Just off the cuff, I note that:
- China is entering a hard landing if not an outright economic collapse.
- Europe is facing a recession, banking collapse, sovereign crisis, and a potential break-up.
- The U.S. is in a stagflationary recession.
- Japan is in a sovereign debt crisis, approaching armed conflict with China
- Inflationary pressures are increasing worldwide: new record food prices will hit within the next 12 months.
- The risk of armed conflict is increasing in the Middle East as well as Asia along with food inflation creating civil unrest/ riots.
Against this backdrop, the one remotely positive development as far as the markets are concerned is the belief that Central banks will somehow solve these problems via endless liquidity. However, even this is now proving to be a false premise.
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The problem is that the primary driver of stock prices over the last three years has been the anticipation of more monetary stimulus from Central Banks.
Indeed, the New York Fed itself has openly admitted that were it to remove the market moves that occurred around Fed FOMC meetings (the times when the Fed announced new programs or hinted at doing so), the S&P 500 would be at 600 today. [As such,] by announcing a program that will be on going in nature, the Fed has removed the anticipation of future Central Bank intervention from investors’ psychologies.
The above could become highly problematic, especially if these latest announcements turn out to be duds and, sure enough, stocks are actually down since QE 3 was announced on September 13 2012.
We’ve got over 50% of the global GDP (China, the E.U., and the U.S.) in recession, combined with Europe’s banking and sovereign crisis at the exact time that the Fed appears to have run out of ammo.
It’s truly astounding. I cannot actually remember a single time in which the global economy and financial system have faced this many difficulties – and that includes the build up to the 2008 Crash.
Now more than ever, investors need to get access to high quality guidance and insights. There sheer magnitude of the issues the global financial system is facing is enormous!
*http://gainspainscapital.com/2012/10/31/worse-than-2008/ (For the above reasons, we are lowering the price of an annual subscription of our Private Wealth Advisory newsletter to just $249 (down from $299). Private Wealth Advisory is our bi-weekly investment advisory service tailor made for individual investors who want to stay informed of the real story in the global economy and outperform markets. To whit, my clients made money in 2008 and we’ve been playing the Euro Crisis to perfection, with our portfolio returning 34% between July 31 2011 and July 31 2012 compared to a 2% return for the S&P 500. Our newsletter is now on sale until next Tuesday, Nov.6th – after which time the price is going back up to $299 and will stay there for good – so if you’ve been holding off on subscribing to Private Wealth Advisory for whatever reason, this is your one chance to subscribe now, and lock in a price of $249 for the lifetime of your subscription….To take advantage of this special offer… and start receiving my hard hitting, global market investment commentary delivered to your inbox every other Wednesday Click Here Now!!! Best Regards, Graham Summers)
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Other Articles by Graham Summers:
Timing the U.S. debt implosion in advance is virtually impossible. Thus far, we’ve managed to [avoid such an event], however, this will not always be the case. If the U.S. does not deal with its debt problems now, we’re guaranteed to go the way of the PIIGS, along with an episode of hyperinflation. That is THE issue for the U.S., as this situation would affect every man woman and child living in this country. [Let me explain further.] Words: 495
For over two years now, I’ve been warning that the 2008 Crash was just a warm up and that the REAL Crisis would occur when the stock market realized that the Central Banks, lead by the US Federal Reserve could NOT actually hold the financial system together. Well, the Crisis I’ve been warning about is here. [Let me explain.] Words: 306
By threatening to drop money out of helicopters to fight deflation – to leave a paperweight on the “print” button if you will – Bernanke convinced the market and all of Wall Street that the Fed would always be there to step in and save the day. [In fact, however,] the whole thing was a bluff meant to prop up the markets – the famed Bernanke Put – and it was a lie. The markets will be realizing this in the coming months, if not sooner, and when they do, we’ll see the REAL Collapse: the one to which 2008 was just a warm-up. [Let me explain.] Words: 444
The US Federal Reserve, which has been the life-support for the U.S. economy (for better or for worse), is finally discovering that its policies and theories don’t actually apply [in] the real world….This means that the primary prop underneath the U.S. stock market and financial system (namely Fed intervention) is slowly being removed. What follows will not be pretty and smart investors should be taking steps now to prepare in advance. Words: 350
No one seems to understand what is happening in Europe the way Graham Summers does and, as such, his insightful articles keep appearing on this site as the best choice to convey the message. Below are introductory paragraphs to each of 12 articles with hyperlinks to each should you wish to read any in their entirety.