Here Comes The Recession And Bear Market

Let me discuss one major error of most analysts you see in the media. It is about the Fed rate hike. There is a great misconception.

The majority of analysts tell you that the 0.25% rate hike by the Fed is not important. They obviously know little about how the Fed works.

But this is much more important than just a small rate hike. One has to know what it compels the Fed to do to achieve its goal.

Why Apple Will Enter A Bear Market In 2016

Apple is the darling of many investors. The expectation is that the company can do no wrong. Such unrealistic expectations are always shattered. It’s just a matter of time.

Hedge Funds loved Apple. Carl Icahn bought over 53 million shares, and the Apple ‘groupies’ on the internet insult everyone who pointed out the future negatives with four letter words instead of facts.

Can China Reflate Its Economy?

Now the global institutions think it is better to issue warnings rather than continue hiding the big problems. Only Wall Street analysts still play the “let’s pretend all is well” game.

We hear all the time that China cannot have a crisis because it has $3.7 TRILLION in reserves. We disagree with that for several reasons. First, who has counted that? Is this Chinese accounting? It may have accumulated over the years, but hasn’t it been spent on extravagant and unproductive governmental projects, such as building cities where no one except the street sweepers live?

Year-End Rally Now, But Then What?

As everyone knows, the seasonally positive period of the year has started. The recent August-September crash, during which the DJI plunged 1089 points in about 30 minutes, caused a lot of selling by over-invested money managers. But then the market formed a double-bottom on September 29. One day prior, On September 28, we issued a “Special Bulletin” saying:

The major indices are getting close to their August 24 crash bottom. Old lows provide support. There will be lots of bulls buying, thinking that a good bottom has been made. That will produce a bounce.

The Important Message From Junk Bonds

The ever important Junk Bond market is giving us key signals right now! Could this be the next crisis to take over the markets? Check out at the chart below.

Currently, 15.7% of all junk bonds are classified as “distressed.” That the highest since 2012. We predict that soon it will be the highest since the global crisis of 2008-2009.

Junk bonds have plunged since 2013, while the S&P continued to make new highs.

Alibaba: One Year After—Celebrating The Losses

Today is the anniversary of Alibaba’s founders sucking $22 billion out of pockets of US investors. About 40% of that, or $8.8 billion, has already gone to money heaven. The media is full of stories about this firm.

Even after the plunge, 39 Wall Street analysts have a “buy” on the stock, while there is only one with a “sell.” That’s wonderful for experienced contrarians. Shorting such lopsided advice can be very profitable. We predict that eventually there will be “class-action” law suits for lack of disclosure of the IPO.

Why Apple Is “Dead Money”… At Best

The charts usually tell the story much better than words or opinions based on emotions. And what does the Apple chart tell us? It is heading down…seriously.

Apple is the benchmark for some of the popular stock indices. Because it is the highest capitalization stock in the indices, it carries the greatest weight. Therefore, when the stock can no longer be supported because of big selling pressure, it is bearish for the stock market.

The chart below shows a long sideways pattern since February 2015. That support has now been broken.

The Great ‘Fall’ Of China

About three years ago, I wrote the book, THE COMING CHINA CRISIS. The book predicted the sequence, such as record debt, mal-investments, excessive debt-financed speculation in real estate, 64 million empty condominiums, a credit crunch followed by a credit crisis, and then a crash. Furthermore, the book said this crisis would probably envelope the global markets. So far, that seems to be right on track.

Total private, corporate, and governmental debt is now an immense $28 TRILLION. That is 50% more than US annual GDP. Moreover, it is 282% of China’s GDP.

Stock Market: “To Buy Or Not To Buy, That Is The Question.”

Our long-standing upside target for the Nasdaq Composite as a proxy for the stock market has been reached. In our Wellington Letter we have written for the past 18 months that this index would reach the all-time high of March 2000, which was 5,133 intraday, before the bull market would end.

That high was finally reached and surpassed on June 22 and June 23, 2015. But it was for only two days on a closing basis.

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