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Prechter Reiterrates Call For Dow 1,000, Even As Surging Gold And Plunging Dollar Leave Much Credibility To Be Desired
One has to wonder by now just what is so magical about the Dow 1,000 that Prechter has been so infatuated with since time immemorial. Why not 999? Or 1,001. Oh well, as the rest of the world continues to expect the Dow's drop to precisely 1,000, Prechter's call for a surging dollar (ahem), for a plunge in gold (ahem, ahem), and for a rout in stocks, has left quite a few investors with some unpleasant margin calls. What is odd, is that Prechter seems to completely miss the natural hedge offsets of his bearish trade, and he confuses both inflationary and deflationary outcomes that reinforce each other's loss, in his blind pursuit of a market crash. Perhaps Mr. Prechter would be wise to heed the statement from Brazilian finance minister, who earlier acknowledged there is now a full-blown war of central bank attrition. And, no this is not a zero sum war, as all currencies are devalued equally against each other, but absolutely lose value against other fixed assets like gold.
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The human brain is somehow slanted towards a pattern recognition thought process.
This ability may have had a advantage trailing a antelope on the Savannah but is a very dubious method of analysis when describing the world in a coherent and scientific manner.
Econimics seems to be the only "science" that strives to complicate its model framework before testing its ideas.
Lets not get distracted by the various snake charmers that populate this financial jungle.
I don't know about Dow 1000. Maria seems more focussed on that than he is. but prechter did very well during 2008-mar09. He called the low in mar 09. he also called the low in the dollar in Nov 2009 and called for strengthening swiss fr earleier this year. I personally don't think a call for a stronger dollar here is all that crazy - strengthening relative to JPY and EUR. Not far fetched...
Could you say that one more time.....
LMFAO
I don't know about Dow 1000. Maria seems more focussed on that than he is. but prechter did very well during 2008-mar09. He called the low in mar 09. he also called the low in the dollar in Nov 2009 and called for strengthening swiss fr earleier this year. I personally don't think a call for a stronger dollar here is all that crazy - strengthening relative to JPY and EUR. Not far fetched...
I don't know about Dow 1000. Maria seems more focussed on that than he is. but prechter did very well during 2008-mar09. He called the low in mar 09. he also called the low in the dollar in Nov 2009 and called for strengthening swiss fr earleier this year. I personally don't think a call for a stronger dollar here is all that crazy - strengthening relative to JPY and EUR. Not far fetched...
I don't know about Dow 1000. Maria seems more focussed on that than he is. but prechter did very well during 2008-mar09. He called the low in mar 09. he also called the low in the dollar in Nov 2009 and called for strengthening swiss fr earleier this year. I personally don't think a call for a stronger dollar here is all that crazy - strengthening relative to JPY and EUR. Not far fetched...
he made a career out of the wave thing. some say it works, other say not. In my opinion, it is not a whole lot batter than a broken clock for time. as for the Dow 1000, sounds like pure BS. If Dow is 1000, you need to bring a dozen of chicken to get your colonoscopy. that's probably not gonna happen. there are many unemployed in this country. to see a loaf of bread for $10 is probably as remote as Dow 1000. but again who knows.
Dow 1000? That's way too high. I'm looking for Dow 400
Why, that's enough to give Steve Jobs a heart attack!
Prechter earned my respect way back in 1982 by predicting strong growth our of the second Reagan recession. I seem to remember hearing him tell Louis Rukeyser, back when most financial analysts were bearish, that overall the signs pointed towards a strong and sustained growth. He was right.
Who knows what tomorrow will bring, but long-term, I like Prechter's thinking. He was the first person I read who actually discerned between FRNs and the Ponzi levels of credit that are built upon them, and I can't find a major flaw in the argument that when the credit collapses, and people try to exchange it for FRNs, the real shortage of FRNs will be exposed and the dollar will scream.
There is also the fact that the Fed, however stupid it may be as an institution, is probably not quite stupid enough to destroy the one thing that keeps it in power, the dollar. It's a political, not fundamental, judgement, but I have to think that when faced with an existential crisis, the Fed will fight for itself and never let anything happens that approaches hyperinflation.
And finally, what makes me most bearish equities, is that everyone is depending on equities to bail them out of whatever Ponzi shitstorm they have created for themselves. Public pensions, private pensions, aging boomers, politicians. You name it, they are all max long equities, and the market, as always, aims for max pain.
We have a new poster from Ireland who posted this on the Central Banks no Longer Selling Gold thread. Trouble is, I know no one will see it and it is interesting so I thought I'd pin it up over here so others could read it. Might be a realistic glimpse of our not too distant future.
by szjonon Mon, 09/27/2010 - 15:08
#608224
Thanks for the welcome to all above. I should add, I'm no professional investor or economist.
Sit-rep from Ireland, where to start?
Housing,
Approx 25% drop in value, (those that are selling) long way to go but shored up by government tax breaks for the first 7 years interest on the mortgage. Lots of folks in arrears, government trying to stop repossesions. Thousands of new builds abandoned all over the country, (these are big numbers for Ireland) in fact out of my front window are 3 apartment blocks half finished slowly rotting. Developers are gone, bankrupt, loans taken on by the government (NAMA) who tell us they will make us a profit. I don't share their optimism nor their fancy ideas of aerodynamic swine.
Latest idea is to demolish most of the housing stock built in the last 5 years so supply dries up and prices will magically rise again. At least this may create some jobs in the bulldozing sector.
Jobs.
Unemployment figures are 13.7%, if you believe this then let me tell you the one about the hog with a jet pack. My own estimate would be closer to 20%. The government has a policy for back to education, the same as unemployment benefit but you get to study, takes you off the unemployed register, universities and colleges are bursting at the seams with mature students. Where we used to have 16 pages a week of jobs in our local paper, now we are lucky if there is one full page. The other forgotten (conveniently) factor is migration. Ireland has been a net importer of workers from eastern europe for some years, they built the houses and also rented them. maybe half have gone home since 2008 due to lack of construction jobs. it's like a snake eating it's tail. Many people have been forced into part time work and short hours. These are the silent problem.
Consumption.
Shops are closing daily, most have sales with prices falling across the board for consumer goods while food, fuel and the usual necessities sky rocket. Petrol (gas) is €1.30 a litre. I just did the conversion, I think that's $6.62 a US gallon. People are not spending and you can see it everywhere.
Government measures.
Austerity is the buzz word. Public sector cuts have been severe, everyone has had an extra 2% 'levy' taken from the weekly wage. Benefits have been cut, mainly ones aimed at children. Young unemployed get half the payment they used to, very harsh. More to come in the December budget. €3bn cuts minimum. for a population of 4 million these numbers are astounding. Tax take is plummeting due to less house sales and less workers while the expenditure is rising due to paying unemployment benefits etc.
Oh, and any bad loans, anywhere are being handed over for the taxpayer to deal with, now call me a cynic but why would you bother paying it back the minute it is guarenteed, estimates I have read point to a third of these loans 'not performing'.
Pensions.
Public sector pension liabilities are HUGE and nobody talks about this elephant in the room, but the dung is beginning to whiff and questions are bound to be asked soon. Private pensions for non-governmental workers are something we have to buy ourselves. Most treated their house as their pension, planning to downsize with those crazy ever rising prices or releasing equity. this could be a problem as most are now in negative territory. So, that's the ticking time bomb for another generation to worry about.
Banking.
Not much to say, technically insolvent, announcing profits by laying off workforce, not lending to small business etc, usual stuff. Anglo irish to be split in two. I would prefer it was Sean Fitzpatrick that got this treatment, (google him) but he is laughing all the way from the bank. People are angry, I'm angry. They were running these banks like casinos and were corrupt to the core in collusion with government.
Outlook.
IMF, pure and simple. We can't go on like this much longer. the downward spiral of austerity, more unemployed, more mortgage defaults, less spending etc. is just knocking down the house of cards. It's bleak here, people are ready to take to the streets, It's ok for America. ben just blows his bubbles and puts it off a while longer. We can't devalue as a euro member. Oh, that €1tn ECB rescue fund does not exist. It's just a confidence boost/trick for the markets. It's just an agreement the other members will chip in if one gets in trouble. There is no actual money down. My belief in this fund is equal to my belief in gravity defying pork. With Greece, Belgium, Portugal and Spain with similar problems it's only a matter of time before Germany and France pull the plug on this.
Bleak, dire, depressing, anger building. Ireland is on a hair trigger folks.
Disclaimer. This is all my own outlook. The government and the banks would put it another way and they must be right huh? After all, they saw it coming, who better to get us out of the mess than those that put us in it?
P.S. I'm from the UK and my wife Poland. We are economic migrants not Irish. If anyone wants any opinion on these countries don't hesitate to ask.
Cheers
Szjon
Thanks for the heads up Ms.
ms C, your the shit around here. no kidding, admire your thoroughness with every detail in your investigative reporting. carry on. kiss kiss
Thank you Mscreant!
Sound like Szjon is speaking of US banks, "They were running these banks like casinos and were corrupt to the core in collusion with government."
Dow 444, CNBC can keep trying to sell that trash paper. I aint buying nuttin.
Prechter is foolish. We will never see dow 5000, forget 1000 as long as the Fed ppt and POMO are in full prevent deflation / prevent equities collapse mode. The only way the house of cards collapses is if they pull the plug on the somewhat stealth monetization scheme. The only way to go short is if you have insider knowledge of if and when they pull the plug on the Feds' intervention. Good luck with that. Prechter is looking at the economy as is should be, not as it is with all the bullshit manipulation. That makes him partly a fool. Yours, Maverick
kinda my {take two} M A V E R I C K .
the maverick, awesome surf. p o w e r f u l
But what if someone slips some "Panix" in the NY water supply?
Ironic that Pretchter quotes from ZH posts to support his theses in recent newsletters. His regular Dow target used to be 666, but it's interesting to see that he's raised it to 1000. Also note that he has started hedging his super bearish calls in his most recent letter to say that P3 may start only sometime towards the end of 2012 (as per a 7.5 year cycle) versus his earlier predictions of a 4 year cycle which would require a collapse in 2010. Sigh. In the end, it's all about the newsletter subscriptions.
ZH , and the tyler's just fucking r o c k.
Why do people junk you, your the mostest.
How could you possibly confuse me with Cheeky Bastard?
Does my writing even come close? Doubtful!
CBXer55 comes from a classic Honda motorcycle, built from 78 to 82, the mighty Honda CBX. I am the former owner of two, and on the clubs site, 55 was the first # available, so I have stuck with it for a lot of years.
I still have a bike, but a whole lot bigger! 1800 cc where the CBX was "only" a 1100.
I love motorcycles.
Wanna go for a ride, big girl? ;-)
well, i have gotten into trouble liking motorcycle guys. i really like Moto GP, follow valentino rossi, max biggia. met nicki hayden once. cause he gave a motorcycle skills demonstration to the SCHWINNies mountain bike team. late 90's, that was trouble.
no i don't like you or cheeky bastard. just sayin'.
all your waves are belong to us, make your time elliotts!
CKF
The greatest article I have ever read on "why Prechter is wrong on gold". When I read it in 2008 I immediately went out and bought as much gold as I could afford.
http://www.gold-eagle.com/editorials_03/hultberg020503.html
Written in 2003 and equally valid today. Imagine the cajones on this guy to call out Prechter when gold was sub-$400. In short, Prechter believes that psychological waves dictate fundamentals. In reality, it is the fundamentals that dictate the waves.
My head and shoulders has a target of approx 1,300
I don't use Elliot Wave.
http://stockmarket618.wordpress.com/2010/07/07/wed-july-7-2
founding brothers , the farewell. ..pg 139-140.
joseph j. ellis
.
"for jefferson also had a national vision and a firm conviction about where
american history was headed, or at least where it ought to be headed. the future
he felt in his bones told him that the true spirit of '76, most eloquently expressed
in the language he had drafted for the declaration of independence, was a radical break
with the past and with all previous versions of political authority. like voltaire, jefferson
longed for the day when the last king would be strangled with the entrails of the last priest.
the political landscape he saw in this mind's eye was littered with the dead bodies of despots
and corrupt courtiers, a horizon swept clean of all institutions capable of coercing american
citizens from pursuing their happiness as they saw fit.
thomas paine's "the rights of man" (1791) captured the essence of his vision more fully
than any other book of the age, depicting as it did a radical transformation of society
once the last vestiges of feudalism were destroyed, and the emergence of a utopian world
in which the essential discipline of government was internalized within the citizenry. the
only legitimate form of government, in the end, was self government.
.
shortly after his return to the united states in 1790, jefferson began to harbor the foreboding
sense that the american revolution, as he understood it, had been captured by alien forces.
as we have seen the chief villain and core counterrevolutionary character in the jeffersonian
drama was alexander hamilton, and the most worrisome feature on the political landscape
was hamilton's financial scheme, with it's presumption of a consolidated federal government
possessing many of the powers over the states that parliament had exercised over the colonies.
under hamilton's diabolical leadership, the united states seemed to be re-creating the very
political and economic institutions- the national bank became the most visible symbol of the
accumulating corruption- that the revolution had been designed to destroy. jefferson developed
a full blooded conspiracy theory in which bankers, speculators, federal officeholders, and a small
but powerful congregation of of closet tories permanently alienated from the agrarian majority
("they all live in cities," he wrote) had captured the meaning of the revolution and were now
proceeding to strangle it to death behind the closed doors of investment houses and within the
faraway corridors of the federalist government in new york and philadelphia."
.
.....
copyright 2000.
I'm loving all the "Nevers" from inflationist-minded posters... I guess that's why they call such events BLACK SWANS. Seriously, count them up. A "Never" based paradigm is an emotional one, and why I'm on the otherside of the hyper-inflation trade. However, just as Prechter believes, Gold IS real money... and one would be wise to keep some of the physical stuff on hand.
Elliot Wave?!
Buahahahaha....why didn't you say he was a fucking loon?
.
There is no confusion; we have deflation. Prechter is right, except that he is wrong about one thing. What we really have is a failure to agree on definitions.
What is deflation? "A decline in general price levels, often caused by a reduction in the supply of money or credit."
hmmmm....we can say that deflation is a regime of falling prices or a regime of increasing buying power of money. You can attribute this increase in the buying power of money to a scarcity of money if you like. Mish likes to do that.
What is money? Is your wallet full of currency-thingies full of "money"? Nope. Mish and Prechter fall flat on their faces here.
Money is gold, and the prices of all things when measured in gold are falling. Clearly, this is deflation. Some things are just falling in gold-price faster than others. If you measure this price action w.r.t. currency-thingies, then it looks like some things are falling in price and some are rising in price; this causes a lot of confusion and makes a lot of people stress out about definitions. But w.r.t. gold, practically everything is falling in price, including (especially) currency-thingies.
Since the DOW is measured in currency-thingies, one cannot reliably speculate about it's final price for this crisis cycle. Some might say "one ounce of gold", and they'd be closer than anyone. Houses measured in ounces of gold (or silver, for that matter) are also a useful measure I expect.
One more thing: gold is becoming ever more scarce, and its buying power continues to rise. Isn't that interesting, Mish?
have you read his free online book on deflation, on his website?
You're lumping together Prechter and Mish? Mish thinks gold is true money, Prechter treats gold as a commodity. And unless he's changed his tune recently, Mish has been bullish gold for a while. You should spend more time reading his stuff before you criticize it.
Gold costs $600 to produce. Anything beyond that is speculation.
No, the $ costs 10-a large number ounces of gold to produce, yet sells for about 103 ounces of gold.
Anything beyond than 10-a large number is speculation, until the $ is once again redeemable in a fixed quantity & fineness of gold.
There should be superscript in that post & a minus sign ie. 10 to the power of -3, ounces
http://www.youtube.com/watch?v=1lvVuj_rakU
...Socialism is something the state does, I believe in the private sector (taking half of what you make)....
CLASSIC
If it were truly a free market, and Bernanke wasn't actively debasing the dollar, maybe the Dow would drop to 1,000. But he somehow believes that debasing the currency can lead a nation out of a depression. The Dow may keep rising in nominal terms, but the Dow/gold ratio will trade well below 1 before this carnage is over.
Dow 1000 would have to either be a long road DOWn, say over a 10 year period. With the CBO estimating red for 10 years (likely a bad estimate), is that not at least partially logical ?
Or, stops at 1000 on the way to zero (a nuke, a breakdown, er, a hyperinflation, The End itself)
Certainly will be the case one day my friends.
Remember... "On a long enough time line the survival rate for everyone (everything) drops to zero" ...
In the meantime this guy is the guy they roll out when the markets are turning way down. Great perennial gig...
Just remember, if it happens. Goldman will make it as miserable as possible. And Prechter will be wrong on timing again.
Excuse me, but ZeroHedge got the headline exactly backwards.
Baritoromo asked Prechter no less than FOUR TIMES to confirm that he still stands behind Dow 1,000 call. Prechter ducked the question all four times; refused to reiterate the call. Now THAT was news, but ZeroHedge instead reports the news exactly opposite what really happened, claiming Prechter reiterated the call when he really didn't. Time for a reality check, Tyler.
xPat
While I think a Dow 1000 is unlikely, I never rule anything out, whether it is $50,000 gold or $50 gold, Dow 36000 or Dow 36. Crazy?
Imagine you are a trader on April 1945 reading about last night's exploits by the air wing led by General Curtis LeMay. What would you place as the odds that by 1989 downtown Tokyo would be valued at more than the entire rest of the planet Earth combined, and that Japanese banks would loan 120% of such appraised value against purchases?
I think the Cubs will win a World Series before Prechter ever makes a correct call on gold or the stock market.
Dollar is up. Gold is down. Prechter is God. hahaha.
This is what I've been pointing out to Robert Prechter in recent weeks which is drawn from Chris Carolan's discovery of the nearly exact lunar cycle relationship between the 1929 and 1987 stock market crashes.
From my blog:
13 October 1857 = Panic of 1857 = 25th of Tishrei, 5618
24 September 1869 = Black Friday in 1869 = 19th of Tishrei, 5630
29 October 1929 = 1929 Stock Market Crash = 25th of Tishrei, 5690
26 October 1962 = Cuban Missile Crisis = 28th of Tishrei, 5723
Wed, 24 October 1973 = Yom Kippur Arab/Israeli War = 28th of Tishrei, 5734
Mon, 19 October 1987 = 1987 Stock Market Crash = 26th of Tishrei, 5748
Mon, 13 October 1989 = 1989 Friday the 13th Mini-Crash = 14th of Tishrei, 5750
Tue, 28 October 1997 = 1997 Asian Financial Crisis = 27th of Tishrei, 5758
Thu, 8 October 1998 = 1998 LTCM Financial Crisis = 18th of Tishrei, 5759
Fri, 21 September 2001 = 2001 Post-9/11 Panic Low = 4th of Tishrei, 5762
Fri, 24 October 2008 = 2008 Financial Crisis = 25th of Tishrei, 5769
I cancelled my subscription to this guy
I said that I was suprised in an era of deflation they were keeping their
costs the same
I agree with dow 1000 but not his calls on Gold
he forgets that during the great depression the dollar was on a the gold standard
also his analysis of stocks not reacting to news seems hogwash
Sure, maybe 1000 on the DJIA is a bit extreme...and granted, I don't know jack...
However, the memory of the various commentators/analysts on CNBC, Fox, etc., literally laughing at Peter Schiff back in '05, while he was making his call of the housing crash and a very, very bad recession, is enough for me not to make fun of Prechter for the time being.
That being said, I have no idea what to do with my money these days...
pure chartists fail to realize that history is in fact ---- open-ended. his waves, out of context, are meaningless.
Guess it depends on Who is the true Author of HIS-story and the meaning thereof... :)
If you look at today's intraday $15 plunge on a nothing day, it should highlight the paper risks to price from a panic unwind; much like the one which decimated commodity prices in 08/09. Forced unwinds would take the wind out of this market completely.
People have a very limted amount of 'scenarios' available and a very short memory.
Although there are 'hedge' properties in regards to his calls, that is only if we were to see a continuation in this broken game of 'risk' and steady march to dollar zero and gold 'x'. History has destroyed these naive expectations time and time again.
Zerohedge bays for the blood of this broken system but seems unaware of its involvement in the current gold rally. Of course there are fundamentals and a dying fiat involved but will this be the first penny to drop?? What if a failure of a euro bank or 20bn hedgefund caused a run on liquidity once more?
Just to add to my points above. In the article on bank exposure to Irish debt, you say that a 20-30% 'haircut' on UK/Germany holdings alone would be a 'lights out' event for the banks.
This is only Ireland? Are we really printing to prop up a couple percent inflation? or are we printing to prevent complete financial system meltdown?
On that note, what would happen to gold liquidity and access to comex etc in the event of this type of bank failure?
This paper run up means nothing in that kind of event.
FIAT is really a poor form of savings--- they don't even make decent cars.
i love zerohedge policy cheap hosting