Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Bombed Out Markets Ready to Bounce in 2009

Stock-Markets / Investing 2009 Dec 30, 2008 - 10:29 AM GMT

By: Aden_Forecast

Stock-Markets Best Financial Markets Analysis ArticleTHE END OF A BAD YEAR - As the year draws to a close, we can only say that we're sure this will be a year we'll all remember for a long time. It'll probably fall into the category of 1974, when the country was in a steep recession and gas lines wrapped around blocks, or like 1979. At that time, inflation was raging and interest rates soared to 20%. Even though the circumstances were very different, those landmark times are well remembered and this year will be similar.


DARKEST BEFORE DAWN

Even though it's been a tough year and we wish things were better, in the spirit of the holiday season, we also have to put everything into perspective and be grateful for what we have, be it health, loved ones, income, a home and so on because there are many who don't have these basics this year.

As for the markets, despite the gloom and doom, there are some positive signs. Remember, it's always darkest before dawn and that may be what we're seeing now. It sure seems like it, but we can't yet be sure. Nevertheless, we'll be watching certain guideposts for signs that the situation is improving, which will hopefully tell us that the worst is nearing an end.

Listening to the news, however, you'd never know it. It's been one bad day after another but keep in mind, the markets lead and they'll start up months before the economy actually improves. In fact, they'll turn up when pessimism is its strongest.

U.S. IN RECESSION

This month, for instance, it became official. The U.S. has been in a recession for one year. Of course, that didn't come as a surprise considering the huge drops in consumer confidence, spending, stocks, home prices and manufacturing throughout the year. Then there's the credit crisis, bank failures, one bailout after another, panic, business failures and the huge jump in job losses, the most since 1974. Unfortunately, there's also been more suicides and heart attacks.

Considering most of the above, the bottom line is that 95% of all investors have lost about half of the value of their assets over the past year. It's literally been the worst crisis since the 1930s. But again, there is some good news amidst the bad…

MONEY SUPPLY IS SOARING

Every major country worldwide is doing all they can to soften the blow and bring this crisis to an end. The last thing anyone wants is a deflation/depression. And as these signs have intensified, governments are taking stronger, even desperate measures. Chart 1 provides a great illustration of what we mean.

This shows the Federal Reserve's Monetary Base, which is essentially the money supply in its most liquid forms, going back to 1959. As you can see, it has exploded in a way never seen before. The last we heard it was soaring at an annual rate of 75%, which is beyond unprecedented.

That's a ton of money, and this alone is going to help avoid a depression and boost the economy. But as we've said many times, all those trillions will eventually also lead to a massive inflation. It's inevitable, but that's not the concern right now.

INVESTING IN INFRASTRUCTURE

Currently, Obama and his team are busy working on how to get the economy moving again. This is their top priority and one plan involves the largest infrastructure investment since the 1950s when all of the super highways were built. This will provide jobs and it'll hopefully help spur the economy.

Other countries are planning to do the same. China , for instance, already has two huge stimulus packages in the works, focused on infrastructure building. They're determined to keep their economy strong, which will help Asia . And all of these global projects will keep upward pressure on commodity prices too.

Also impressive have been Obama's picks for key posts so far, especially his economic team. Former Fed Chief Paul Volcker, for instance, is widely respected and has decades of hands-on experience, and he's been warning of economic disaster for years if policies continued on the path they were on. Timothy Geithner, the new Treasury Secretary, is also well respected, knowledgeable and he's been instrumental in helping to resolve the current crisis.

For now, Paulson is extending government assistance to other non-banking companies involving credit cards, auto loans and so on. And following the Citigroup bailout, the auto companies will be helped as well. The point is, save the economy. And so far, the markets seem to like what they see.

BOMBED OUT MARKETS : Ready to bounce

Most of the markets have been extremely oversold for months now. That means they're poised to rise in at least a good sized rebound following their steep declines. Several of the markets are clearly bottoming and a few are now beginning to punch up.

As we've previously mentioned, it's very possible that the initial reaction to the new presidency will fuel a rebound rise in most of the markets. That's because it's coinciding with this oversold situation.

This month this scenario seems even more likely than it did before. If so, it will be a super sign that the situation is going to work out, one way or another. We're not there yet but again, the guideposts will tell us if things are headed in the right direction.

KEEP CASH AND GOLD

In the meantime, keep your gold and cash, which are best regardless of what happens. In this year of extreme market drops and volatility, for example, gold has held up best and it's been the best investment. It's also one of the most important guideposts to be watching. If gold can now stay above $857, it'll be very bullish, strongly suggesting it's headed higher and the above, more positive scenario will likely unfold.

Cash is important for dozens of reasons, and it'll enable you to take advantage of the many bargains now available and during 2009 in order to add or buy new positions, especially in precious metals, stocks, currencies and most gold shares. Whatever you do, don't sell now. We think we could soon be in for some long overdue good news.

By Mary Anne & Pamela Aden

www.adenforecast.com

Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter providing specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com

Aden_Forecast Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules