5/4/2016 – A negative day with the Dow Jones down 99 points (-0.56%) and the Nasdaq down 38 points (-0.79%).
Bill Gross definitely thinks so….
Gross may not be entirely serious about “helicopter money,” but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost the economy. “There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die.”
I would have to agree with Mr. Gross here. Now, most investors would automatically dismiss such a view at this point, but they might not realize where we could be in about a year. Allow me to illustrate a possible financial/economic setup in 12-18 months.
- Much lower stock prices with major stock market indices down 20-40%.
- Junk debt imploding.
- Commodities pushing towards multi-year lows.
- Major deflationary forces appearing throughout the economy.
- Zero interest rates, even negative.
- The US Economy “officially” entering a recession.
- Unemployment numbers surging higher.
- Etc….
Considering all of the above, the FED will only have two options. Stand by and watch an implosion -OR- attempt some sort of a rescue. Though more QE and as Mr. Gross argues, outright monetization.
As you can imagine, the answer is rather simple here. The FED will continue on with their insane monetary policies until the bitter end. A better question here would be…..how long before the bond market finally has enough and drives rates higher….much higher?
Well, we might find out over the next 12-24 months.
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. May 4th, 2016 InvestWithAlex.com
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