9/24/2015 – Another down day with the Dow Jones down 78 points (-0.48%) and the Nasdaq down 18 points (-0.38%)
If you think I have been bearish, consider what Societe Generale’s Albert Edwards has to say. ALBERT EDWARDS WARNS: The next US recession will surprise investors, and a desperate Fed’s next move will be unprecedented
The next US recession will probably arrive a lot sooner than most investors expect and will likely see more desperate monetary experimentation from the Fed. Bob [Janjuah of Nomura] and I thought that this time we would see deeply negative interest rates in the US (and Europe). Sweden has led the way, dipping their toe below the water line with their current -0.35% policy rates but there will be more, much more along these lines. For if -0.35% is possible, why not – 3.5% or less? It goes without saying that deeply negative interest rates would be accompanied by a massively expanded QE4 in the US. The last seven years of exploding central bank balance sheets will seem like Bundesbank monetary austerity compared to what is to come.
Well, if -3.5% is possible, than why the hell not -50%?
I’ll tell you why. First, that would equal outright monetization. If that actually happens, my investment advice would be very simple. Invest in guns, ammo and canned food. Is the FED that stupid and irresponsible? They have brought us thus far, but that would definitely be something else.
As I have mentioned here many times before, the FED is unlikely to raise rates anytime soon. Which brings me to my point #2. Negative interest rates and QE 4, …5….6….. will have no impact on our capital markets and the overall economy.
Why?
There is nothing to invest in. Notice, I didn’t say to speculate in. It is as simple as that. The stock market is in a massive bubble, by all traditional measures. The US Economy has plenty of spare capacity as is evident from the negative wage growth (inflation adjusted). Deflationary forces are re-appearing again, etc….
Point being, while the FED can literally drop money for a helicopter, they won’t be able to steer that money towards anything productive or good. Yes, some of it will go towards speculation, share buybacks, wars, etc…., but that will just create an even bigger bubble down the road.
In other words, the FED has already lost this game. It’s just that most investors don’t realize it yet.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 24th, 2015 InvestWithAlex.com
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