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Graham Summers’ Weekly Market Forecast (Next Leg Down Edition)
Looking out on the markets before the week begins the mood is very, very tense.
The European debt crisis continues to intensify with Greece moving to save one of its smaller banks (Proton) from failure. The Greek bank system does not have FDIC-style insurance, so a bank failure there means that the possibility of losing all of one’s money is in fact very real.
Elsewhere in the Eurozone, Spain and Italy are increasingly coming under fire with the ECB revealing it has purchased 34 billion Euros worth of their debt in the last two weeks. As I’ve noted in previous pieces, these two countries are the REAL problem for the Eurozone: they’re too big to be bailed out.
How this particular mess will play out all depends on Germany. No German support for the ECB’s moves and you’ve got no EU. And German politicians are becoming increasingly negative about further aid.
Indeed, over the weekend Angela Merkel announced that Euro-bonds (the new idea of floating bonds backed by… the EU?!?) wouldn’t solve the EU’s problems. Germany’s Finance Minister said the same thing, pointing out that Germany would be required to make $3.6 billion in interest payments for Euro-bonds in the first year alone, with the amount likely to increase to over $36 billion per year after the first decade.
Merkel’s party got slammed in the March 2011 German elections. With the next round of elections coming up in roughly one month’s time (and 56% of Germans saying the Euro has brought them disadvantages), the fate of the Euro will likely be decided within the next four months.
The market seems to be sensing this with the Euro coiling tighter and tighter in a triangle pattern. When this pattern breaks (likely to the downside) the Euro will take out critical support at 140
Aside from the European situation, the world is experiencing a global liquidity crisis that is now bordering on a “2008” situation. I’ve been warning about this to my Private Wealth Advisory subscribers since early July. However, we’re now beginning to see even Goldman Sachs and other large institutions publicly calling for a Crash. In other words, BUCKLE UP.
The S&P 500 has now wiped out a year’s worth of gains, bringing stocks back to roughly where they were when the Fed announced QE lite. The snapback rally of early last week proved to be exactly what I thought it was: a bounce from oversold conditions.
The tell-tale sign is that we’ve since had a sharp reversal erasing all of those gains. One more down day and we’re on to new lows and officially into a bear market in the US (20% off the peak). Which would put us up there with Spain, Switzerland, Russia, Germany, Brazil, Italy, India, and nearly every other major market in the world.
I’ve said before that stocks are the last to “get it.” What I mean by this is that the bond and credit markets typically adjust to changes in the world much faster than stocks. This is definitely true today as the US stock market has held up relatively well. However, Treasuries have rallied beyond even their May 2010 highs and are now approaching their 2008 highs:
In plain terms, the market’s are in full-scale Crisis mode. While stocks have bounce hard temporarily the rest of the financial system is in a complete and utter panic.
I warned to get defensive several weeks ago. That warning is even more important now. I would avoid stocks and Treasuries as neither are particularly safe. I’d have increased exposure to cash and PHYSICAL bullion (Gold and Silver). If you have to remain long stocks shift into large-caps and companies that will exist a year from now (brands and industries people will need regardless of how bad the economy gets).
Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com.
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Just think about why folks sell newsletters.......................they make a killing.Otherwise they would not waste their time.
I often am LOL at these Multi Millionaires, wanting to SHARE their Secrets..................simply BY their newsletters and YOU TOO!! can be like they ARE!.
Why bother selling newsletters, if your already a Multi Millionaire many times over, with the age old ruse of wanting to make you millionaires like them.
It's a fricken riot, as PT Barnum said.........................
This is not to disparage Mr.Summers,or to label him, put him in the same category................just some of my observations.
He's like Robert Prechter Jr....eventually he will be right
$199......... great post!
Cash really?? And what is that invested in, I ask....specious
Marc Faber is not so down on equities as he believes that they will benefit from further money printing. S&P may still go down, but it may be safer than bonds. Makes some sense. Just sayin.
Private Wealth Advisory Subscription, That's sure not me. Besides, it would put a big crimp in my beer budget.
You can call Graham everything in the book, except incorrect.....
Actually, you can call him that too. He had to stop out of all his crisis trades right at the top of the market. He bought oil at 110, and now he's selling the bottom. Great trader IMO.
Graham Summers' first Spam post of the day.
blah blah, free newsletter here, buy your premium newsletter here, blah blah
I like the word "PREMIUM". Premium to what?