“Father, forgive them, for they know not what they do.” And they cast lots to divide his garments.” Luke 34
Trump won! Seventy five percent of those that voted, voted for someone they felt is unqualified to be president. Uncertainty will not be good for the markets. The last time the senate, congress, presidency and Supreme Court were dominated by the Republicans. was 1928. Watch out below!
Trump’s only plan so far, is to, build a wall, brutally extract 11 million immigrants from their children, not allow Moslems into the country, eliminate Obama Care, eliminate Dodd-Frank, eliminate the Environmental Protection Agency, rewrite all executive orders, pull back from NATO and to give the rich and corporations big tax breaks. The reduction of taxes to the rich and corporations in my opinion will increase inequality and cause HUGE budget deficits, which will kill economic growth. The elimination of Dodd-frank will give the banks enough rope to hang themselves. Deporting 11 million workers and consumers from the economy, will kill growth. Pulling back from NATO will encourage Russia aggressive behavior. Eliminating environmental controls will cause increase economic weather related disasters.
In my opinion, it appears that this was a backlash of white voters (a white lash) to bring back the nation to a time before diversity. It was a vote against women seeking power and against those different from them. It was a vote by rural white people against multicultural city people. It was a rejection of a multicultural culture and blaming it for talking jobs away from them. In particular, previously privileged white voters want to bring back a time when they were guaranteed a union job at $35 an hour. These times are gone forever and now they must struggle up the ladder along with women, blacks, gays, immigrants and Mexicans. Solutions are complicated. However, the public is looking for simple and quick answers. There are no simple and quick solutions. A Trump presidency makes the ‘bear market scenario’ I have seen coming and documented in this blog, more frightening. I believe a Trump Presidency will lead to an economic collapse worse than the Bush 2008 economic collapse.
Expect an Oligarchy similar to Putin’s Russia
My fear is that, now with a Trump presidency, Big Corporations and the top 1%, will increasingly dominate the our economy that will leave individuals, small businesses and the investing public very vulnerable. The general public has become so weakened and disillusioned, that it is powerless to stop this crisis from progressing. This is similar to what happened to democracy in Russia. In my opinion, both Trump and Putin have tendencies that are vindictive and are not tolerable of criticism and have no answers for solving economic problems.
In a recent (Oct 22, 2016) Economist Magazine they describe Putin’s domestic policy to reduce competition to favor his oligarchs. They describe a system he developed which Kirll Rogov, a Russian political economist describes as “soft legal constraints.” To quote from the Economist Magazine, “It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible to follow, then handing out licenses to break those rules to the oligarchy.” Doesn’t this sound exactly like what has happened in our financial industry? The SEC and FINRA have made the rules (compliance) to run an independent brokerage firm as either prohibitively expensive or downright impossible to follow. In this way, the government has eliminated independent competition and has turned over the entire financial industry to the banks and large financial institutions. They allow these companies to break the rules for the cost of a small fine, as compared to the large profit that they made in breaking the rules. In this way the large financial institutions feed the SEC, that guards their monopoly. In my opinion, with the Republicans, functioning without restraints, the United States will continue to look more and more like Putin’s Russia and it’s economy, dominated by the privledged few 400 families (top tenth of 1%).
BELOW ARE 12 CONTINUING REASON FOR A BEAR MARKET.
A TRUMP PRESIDENCY IS #13
For the following reasons below, I believe this is a bubble that is being held up by corporate buy- backs, excessive Central Bank buying (don’t fight the Fed) and political considerations to keep the bubble fully blown during the election period.
1) The US MARKETS ARE making new highs. Now, everything is OK again? Sure! A Citigroup analyst has reported buying is coming from Central Banks. They are creating a fantasy that all is OK, before the US election. The BEAR MARKET decline may take longer to develop than I first thought and I am extending my 2016 FORCAST TO 7/4/2017. See below
2). Retail stocks such as Macy’s, Disney and Sears are having trouble with their earnings. Store closings are commonplace today as people are buying online. This is not good for profit margins or employment. The economy could be stimulated with a backlog of infrastructure spending. Not a chance with this Congress.
3). Gold is making new highs; while the 10 year treasury WENT TO 1.37% is a new low. Now 1.68%.That is where the money is going. This means that INDIVIDUAL investors are very cautious.
4). Donald Trump, continues to blurt out dangerous statements. He recently said, “Why worry about Debt, we can print money.” That’s true, except that excessive printing of money turns into hyperinflation. If you don’t know the history of the Weimar Republic in Germany you are likely to repeat history’s mistakes. Besides, it’s the Federal Reserve’s job to monitor monetary policy. Of course a dictator, can easily appoint flunkies at the Federal Reserve, which he could control. The market dislikes uncertainty and instability. His quote of “fight fire with fire” will mean more meaningless and expensive wars~! His comments on NATO are based on financing, not commitment or global strategy. This will encourage Putin.
5).I believe most of buying has occurred because of Central Bank stimulus, continued low interest rates (-0% some places) and corporate stock buybacks in the last 12 months are a record $600 billion. If it were not this stimulus, I believe the market would be down some 20% at this point. Companies are not investing in production or innovation. this is bad for employment and the economy.
6). The middle class continues to take it on the chin. According to recent data between 2000 and 2014, the middle class shrunk from 55% to under 51%. It’s probably now below 50%. An economy based on consumer spending of the middle class, like the United States, cannot grow without a healthy middle-class. International corporations do well for a while, as they are now. But eventually, I feel the present economic environment will lead to a deflationary economy, which will hurt all economic levels.
7). If commodity prices and companies engaged in retail sales continue to suffer, their bonds will eventually suffer and therefore the banks that are holding securities will suffer. 2008 all over again, only this time no government bailout! The ‘canary in the mine’ Deutsche Bank at 14.35 is down from its recent high of 19.46 and above its recent low at 12.60, Also see weak charts of BCS, CS, HBC.BE, BNP.PA WHY IS THE US MARKETS MAKING NEW HIGHS AND THE BANKS MAKING NEW LOWS? BECAUSE OF, I BELIEVE CENTRAL BANK INTERFERENCE, WHICH WILL STOP AFTER THE ELECTION.
8). China continues to show lackluster economic growth. China’s rate of loans is far above the rate of money supply growth. Right now, China is using its currency to buy as many companies in the West as it can, while it can. Just as has happened to Japan in the 1990s, we expect the same deflationary scenario to begin to occur in China. . In China, for example, has $1.3 trillion of corporate loans, one seventh of the total are owned by companies whose profits don’t cover their interest payments, a problem that could trigger banks losses equal to 7% of gross domestic product. Money is flowing out of china!
9). The central banks have done everything they can to stop inflation in Europe and in the United States with the results that many corporations in Europe are issuing bonds and financing them at close to zero interest rates. What this means, is that central banks cannot stop deflation. Rick Santelli of CNBC says “nobody says anything good about negative interest rates.” Central banks are helpless to stop deflation.
10). I continue to believe that economic growth in the United States is being slowed by all the income growth going to the top 1%. A recent Economist Magazine showed the upper 1% standing on top of their money with the guarded by barbed wire fence around, with the title WINNERS TAKE ALL. This is a lose, lose policy for everyone, where all boats will sink.
11) Brazil and Petrobas its oil company($500 Bil debt) are going bankrupt because of corruption. What will happen to its Bonds that the banks hold?
12) Cyber theft at the banks can’t be stopped. $80 billion, another attack right after that. Soon there will be no confidence in on line banking.
My forecasts for next 12 months TO JULY 4TH 2017 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 (See previous market letters)
| Current 9/8/16
|Foretasted Trends||DJIA||NASDAQ||S&P 500|
|Long Term||Bear Market||Bear Market||Bear Market|
|Breakout Points||DJIA||NASDAQ||S&P 500|
|Short Term Up (Resistance)||18,722||5,287||2,193|
|Short Term Down (Support)||17,140/||4,594||2,001|
|Int. Term Up (Resistance)||18,722||5,287||2,193|
|Int. Term Down (Support)||16,865 15,484 /15,370 /14,688/ 13,377||4,267/4,209/3,986/3,294||1,850/1,560|
|Long Term Up (Resistance)||18,722||5,287||2,193|
|Long Term Down Fibonacci Support||50%12,000
2008 LOW 6,627
2008 LOW 1,204
2008 LOW 666
|10 Treasury L0W 1.37^ NOW1.97%||Gold 1,287||Oil 26.59 low Now 44.68|
ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl 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. Carl, 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