Something wicked this way comes! So, be afraid. Be very afraid. (Unless you're a gold bug.)
The recent rally in American and Canadian equity markets is soon to give way to a gut-wrenching collapse that will push equities to shocking new lows, with gold prices reacting by rallying to new highs.
After having correctly anticipated the timing and extent of the March 9th to April 3rd market rally, this is the latest dire warning from Heiko Seibel, a leading German stock market strategist.
The Director of Research for Munich-based CM-Equity AG now believes that the U.S. benchmark S&P 500 Index will dramatically drop to an ultimate low of around 450 points in late June or in July. The odds favour him being proven right - that is if his talent for correctly anticipating market moves continues.
"Within a few weeks, we will see the stock lows of our lifetimes," he nonchalantly declares.
Indeed, he was right on the money when he told BNW Business Newswire on March 2nd that the S&P 500 Index was about to reverse a pronounced downward trend. He suggested at the time that it would rally to a high of not much more than 850 points during April before it begins an orderly retreat that soon turns into a panic-stricken rout.
Seibel believes that a growing sense of economic optimism shared by many U.S. investors and the Obama Administration, alike, is completely misplaced. He suggests that the rally during March and early April (with the Dow Jones Industrial Average closing at 8,018 points on April 3rd after enjoying the best four-week run since 1933) is merely a false dawn.
Soon enough investors will be seriously rattled yet again - this time by a devastating after-shock to October's global financial earthquake. One that will see the S&P 500 Index nose-dive up to 40% before it hits rock bottom at around the 450 points level. This bleak scenario contrasts starkly to the S&P's heady high of over 1,550 points in October of 2007.
A proponent of quantitative analysis, Seibel says this pending nightmarish sell-off will cause plenty of already shell-shocked investors to relinquish their remaining equity holdings. However, investors in gold bullion and gold-backed Exchange Traded Funds (ETFs) will likely be spared the widespread misery, Seibel believes.
"When there is a total loss in confidence in the stock market, then gold will rally. Gold bullion is historically an inverse proxy to the stock market. So, it's only logical that this will happen," he says.
"We should see a culmination of massive price weakness in stocks within weeks, which will cause gold to reverse its current trend to establish new highs beyond $1,000 early in the third quarter of this year - maybe even testing the $1,200 mark," he adds.
Interestingly, gold equities will not be immune to the market meltdown because investors will engage in "panic selling," to preserve whatever capital they have left, he predicts.
Meanwhile, the catalyst to the stock market's final capitulation during the coming months will be a combination of the collapse of more landmark U.S. companies, a renewed banking crisis, and other forms of "major economic upheaval," Seibel explains.
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Thursday, April 16, 2009
Wednesday, April 15, 2009
White House: More American job losses ahead
WASHINGTON — Aiming to assert control over the nation’s economic debate, President Barack Obama today warned Americans eager for good news that “by no means are we out of the woods” and argued his broad domestic agenda is the path to recovery.
In a speech at Georgetown University, Obama aimed to juggle his recent glass-half-full takes on the economy with a determination to not be stamped as naive in the face lingering problems. He summarized actions his administration has taken to steady the limping economy and coupled that with a fresh overview of his domestic goals.
The speech, which key aides had signaled in advance would not contain any major announcements, came as Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations.
“There is no doubt that times are still tough,” Obama said. “But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.”
Associated Press
April 14, 2009, 1:48PM
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In a speech at Georgetown University, Obama aimed to juggle his recent glass-half-full takes on the economy with a determination to not be stamped as naive in the face lingering problems. He summarized actions his administration has taken to steady the limping economy and coupled that with a fresh overview of his domestic goals.
The speech, which key aides had signaled in advance would not contain any major announcements, came as Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations.
“There is no doubt that times are still tough,” Obama said. “But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.”
Associated Press
April 14, 2009, 1:48PM
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Krugman in Need of Remedial Education
Posted: 14 Apr 2009 01:42 PM PDT
Paul Krugman is back in his usual form of preaching sheer idiocy with his piece Time for bottles in coal mines.
Krugman is upset that Obama says stimulus projects under budget.
"By the end of next year our investment in highway projects alone will create or save 150,000 jobs, most of them in the private sector," Obama said during an appearance at the Transportation Department to plug his plan.
"What is most remarkable about this effort ... isn't just the size of our investment or the number of projects we're investing in. It is how quickly, efficiently and responsibly those investments have been made," Obama said.
"This government effort is coming in ahead of schedule and under budget," he said.
Obama said fierce competition for the projects had led to bids coming in under budget in many states around the country. The White House said bids have been 15 to 20 percent lower than expected on average.
"Because these projects are proceeding so efficiently, we now have more recovery dollars to go around, and that means we can fund more projects, revitalize more of our infrastructure, put more people back to work," he said.
Logic would dictate that getting more work done for less cost and employing more people to do it would be a good thing. But Noooooooo! Krugman says "Seriously: if the projects really are coming in cheaper than expected, that doesn’t mean we should bank the savings; it means that we need more projects."
Here's the deal. If a road needs patching then patch it. If a bridge needs fixing then fix it. The least amount of money spent the better. That is plain common sense that any eighth grader could easily understand.
Somehow Kurgman believes the more money is wasted on projects the better off we will be. Krugman even cites Keynes' Marginal Propensity To Consume absurdity that burying money in coal mines will stimulate the economy.
Mike "Mish" Shedlock
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Paul Krugman is back in his usual form of preaching sheer idiocy with his piece Time for bottles in coal mines.
Krugman is upset that Obama says stimulus projects under budget.
"By the end of next year our investment in highway projects alone will create or save 150,000 jobs, most of them in the private sector," Obama said during an appearance at the Transportation Department to plug his plan.
"What is most remarkable about this effort ... isn't just the size of our investment or the number of projects we're investing in. It is how quickly, efficiently and responsibly those investments have been made," Obama said.
"This government effort is coming in ahead of schedule and under budget," he said.
Obama said fierce competition for the projects had led to bids coming in under budget in many states around the country. The White House said bids have been 15 to 20 percent lower than expected on average.
"Because these projects are proceeding so efficiently, we now have more recovery dollars to go around, and that means we can fund more projects, revitalize more of our infrastructure, put more people back to work," he said.
Logic would dictate that getting more work done for less cost and employing more people to do it would be a good thing. But Noooooooo! Krugman says "Seriously: if the projects really are coming in cheaper than expected, that doesn’t mean we should bank the savings; it means that we need more projects."
Here's the deal. If a road needs patching then patch it. If a bridge needs fixing then fix it. The least amount of money spent the better. That is plain common sense that any eighth grader could easily understand.
Somehow Kurgman believes the more money is wasted on projects the better off we will be. Krugman even cites Keynes' Marginal Propensity To Consume absurdity that burying money in coal mines will stimulate the economy.
Mike "Mish" Shedlock
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The Great Geithner Coverup
Economist William K. Black of the University of Missouri appeared in an interview on PBS last week with Bill Moyers. He pulls no punches in spelling out who is really responsible for our current economic disaster, and why our own Treasury Secretary is leading the charge to keep the truth covered up.
Fed weighs news conferences in tranparency push
WASHINGTON (Reuters) - Officials at the U.S. Federal Reserve have discussed holding regular press briefings to help improve public understanding of unusual actions by the Fed in times of crisis, a Fed official said on Tuesday.
Press conferences have been weighed among other ideas, the official said. The Fed has sought during recent upheaval to explain its actions to a broader public, the official said, citing Chairman Ben Bernanke's recent television interview and willingness to take questions from reporters after a speech.
The Fed also took the unusual step on Tuesday of publishing excerpts of Bernanke's speech Tuesday at Morehouse College in Atlanta in a newspaper, USA Today.
By Mark Felsenthal
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Press conferences have been weighed among other ideas, the official said. The Fed has sought during recent upheaval to explain its actions to a broader public, the official said, citing Chairman Ben Bernanke's recent television interview and willingness to take questions from reporters after a speech.
The Fed also took the unusual step on Tuesday of publishing excerpts of Bernanke's speech Tuesday at Morehouse College in Atlanta in a newspaper, USA Today.
By Mark Felsenthal
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China Slows Purchases of U.S. and Other Bonds
HONG KONG — Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.
China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.
China has lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.
KEITH BRADSHER
The New York TimesApril 13, 2009
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China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.
China has lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.
KEITH BRADSHER
The New York TimesApril 13, 2009
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