DOW INDUSTRIALS SURGE, UP 700 POINTS IN THREE DAYS.
THE BEAR MARKET IS OVER? (NAH!)
MAJOR WORLD MARKETS DOWN TODAY
TODAYS THE ECONOMIST MAGAZINE COVER “THE WORLD ECONOMY; OUT OF AMMO?
The stock markets worldwide have rallied over the last couple of days. The Nikkei was up 15%. Chinese markets were up 5% and European markets are up 3% points. Most world markets rallied because oil temporarily went above thirty-two dollars a barrel. Today oil is below thirty dollars a barrel and I believe that it is headed for the teens! Is the worst over? NAH! Japan announced its economy in the fourth quarter was down 1.4%. IF China was honest about its economy, it would probably show the same decline. It is now common knowledge that the banks in Europe and emerging nations are in trouble. Some analysts are reasoning that this troubling situation is now discounted in current prices. Deutsches Bank was up 12% now back down 7%. Are there troubles over? NAH! The Russian markets were and the emerging markets index is up 3% now down 1%. Are there troubles over? NAH! American banks have announced that they have more than enough capital to offset any problems with unsecured debt in the oil and material service industry. J.P. Morgan was up 8%. Are there troubles over? NAH! Banks have built up their assets on the backs of the middle class. In cooperation with the Federal Reserve, interest rates are at virtually at zero, penalizing savers and retirees and weakening the middle class as banks make huge profits from consumers who pay high rates on credit cards and small businesses on loans. Because banks can borrow at almost nothing, whatever they charge above zero is pure profit. Auto and mortgage rates are 3% or 4%, industrial loans are between eight and 12% ( down 11% this year)and credit cards are anywhere from 15% to 29%.This is high-way robbery and this is weakening middle-class consumers, small businesses and retirees, with the result, as I have said many times, ‘All boats will sink!’, Also, As I have said several times this year, I didn’t expect my downside objectives to be met all in one or two months. In my opinion, the downside is yet to be played out and this rally will probably end up to be no more than a dead cat bounce!
I don’t tell the market what to do. The market tells me what it is doing. On Thursday the Dow Jones industrial average broke its August 25 low of 15,666 by closing at 15,660. This was the last major index or average to not break below August lows. All major indexes and averages worldwide have now broken below the August 25 lows and are officially in a BEAR Market.
FOUR NEW BOOKS and ONE CLASSIC TO READ
- The Age of Stagnation by Satvajit Das. This book explains the failures of central banks to stop an economic and financial catastrophe. His solution is austerity, which seems unlikely to happen
- The Only Game in Town by El-Erain. He believes that central banks cannot avoid a financial catastrophe with monetary policy alone and needs fiscal policy to aid the economy. With Republican Congress, this does not seem possible.
- Dark Money and the rise of the radical right, by Jane Mayer. This book explains how economic growth is unsustainable if eighty people own 50% of the world’s wealth and 1% of people own more than the 90% of wealth in the US. (dah!)
- The Fourth Industrial Revolution by Klaus Schwab. This book shows what a wonderful world of technological wonders awaiting us once we get through this economic and financial catastrophe. EVENTUALLY, the only problem is, once Artificial Intelligence has access to unlimited knowledge in the cloud and is able to reproduce itself, silicon based intelligence will not need carbon based intelligence The next step in evolution?. However, that’s a problem for another day.
- Don’t’ forget the classic THIS TIME ITS DIFFERENT by Carmen Reinhart: It tells the story of eight centuries of Financial Folly. Each time after a catastrophe, such as the Great Depression or 2008, economists agree that it could never happen again. Who could be so stupid as to let six banks control 70% of the US assets (to big to fail) and allow all the economic growth to go to the 1%, while eighty people own 50% of the world’s wealth? NAH!
2/12/16 THREE MAIN REASONS FOR THE DECLINE
My forecasts for 2016 call for the Dow Jones Industrial average to be as low as 14,688 to 12,000, the NASDAQ to be as low as 4,000 to 3,000 and the S&P 500 to be as low as 1,560 to 1,400 because of three factors! See previous market letters)
|Current noon||Dow||NASDAQ||S&P 500|
|Foretasted Trend||DJIA||NASDAQ||S&P 500|
|Long Term||Bear Market||Bear Market||Bear Market|
|Breakout Points||DJIA||NASDAQ||S&P 500|
|Short Term Up (Resistance)||16,912||5,057||2,062|
|Short Term Down (Support)||15,845/15,484
|Int. Term Up (Resistance)||18,352||5,231||2,134|
|Int. Term Down (Support)||/15,370 /14,688/ 13,377||3,986/3294||1,560|
|Long Term Up (Resistance)||18,352||5,231||2,134|
|Long Term Down Fibonacci Support||50%12,000
2008 LOW 6,627
2008 LOW 1,204
2008 LOW 666
|10 Treasury 1.76%%||Gold 1,231||Oil 26.59low now 29.41|
ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Mr Birkelbach does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Mr.Birkelbach , his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com