# Meltdown Ahead?



## Marcus

Rather than continuing to reply on Padre's thread about "Is It Beginning" with more of my take on our present economic situation, I thought I'd start a new thread where I'll give links to some of the articles and references that lead me to my conclusions.

http://finance.yahoo.com/news/heres-why-millions-americans-feel-205600170.html

"Roughly six years after the current economic expansion began in 2009, 93 percent of counties in the U.S. are still struggling to recover from the Great Recession, according to a new study from the National Association of Counties."

Here is the study referenced in the article in pdf form: http://www.naco.org/sites/default/files/documents/2016 CET-report_01.08.pdf

214 out of 3069 counties have recovered to pre-recession levels. Most of those counties are in Texas and north of Texas in a lopsided umbrella extending all the way to Canada. I suspect a lot of it is due to oil and gas mining.

Here is a link to a comment someone made about all the oil tankers in the Gulf: http://www.truthandaction.org/strange-occurrence-off-coast-texas-raises-concerns/2/

Oil slides to lowest since 2003 as Iran sanctions lifted
http://finance.yahoo.com/news/oil-slides-lowest-since-2003-235702182.html

"Iran is ready to increase its crude exports by 500,000 barrels a day, the deputy oil minister said on Sunday, hours after international sanctions on Tehran were lifted, removing an obstacle to exports.

London Brent crude for March delivery (LCOc1) was down $1.14 at $27.80 a barrel by 2333 GMT, after touching an intraday low of $27.70 earlier, the lowest since Nov. 25, 2003.

NYMEX crude for February delivery (CLc1) was down 86 cents at $28.56 a barrel, after falling more than $1 earlier to $28.36, the lowest since Oct. 30, 2003."

I'm having problems getting live quotes right now since it's a market holiday tomorrow (MLK Day.) The significance is we're looking at another $0.50 or so loss in the price of oil (1.7%) at the moment.

Pre-market futures are up right now after being down earlier, but they're almost irrelevant since there's still over 30 hours before US exchanges open.

The DJIA (Dow) isn't really much of an index since it's too narrow and only contains large cap stocks. However, the Dow ETF (DIA aka the DIAmonds) is stacked down on the moving averages I use for triggers and had a Death Cross (50 & 200 day MA) on 1/13. That is bearish.
http://www.investopedia.com/terms/d/deathcross.asp

The S&P 500 is a much broader index that contains 500 of the biggest companies in the US. It's ETF (SPY or the SPYders) is also stacked down and also had a Death Cross on 1/11.

The NASDAQ 100 index (ETF is QQQ ot the Qs) likewise also stacked down except for the 200 day MA. It still has a little way to go before it too makes a Death Cross.

The Russell 2000 (ETF is IWM) is a small cap index. It too is stacked down currently and made a Death Cross on 9/01. Since 9/01, it has broken the 50 day MA to the upside but not the 200 day MA. It is now below both.

While I do not follow it, the Vanguard Total Stock Market Index ETF (VTI) is likewise stacked down and made a Death Cross in late August.

What all this tells me is that the small cap stocks felt the pain first, and it has now spread to the mid and large cap stocks.

The outlier is the NASDAQ, but only 5 companies (Apple, Microsoft, Amazon, Alphabet (class A & class C shares, formerly Google), and Facebook comprise 39.4% of the QQQ ETF of 100 stocks by value. That concentration, especially since Apple has now declined 20%, represents an added risk. Additionally, Information Technology companies comprise over 55% of the ETF which is another added risk if the sector underperforms.

So do all these Death Crosses mean we're looking at a bear market? No. It simply means there are higher probabilities that we're headed down. But it is why I suggested folks start buying portfolio insurance (Put options) on their stocks and move most of their mutual fund assets to cash equivalents.

The Baltic Dry Index (BDIY) is a measure of shipping traffic. On 1/15, the index was 373 which is the lowest it's been in 5 years (max timeframe on the Bloomberg chart.) The MACD (a technical indicator meaning Moving Average Convergence Divergence) indicates it will continue to drop.
http://www.bloomberg.com/quote/BDIY:IND
The 20 & 200 Day EMAs (Exponential Moving Average) also indicate the drop will continue.
http://investmenttools.com/futures/bdi_baltic_dry_index.htm

As if the shipping news isn't already bad enough, this article is icing on the cake as it claims shipping has ground to a halt.
http://www.globalresearch.ca/nothin...rnational-commerce-has-come-to-a-halt/5501779

That brings me to the Fed who, in their indefinite wisdom, decided to finally raise interest rates in December. Their timing was perfect as it was right before the holidays when few were paying attention. We floated through the holidays on light volume and short work weeks until the new year. Then people started back to work, looked around, and decided the emperor has no clothes (or much of an economy.)

At this point, there's not much the Fed can do since they can only lower rates 0.25% and restart the bond buying which wasn't too effective anyway. Sure the liquidity issue was resolved, but it came at a huge cost (*$8 Trillion*) to the American people. Meanwhile there were huge amounts of dollars lost through graft, political corruption, and sweetheart deals.

We're liable to see a period of deflation which has the Fed and the politicians scared. Why? Because money will become worth more so there will be less for the politicos to spend. Meanwhile the average Joe will pay less in taxes since he'll make less, but his purchases will also cost less as prices drop. Expect the Fed to do any and everything they can to stave off deflation since it will ruin all the inflationary forecasting used by the government since at least the 1930s when the shenanigans really began.


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## Tweto

Marcus said:


> We're liable to see a period of deflation which has the Fed and the politicians scared. Why? Because money will become worth more so there will be less for the politicos to spend. Meanwhile the average Joe will pay less in taxes since he'll make less, but his purchases will also cost less as prices drop. Expect the Fed to do any and everything they can to stave off deflation since it will ruin all the inflationary forecasting used by the government since at least the 1930s when the shenanigans really began.


I'm not sure what more the Fed can do except negative interest rates and things like IRA and 401K surrender.

We are just on the verge of deflation now, I don't think that this will resolve it self any time soon so if we do end up in a solid depression I expect it to last a decade or more and be worse that the Great Depression.

I think this will be a slow collapse that you take years to get to the bottom.


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## hiwall

> I think this will be a slow collapse that you take years to get to the bottom.


Sometimes I think this and other times I think our downfall will really accelerate at some point. Who knows?
Maybe things will move faster downhill after the election.
Expect high volatility in the markets with large swings is my guess for the year with the steady trend being down.
I just hope if things do keep getting worse that we do not end up in a big war.


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## Tweto

hiwall said:


> Sometimes I think this and other times I think our downfall will really accelerate at some point. Who knows?
> Maybe things will move faster downhill after the election.
> Expect high volatility in the markets with large swings is my guess for the year with the steady trend being down.
> I just hope if things do keep getting worse that we do not end up in a big war.


War is a good possibility. Here's something that no one talks about. If I was a terrorist, I would plan something really big at the beginnings of a possible financial collapse. Especially while BO is still in office.


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## bkt

Governments do the bidding of big banks and corporations. Governments start wars, not people. No doubt a (contrived?) terrorist attack would be the pretext for another war.

War is indeed a strong possibility. If economic calamity cannot be stopped, governments must keep people distracted; if enough people come to realize what central and large private banks have done to the foundation of their economy - the currency - the French Revolution would look comparatively mild. The war or the bad guys would be blamed as the reason for economic pain, of course.

Confiscating retirements (IRAs, 401ks and pensions) and replacing them with IOUs would not be received well at all and could spark something very ugly.


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## Marcus

hiwall said:


> Expect high volatility in the markets with large swings is my guess for the year with the steady trend being down.


The VIX is at 27 right now which is still below my trigger level of 30. It did briefly rise above 30 last week, but settled back down.

This tells me there's not a stampede for the exits yet but a more orderly reduction in exposure. That's one of the other reasons I don't think we're anywhere near the bottom yet. There hasn't been the capitulation phase yet with its ensuing mad rush to get out.

I do think we'll keep drifting lower until there is an event to trigger a large selloff. If I had to predict the cause of it, I'd go with something related to China or oil.


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## Tweto

bkt said:


> Confiscating retirements (IRAs, 401ks and pensions) and replacing them with IOUs would not be received well at all and could spark something very ugly.


Obama has actually mentioned this. He said take peoples retirement money and then just send people a monthly sum based on the quantity of their account and their expected life span.

Most of the financial news shows I watch have mentioned this as a possibility. The key phrase is "bale-in".


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## Marcus

I just saw this although it's been posted for 5 days. The article contains comments from a notoriously bearish analyst at a French bank.
http://www.cnbc.com/2016/01/13/sp-will-plunge-75-on-china-deflation-socgen-bear.html

Of note are several of his comments:

"...cheaper exports from China are seen as likely to spread deflation globally as consumers from developed economies buy cheap imports rather than domestically produced goods."

"If I am right and we have just seen a cyclical bull market within a secular bear market, then the next recession will spell real trouble for investors ill-prepared for equity valuations to fall to new lows," he added, using the cyclically adjusted price-to-earnings ratio, known as Shiller P/E, for his gloomy prediction on the S&P 500. He gave no timeframe for his latest call.

"The Fed will fight the next bear market with every weapon available including deeply negative Fed Funds rates in addition to more QE. Indeed, negative policy rates will become ubiquitous," he said.

Edwards believes his "Ice Age" thesis-economic cycles that deteriorate in ever decreasing circles-is drawing ever closer to its final stages. While his bearish thoughts and predictions are widely read by colleagues and rivals at fellow banking organizations, they do not always come true.

The *interesting* thing to me is not that he agrees with me about deflation or future Fed actions. After all, we could both be wrong.

But rather it is that we are both looking for deflation and seeing the same Fed reactions to it while we have very different viewpoints from which we're approaching the issue. To me, that agreement tends to validate that our conclusions have some validity.


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## hiwall

I don't think the stock market is a very good indicator of a country's economic health but it is the easiest to look at every day.
All the QE sure made the markets go up. I would guess if the markets fell the fed would again use QE to prop it back up. After all you can't have the markets fall dramatically during an election year now can ya?


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## bigg777

This is merely my opinion, based on the data I am seeing and the things I am hearing from a very few MSM economists.

BDI is at an all time low, which means very low amounts of goods are being shipped.

This past holiday season was off for retailers and personal incomes haven't grown for the last 15 - 20 years.

Oil prices are at 13 years lows but, consumers are not injecting the saving from fuel costs back into the economy and, low energy prices are causing layoffs and possibly bankruptcies in the near future, in one of the few sectors of our economy that carried the nation out of the last recession.

Walmart, the nation's largest retailer and employer is closing 250+ stores and laying off employees. They say they are planning to open more stores, we'll see.

Large money center banks have announced layoffs.

Our largest foreign debt holder, China has stopped buying our bonds and has slowly, stealth-fully been selling our debt obligations.

The Rem-nimbi/Yuan has become one of the currencies acceptable by the IMF for international debt settlement, signalling a weakening of the stature of the USD.

Our national debt continues to spiral out of control, while entitlement programs expand and our politicians fiddle away in DC.

Special interests and corporations now have the same constitutional rights as U.S. citizens, according to the SCOTUS, as upheld by the Citizens United case(talk about subterfuge).

Many main-stream economists and investment bankers (Fink, El Arien[sp?], Zandi . . .) are warning of 10%+ corrections to the stock market from here.

Enough for now. Suffice it to say that, there's a storm on the horizon, IMO.


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## Tweto

The reason that the lower prices for gasoline is not being realized in increase consumer spending is because the average person is paying more for health care. I know I am.

There is also fewer miles being driven because of higher unemployment, so even though gas prices are down the savings for the average consumer is still not that great.


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## Marcus

bigg777 said:


> Walmart, the nation's largest retailer and employer is closing 250+ stores and laying off employees. They say they are planning to open more stores, we'll see.


This link is much more informative about the store closings.
http://www.cnbc.com/2016/01/15/wal-mart-to-close-269-stores-as-it-retools-fleet.html

"The domestic store closures will mostly impact the company's Walmart Express stores, which account for 102 of the closings. These small stores, which are comparable in size to a dollar store, had been in pilot since 2011. They were rebranded as Neighborhood Market in 2014.

Also domestically, Wal-Mart will also close 23 Neighborhood Market stores, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam's Clubs.

Internationally, Wal-Mart is closing 115 stores, including 60 recently shuttered, unprofitable stores in Brazil, which represent about 5 percent of that market's sales. The remainder of the stores are primarily small, money-losing stores in other Latin American markets."

"More than 95 percent of the closed U.S. stores are within 10 miles of another Wal-Mart store. When possible, it will transfer store associates to nearby locations."

*My take:*
I don't worry about the international closures since they may not be operating on equal footing with other stores in that country. That the stores are in Latin America is no great surprise either given some of their economies and laws.

Puerto Rico losing over 50 stores is no great surprise either given the state of their economy under the Democrats and the large debt of the territory.

There are 3 stores within 50 miles of me closing, but none are big ones. People in these small communities will be a little inconvenienced since they'll have to drive 10 miles or so to one of the big stores. IMHO, I don't think the population is high enough to support 2 of those stores. I am unsure about the other store.

As far as Sears closing 600 stores, it should be considered a real estate company now.


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## bkt

The Federal Reserve is set to monetize half of 2016's Treasury issuance. Way back in 2010, Ben Bernanke told Congress the Fed would not monetize debt, yet look where we are today. Given the fungible nature of dollars, this certainly is going to paying off [interest on] our debt. Monetizing Treasury issuance has been going on since the days of Bernanke. Yellen just takes it to a new level.

So expect the markets to come back up as they are artificially propped up with another round of unofficial QE. It won't mean things are good or even better. They'll be much worse, but the Federal Reserve is pretty good at papering over a big problem.


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## Marcus

We're looking down again this morning.
*Pre-market*
Dow -320
S&P -36
Nasdaq -80
oil down 3.5%

Here is an interesting article from Jim Cramer's show about the future direction of the market and support levels. The article doesn't mention it; but when they talking about Fibonacci levels, they're talking about Elliott Wave Theory developed by RN Elliott in the 1930s.
http://www.cnbc.com/2016/01/19/cramer-charts-showing-a-huge-sp-correction-could-be-coming.html

"The one spark of hope that Boroden found were two key levels. First was a floor of support between 1,847 and 1,857, which is down 2 percent from current levels. She found a second floor running to 1,832 from 1,838, down about 3 percent.

Boroden noticed the Fibonacci timing cycles suggest that this could trigger a healthy bounce, and it could happen sometime this week.

However, if the S&P 500 breaks down below the floor of support in the 1,830s, then Boroden believes a brutal sell-off could happen. It could even be similar to the magnitude of what happened in the financial crisis."

*Note:* We should *open* this morning around 1837 which is in the range of the second support level. So we're *real close* to breaking through that support level. If that support breaks, http://soundbible.com/1582-Bomb-Drop.html


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## bigg777

Marcus said:


> This link is much more informative about the store closings.
> http://www.cnbc.com/2016/01/15/wal-mart-to-close-269-stores-as-it-retools-fleet.html
> 
> "The domestic store closures will mostly impact the company's Walmart Express stores, which account for 102 of the closings. These small stores, which are comparable in size to a dollar store, had been in pilot since 2011. They were rebranded as Neighborhood Market in 2014.
> 
> Also domestically, Wal-Mart will also close 23 Neighborhood Market stores, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam's Clubs.
> 
> Internationally, Wal-Mart is closing 115 stores, including 60 recently shuttered, unprofitable stores in Brazil, which represent about 5 percent of that market's sales. The remainder of the stores are primarily small, money-losing stores in other Latin American markets."
> 
> "More than 95 percent of the closed U.S. stores are within 10 miles of another Wal-Mart store. When possible, it will transfer store associates to nearby locations."
> 
> *My take:*
> I don't worry about the international closures since they may not be operating on equal footing with other stores in that country. That the stores are in Latin America is no great surprise either given some of their economies and laws.
> 
> Puerto Rico losing over 50 stores is no great surprise either given the state of their economy under the Democrats and the large debt of the territory.
> 
> There are 3 stores within 50 miles of me closing, but none are big ones. People in these small communities will be a little inconvenienced since they'll have to drive 10 miles or so to one of the big stores. IMHO, I don't think the population is high enough to support 2 of those stores. I am unsure about the other store.
> 
> As far as Sears closing 600 stores, it should be considered a real estate company now.


My contention is that you just don't close stores in a thriving economy. Our feckless leader, Obamao says that things are so good, we're nearing full employment. Where is the growth in real economic activity. There is none!

I'm not arguing your point of the proximity of Walmart's specialty stores to their super centers, just that the cheap goods leader in our economy isn't doing well in a supposed thriving economic environment.

As I think we agree, it's all been smoke 'n mirrors for a long time.


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## Marcus

bigg777 said:


> As I think we agree, it's all been smoke 'n mirrors for a long time.


Actually probably a lot longer than you realize.
If you haven't read *Broke* by *Glenn Beck*, pick up a copy. I got mine at Wal Mart a few years back for $6.97 which is a good price for a hardcover book.

The growth of federal intervention in the economy was a good way to grow the economy when it started. $0.50 in federal funds would generate $1 in economic activity which would then be taxed about 7 times as the money moved through different hands. The federal government would actually make money at these ratios.

But as with almost everything the government does, they went overboard on it. IIRC by the time of the Reagan administration, it took $0.90 to generate an additional $1 in economic activity so it no longer paid for itself through taxes. Since then, we're up to $1 in stimulus (or more) to generate that same $1 in economic growth.

That's part of the problem we now face. Additional stimulus yields diminishing returns. *But* it transferred a lot of *power* to DC which suits the politicians and bureaucrats just fine. That concentration of power is very dangerous to our freedoms.

We're rapidly approaching a point where there will have to be cuts in programs and departments. The Fed has been trying to inflate away the problem, but they're almost out of ammunition to use. If all that pops, it'll be SHTF time and those who don't contribute to the economy (~48% or so) will get very po'd when the gravy train stops.


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## Marcus

So was today's big comeback the end of the slump? After all, the Dow futures are showing +170 tomorrow, the Nasdaq +44, the S&P 500 +20, and the Russell +9.
The short answer is we could get a bounce. Markets go up and down every day and during the day as today showed. We were down over 500 points on the Dow at one point and ended up only down 250.
*What a victory!!! 4 more days like that and we'll be down another 1000 points.*

Let's put this in perspective. +170 on the Dow is +1.08%. +44 on the Nasdaq is +1.07%. +20 on the S&P is +1.08%. +9 on the Russell is +0.9%
If you recall in an earlier post, I pointed out that the Russell 2000 (IWM) led the other indices down and was the first to have a Death Cross. None of those Death Crosses changed today.
So how high could we bounce if we do bounce? Again the short answer is about half of the loss. So right now we could bounce back up to roughly 2000 on the S&P.
*But* we're also about equidistant from being down 20% (1710 on the S&P) so the probabilities are about the same we'll hit either level *barring any other influences.*

But the base causes of the downturn haven't changed nor has the situation.
Even Jim Cramer thinks there's more pain to come.
http://www.cnbc.com/2016/01/20/cramer-when-the-market-torture-will-end.html
I do agree with his numbers 1, 3, 4, & 5 and a few of his other numbers but I don't give them all equal weight. The numbers I listed are the more important ones IMHO.

On the other hand, I do respect the opinion of Bob Pisani. He has a different POV which revolves around whether this is a correction or a bear market.
http://www.cnbc.com/2016/01/20/is-this-capitulation.html

"Here's the problem: this only suggests that the selling has halted for the moment. In bear markets, you always get rallies. Some of the last for a day; some for a few days. But then the markets drop again.

So, to answer the question, "Is this the bottom?," you have to have a conviction on the markets. If you believe this is just a garden variety sell-off (and so far this is a garden-variety sell-off, since the S&P 500 is roughly 13 percent off its May historic high), then there is a good chance we are near the bottom.

But if you think we are headed for a steeper drop - and many feel we could drop another 10 percent or more - then today's action, and the likely modest bounce we will get tomorrow, is just a brief respite."

I am of the opinion that we are in the beginning stages of a bear market with a lot more pain to come. This bounce is a good time to hit the exit if you can.


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## BillM

*The thing that ends us*

The thing that will end us as a society is an exponential equation.

It could be the debt .

It could be the population explosion of Muslims vs non-Muslims

It could be a pandemic but it will surely involve an exponential equation.


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## Tweto

Towards the end of market yesterday 2 separate traders on 2 different financial shows said that there is no sign of capitulation and they expect another few thousand lose in the Dow.

One of the traders said that this has been very strange because the sell off has been very orderly almost as if it was planned.

I classify the talking heads into 3 different groups. 
The on the floor traders, these people I can trust.
And then there are the on the air pundits that are selling books and conferences, these people I can partially trust.
And then there are the people that make their money from the buying and selling stocks, these people will always talk up the markets, they can not be trusted, they are the used car salesman of the markets..

Every trader that I hear is doom and glom about the market and they say that there is a lot more down side left. The pundits are mostly doom and glom.

And of course the used car salesmen are saying that there has never been a better time to get in. Ya it's a good time to get in for them not their clients.

I have been 100% in cash for more then a year. I will get back in when it's time but I don't see that happening for a while.


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## hiwall

Pretty much all commodities are way down and continue to drop. I think that is very telling.


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## Marcus

Tweto said:


> Towards the end of market yesterday 2 separate traders on 2 different financial shows said that there is no sign of capitulation and they expect another few thousand lose in the Dow.
> 
> One of the traders said that this has been very strange because the sell off has been very orderly almost as if it was planned.


There has been no capitulation, at all. As far as it being an orderly decline, I have to agree. Something I read towards the end of the year gave me an insight into what is partly the cause of the blame. I've heard it before but it bears repeating.

The article mentioned that the last week of a quarter and the first week of a new quarter (and a year) is window dressing time for mutual funds and hedge funds. They sell their worst performing stocks and buy the 'hot' stocks so their quarterly/yearly reports that name their holdings look better. So part of the decline was indeed planned.



Tweto said:


> I classify the talking heads into 3 different groups.
> The on the floor traders, these people I can trust.
> And then there are the on the air pundits that are selling books and conferences, these people I can partially trust.
> And then there are the people that make their money from the buying and selling stocks, these people will always talk up the markets, they can not be trusted, they are the used car salesman of the markets..
> 
> Every trader that I hear is doom and gloom about the market and they say that there is a lot more down side left. The pundits are mostly doom and gloom.
> 
> And of course the used car salesmen are saying that there has never been a better time to get in. Ya it's a good time to get in for them not their clients.
> 
> I have been 100% in cash for more then a year. I will get back in when it's time but I don't see that happening for a while.


You're much more trusting than I am. 
If someone is touting an individual stock, especially one you've never heard of; *run quickly in the other direction.* They're attempting to apply *The Greater Fool Theory* to you.
If they're talking about specific support or resistance levels of an index, I'll listen and note those levels.
If they're saying the market is oversold/overbought, I'll barely listen and judge their opinion by the quality of their argument. After all, we know what they say about opinions. Simply saying the market is oversold/overbought means nothing since markets can stay that way for a good amount of time.

As for myself, I lightened up my holdings in December. I should have lightened up more than I did in hindsight. In any case, I'm at 70% cash and still trade everyday using momentum day trades on the indices and Apple.


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## butch630434

here some thing most don't look at an that trucking last year. don't know the number off the top of my head but it was around 9.2 billon lbs last year got move. that a lot of thing some one make an sell. we got a 11% pay rise last year an there talk more this year. truck has not seen a down turn.


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## hiwall

Actually all shipping is down rail, trucks, and ships.


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## Marcus

hiwall said:


> Actually all shipping is down rail, trucks, and ships.


The DJT (Dow Jones Transportation Average) is 6778.54 down from 8981.94 a year ago. So it's off 24.5% YOY (year over year.)

The Baltic Dry Index (BDIY) was 373 on 1/15. Today it's 354 *which is it's lowest level ever.*

http://marketnews.dk/artikel/19/53778/shipping_baltic_dry-indekset_dykker_laengere_ned_i_dybet.html
This article is in German and can be translated using Chrome.

Union Pacific (UNP) reported lower freight volumes on Thursday and has reduced employee count as a result.

http://www.cnbc.com/2016/01/21/reut...reight-volumes-hurt-union-pacific-profit.html

Trucking volumes were up 1% in the 3 months ending in November, but even that was a deceleration in growth.


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## Caribou

Marcus said:


> Union Pacific (UNP) reported lower freight volumes on Thursday and has reduced employee count as a result.
> 
> http://www.cnbc.com/2016/01/21/reut...reight-volumes-hurt-union-pacific-profit.html
> 
> Trucking volumes were up 1% in the 3 months ending in November, but even that was a deceleration in growth.


I just thinking out loud here. When I was shipping freight on a regular basis I tried to use the railroad due to the cost savings. The railroad didn't want my business because I wasn't a big enough customer. When I could fill a rail car they would be interested. Here is where I put two and two together and I don't have a clue whether my answer will turn out to be four or five.

If the businesses that were filling rail cars in the past are now only purchasing enough to fill a truck it could mean that the truck business is picking up, at least for now.


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## hiwall

> If the businesses that were filling rail cars in the past are now only purchasing enough to fill a truck it could mean that the truck business is picking up, at least for now.


With International shipping at record lows there is no way rail or truck shipping can be up. Container ocean shipping is lower than it has Ever been since they started keeping track of it about thirty years ago. So that means both the imports and exports in the USA (and everywhere) are very very low. I suppose here in the USA we would still have truck and rail traffic between here and both Mexico and Canada.
I my view we are in a recession and it will soon change to a depression.


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## BillS

I think we'll see a bigger problem with the financial system than we saw in 2008. Not only do the big banks still have all those toxic mortgages on their books but the fracking industry is going bankrupt and sticking the banks with those losses. 

The petro-dollar system is dying. A lot of countries want to trade without using the dollar. The oil price is so low that a lot fewer dollars are necessary to stockpile for countries to buy oil. Oil consumption is dropping due to the slowing economy too.

If I hadn't been wrong so many times before I'd say that this year could be the year it all falls apart. But last year Jade Helm was supposed to lead to martial law. Before that we were on the verge of World War III with Russia over Syria and then things cooled down. Things just keep on going. 

This could be the year that all the dollar dumping by foreign countries leads to hyperinflation. Or maybe not.


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## Marcus

One of the videos I watched but didn't put up here was an interview with an official in the trucking industry. He mentioned that the driver shortage had eased a bit since the drivers from the oil patch had returned to OTR driving as the jobs and loads in the oil sector dried up. This was also the source of where I got the info about trucking being up 1% YOY for the 3 months ending in November. So there is a very good possibility that the easing in the driver shortage has led to a short term surge in truck freight volume. The official also mentioned that the driver shortage would return if the oil patch business came back to more normal levels.

One of the other railroads (BNSF?) also reported lower volumes due to lower oil tanker usage. That's why I 'think' it was BNSF since Warren Buffett used his political pull to block the pipeline so his railroad would benefit.

With the Baltic Dry Index so low, the dearth of shipping will eventually affect rail and trucking traffic. Because of the steep drop in the BDIY, I don't know that we're at the point *yet* where the effects begin to cascade. If trucking loads or trucking rates start to decline, that will be a big red flag to me. But it's not something that is easy to quantify in real time to my knowledge. I will search around and see if I can find some way to compare the number of loads in some kind of index. If I find something, I will post it.

One of the reasons I half agree with BillS is I too think we're probably headed for a recession. I won't say a depression yet since we're doing relatively well compared to the rest of the world. Unlike many other countries, the US is not much of a resource economy. Thus other countries are much more exposed to the slowdown in China than the US. A good portion of US exports are agricultural products which has a relatively low elasticity of demand. After all people have to eat, but they don't have to buy the latest iPhone, electronic doodad, or car.

Here is what *I* consider to be a shill article.
http://www.cnbc.com/2016/01/24/went-to-cash-heres-the-next-big-mistake-youll-make.html
One of the reasons I say this about the article mentions Jack Bogle who has reduced his stock holdings and is now mostly in bonds.
http://www.marketwatch.com/story/jack-bogle-owns-more-bonds-than-stocks-2015-12-15

Here is an overview on why I think we're headed down from David Stockman.
http://www.cnbc.com/2016/01/22/markets-in-store-for-a-thundering-reset-former-official-says.html

"For Stockman, those "four no's" consist of a combination of no escape velocity, no earnings growth, no dry powder from the central banks and no reflation. Taken together, it leads him to believe the U.S. economy is on the cusp of a full-blown recession."


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## CrackbottomLouis

Thanks for posting all these articles marcus. I don't really have anything intelligent to add but I've gotten a lot of food for thought out of this thread.


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## Tirediron

I just love the truck driver shortage Bull$hit, there is no shortage of drivers, just a shortage of drivers who will work for nothing and enjoy being treated like scum, 

if aliens removed all the longhaul drivers, the whole planets cities would starve in no time, no other occupation would have such a widespread effect.


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## Marcus

Tirediron said:


> I just love the truck driver shortage Bull$hit, there is no shortage of drivers, just a shortage of drivers who will work for nothing and enjoy being treated like scum,


That's true with a lot of jobs. I don't know if y'all see a lot of Mexican drivers up there, but it's really hurt the truckers down here.


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## Marcus

*I hope I'm wrong, but....*

As most of you know, I make a living in the stock market as an investor and trader. I retired early, and now watch the markets for profitable setups to fund my lifestyle.
This year has been profitable so far since I looked at the various indices at the end of the year and *turned to the dark side (Puts.)* 

One of the things I've noticed since last Wednesday's lows is we're seeing a *lot less* fluctuations in the major indices throughout the trading day than what I would consider normal.
Particularly since Friday's open, we've been trading in a very tight range. Normally at an open, you'll see a jump up or down as the market conforms to the futures trading. When I say it jumps, I'm talking a minute or two and almost vertical lines. Strike 1
*Yesterday, that didn't happen.* It was a very sedate 45° down line that took about 5 minutes to reach the proper level. Strike 2
Then I started having trouble getting quotes with my trading platform which has happened maybe a handful of times in the last year (250 or so trading days.) Yesterday, it happened more than all of last year combined. I'm at my brokers highest trading level so I switched to their proprietary platform which I hate. No problems (except for its usual clunkiness.) Strike 3

*While I can't prove it,* I strongly suspect there has been some sort of intervention in the markets since the big drop hit last Wednesday. I don't know if it was the PPT (Plunge Protection Team) of the Fed, or someone else. But something is going on to control how much the market is moving. There seems to be limits on how much an index can move every hour, and how much it can drop in a given day. Given that the VIX (volatility index) is in the mid-20s, we should be seeing bigger moves every hour. We'll see today as Apple has a bad sales report out.

*Trucking update and correction:* It was *December* and not November that had a 1% YOY rise. I found a couple of trucking indices, and December 2015 barely beat December 2013 which was the worst December since the recession. We're not that far from December 2009 levels (11%.) I used the Cass Freight Index 1999-2015.)


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## CrackbottomLouis

Marcus said:


> That's true with a lot of jobs. I don't know if y'all see a lot of Mexican drivers up there, but it's really hurt the truckers down here.


Yeah. They make 29 cents a mile.


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## Padre

Marcus said:


> Rather than continuing to reply on Padre's thread about "Is It Beginning" with more of my take on our present economic situation, I thought I'd start a new thread where I'll give links to some of the articles and references that lead me to my conclusions.
> .


To answer my own question...yes...I think it might be! I think the whole diseased leviathan, is starting to shake apart...a market collapse and huge increase in interest paid on US debt are the next indicators, then defaults...then inflation.


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## Tweto

Marcus said:


> *I hope I'm wrong, but....*
> 
> As most of you know, I make a living in the stock market as an investor and trader. I retired early, and now watch the markets for profitable setups to fund my lifestyle.
> This year has been profitable so far since I looked at the various indices at the end of the year and *turned to the dark side (Puts.)*
> 
> One of the things I've noticed since last Wednesday's lows is we're seeing a *lot less* fluctuations in the major indices throughout the trading day than what I would consider normal.
> Particularly since Friday's open, we've been trading in a very tight range. Normally at an open, you'll see a jump up or down as the market conforms to the futures trading. When I say it jumps, I'm talking a minute or two and almost vertical lines. Strike 1
> *Yesterday, that didn't happen.* It was a very sedate 45° down line that took about 5 minutes to reach the proper level. Strike 2
> Then I started having trouble getting quotes with my trading platform which has happened maybe a handful of times in the last year (250 or so trading days.) Yesterday, it happened more than all of last year combined. I'm at my brokers highest trading level so I switched to their proprietary platform which I hate. No problems (except for its usual clunkiness.) Strike 3
> 
> *While I can't prove it,* I strongly suspect there has been some sort of intervention in the markets since the big drop hit last Wednesday. I don't know if it was the PPT (Plunge Protection Team) of the Fed, or someone else. But something is going on to control how much the market is moving. There seems to be limits on how much an index can move every hour, and how much it can drop in a given day. Given that the VIX (volatility index) is in the mid-20s, we should be seeing bigger moves every hour. We'll see today as Apple has a bad sales report out.
> 
> *Trucking update and correction:* It was *December* and not November that had a 1% YOY rise. I found a couple of trucking indices, and December 2015 barely beat December 2013 which was the worst December since the recession. We're not that far from December 2009 levels (11%.) I used the Cass Freight Index 1999-2015.)


Like you I can not prove anything, but something doesn't feel right in the markets. I have been an private investor for 30 years and now that I'm retired, I spend 4-6 hours a day watching the news, mostly financial news and my gut has been right more times then it's been wrong and something nefarious is going on, IMO.

In the past I used the news on large company layoffs as a fool proof method to predict a down trending economy and there have been a lot of reports on companies laying off large fractions of their work forces now. I like this indicator because it's a hard indicator that can't be screwed with. Here's what my gut is saying, this may be it. the big bear market that will keep heading down for years.


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## Marcus

Tweto said:


> In the past I used the news on large company layoffs as a fool proof method to predict a down trending economy and there have been a lot of reports on companies laying off large fractions of their work forces now. I like this indicator because it's a hard indicator that can't be screwed with. Here's what my gut is saying, this may be it. the big bear market that will keep heading down for years.


That's one I use too. The oil field has laid off about 250,000 so far, and it will probably double that before we're through. Those are high paying jobs too and not the welcome to Wal Mart variety.



Tweto said:


> Like you I can not prove anything, but something doesn't feel right in the markets. I have been an private investor for 30 years and now that I'm retired, I spend 4-6 hours a day watching the news, mostly financial news and my gut has been right more times then it's been wrong and something nefarious is going on, IMO.


Look at the SPY ETF on a one hour chart with a one minute frequency. The last few days it's been almost a flatline which is unheard of with the current volatility. I was pondering this last night before going to sleep. Occam's Razor led me to manipulation.

The pre-market futures were down 100 on the Dow and 10 on the S&P last night. About 4:30-5:00 they started going up and ended up ~+100 & ~+10. Meanwhile oil went up $0.25. It doesn't make any sense since Europe was down at the time. Meanwhile the Shanghai Index broke 2800 (-6%) which was a big support region. SMH


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## Marcus

The last couple of days I've started seeing much more normal waves up and down on the index charts. Hopefully, this will continue for a while. I have noticed a tamping effect (not tampering) yesterday as the amplitude of oscillations up and down steadily decreased throughout the day. I don't imply any intent in the tamping effect, yet. This was across the 4 major index ETFs (DIA, SPY, QQQ, & IWM.)

Apple (AAPL) got clobbered on their earnings report Wednesday losing over 6%. They are projecting a slowdown in cell phone sales, particularly in China. Yesterday, they recovered a bit (0.5%) which I consider to be underwhelming given the loss the day before. The upstream iPhone component producers were also hit by this news.

Overnight, the BOJ (Bank of Japan) adopted a negative 0.1% interest rate for excess reserves for deposits financial institutions place with it effective 2/16. This will cause the Japanese banks to lend more and drive a bit more inflation there. Personally, I think the Fed here should have done something similar first before raising rates given the huge amount of excess reserves US banks hold. It's a way to accelerate the velocity of money through the economy without actually raising rates, and it ends the corporate welfare for the bankers.

I have noticed there is still quite a bit of weakness in the IWM (Russell 2000) and also in the QQQ (NASDAQ 100) so we may be close to the next leg down. Pre-market shows the Dow opening up close to 100, the S&P ~8 with the NASDAQ & Russell seriously lagging behind though still up.

The BDIY (Baltic Dry Index) is still trying to find a bottom and is at yet another all time low (325.) I also saw an article where tankers are being ordered to slow down to their most fuel efficient speed. So things on the international shipping front continue to drop. 

The surge in oil lately is all news driven because of the proposed meeting about reductions in pumping. IMHO, there won't be any reductions so we'll likely see yet another oil crash lower than before within a month. IIRC, we're coming up on refinery maintenance season so we'll probably see inventory reductions as refineries are taken offline. IMHO, the setup is being prepared for the suckers who are blindly speculating in oil futures.


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## bkt

And yet, yesterday saw all kinds of extremely odd behavior.


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## Marcus

Thanks for the heads up, bkt.

I knew something had happened around that time, but I figured it was some news I had missed. I don't know how much you know about futures, but ES is the futures contract for the S&P 500.


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## VoorTrekker

Tirediron said:


> I just love the truck driver shortage Bull$hit, there is no shortage of drivers, *just a shortage of drivers who will work for nothing and enjoy being treated like scum,*
> 
> if aliens removed all the longhaul drivers, the whole planets cities would starve in no time, no other occupation would have such a widespread effect.


If aliens replaced all of the American tuck drivers, trucks would fall apart, fatal collisions would be prolific, trucks would get stuck in the most inaccessible places and then the real problems would begin.

In my younger years I starved, was homeless and unemployed, penniless and persecuted for it. I prayed for financial direction and some years ago I found a profession where I won't get fired for being a white man or replaced by an illegal alien. TRUCKING. There are bad truck companies and there are worse truck companies. There are few good and fewer great companies.

I now am employed where I would have been back in "the shelter." I have cash. I also invested in the stock market online and built a portfolio.

BillX and Marcus, should I really sell my stocks? I bought into petroleum companies who have gas stations, a rail/truck carrier, an ammo company and a firearms company, a tobacco company and a radio company.

My first session was $2500+ developed into $11,000. (sold it and paid the tax)
The second time it was $9800 into $28,000. (sold it and paid the capital gains tax).

Now I am not even counting the expenditures/yield, I just want to have a big portfolio for the dividends. I guess I'm not that market savvy.


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## Dakine

VoorTrekker said:


> If aliens replaced all of the American tuck drivers, trucks would fall apart, fatal collisions would be prolific, trucks would get stuck in the most inaccessible places and then the real problems would begin.
> 
> In my younger years I starved, was homeless and unemployed, penniless and persecuted for it. I prayed for financial direction and some years ago I found a profession where I won't get fired for being a white man or replaced by an illegal alien. TRUCKING. There are bad truck companies and there are worse truck companies. There are few good and fewer great companies.
> 
> I now am employed where I would have been back in "the shelter." I have cash. I also invested in the stock market online and built a portfolio.
> 
> BillX and Marcus, should I really sell my stocks? I bought into petroleum companies who have gas stations, a rail/truck carrier, an ammo company and a firearms company, a tobacco company and a radio company.
> 
> My first session was $2500+ developed into $11,000. (sold it and paid the tax)
> The second time it was $9800 into $28,000. (sold it and paid the capital gains tax).
> 
> Now I am not even counting the expenditures/yield, I just want to have a big portfolio for the dividends. I guess I'm not that market savvy.


turning FIAT cash into more fiat cash is neat, but please to be dumping some of that into precious metals. Gold, Silver, and copper jacketed lead!!!


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## Tweto

I will never tell some one else what to do with there money. What I will do is say what I'm doing with my money. 97% is in cash and 3% is in PM's. My plan is to get to 10% PM's. 

A year ago I was invested about 90%.

Here's what I don't understand is that financial institutions have been slowly increasing their cash holdings for the last few years. There is also large banks buying large quantities of Gold and Silver in the thousands of pounds. This has all been reported in hundreds of news reports. But for some reason the individual investor is still sticking to their guns and staying 100% invested.

Keep in mind that the markets lose value a lot faster then they gain value. By the time that some one thinks about getting out and then they actually get out can be a week and in that week they could easily lose 20%.

Any idiot can make money when all the markets are going up. The really smart investors know when to get out.

I have always said that the 3 smartest decisions that I have ever made was to get married, learn to fly, and get out of the markets in late 2000. I may be adding the 4th smartest decision to get out of the markets in 2015. Yes, I was out of the market in 2007 but that doesn't make the top 10 for decisions. Any one could see that crash coming.


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## VoorTrekker

Thanks Marcus and Bill. Oh, wait, Dakine and Tweto. Yeah, I only have a few thousand in stock investments. These companies are U.S. based, manufacture a product and have a market. They also pay dividends and yields.

If there was a crash/depression these companies have a strong possibility of staying in business. 

Precious metals are a component of financial planning for survivalism, so I do have a few coins.


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## hiwall

> If there was a crash/depression these companies have a strong possibility of staying in business.


That may well be true but the value of those stocks could drop by 10% or by 90% who knows?


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## bigg777

Even Jim Cramer said, last week, on CNBC, that most investors should hold a 10% position in PMs. Now he's probably thinking ETFs, but physical PMs are the best hedge against stock & bond collapses.


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## hiwall

More trucking info.........................
Also the Baltic Dry Index just set another new record low.



> "It's Probably Nothing": January Truck Orders Collapse 48%
> We have previously shown just how bad the situation in the US heavy trucking space - trucks with a gross weight over 33K pounds - was most recently in "US Trucking Has Not Been This Bad Since The Financial Crisis" in which we looked at November data and found, that "Class 8 truck net orders at 16,475, were 59% below a year ago and the lowest level since September 2012. This was the weakest November order activity since 2009 and was a major disappointment, coming in significantly below expectations. All of the OEMs, except one, experienced unusually low orders for the month."
> So with 2015 in the history books, and as we start 2016 where the base effect was supposed to make the annual comps far more palatable, we just got the latest, January data. In short: the drop continues to be one of Great Recession proportions, manifesting in yet another massive 48% collapse in truck orders in the first month of the year as demand appears to have gone in a state of deep hibernation. From Reuters:
> 
> U.S. January Class 8 truck orders fell 48 percent on the year, preliminary data from freight transportation forecaster FTR showed, indicating that 2016 could be another weak year for truck makers.


More at site..............
http://www.zerohedge.com/news/2016-02-03/its-probably-nothing-january-truck-orders-collapse-48


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## Tirediron

New truck orders is a pretty shaky indicator of the economy, if there is a change in emission standards or a new seen to be better component available in a month or 2 people will wait, Class 8 trucks are mostly ordered by people who know the transport industry.


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## dlharris

Mainly truckers are avoiding the new trucks because of all the emissions crap on them. You can't keep them out of the shop long enough to make money. If you have the DEF systems they are also burning to the ground. Truckers are choosing to keep and repair the trucks they already own and avoiding the states like CA that make you have them.


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## VoorTrekker

This may be by design. When trucks stop, America stops.


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## Dakine

VoorTrekker said:


> This may be by design. When trucks stop, America stops.


That's just one way to bring the USA crashing to the worst disaster in our history. Supply on demand fulfillment is AWESOME if everything is working normally, but disrupt any key components for very long and then the ripple effects start becoming waves, which turn into storms which turn into tsunami's and it's adios amigos for us!


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## hiwall

Dakine said:


> That's just one way to bring the USA crashing to the worst disaster in our history. Supply on demand fulfillment is AWESOME if everything is working normally, but disrupt any key components for very long and then the ripple effects start becoming waves, which turn into storms which turn into tsunami's and it's adios amigos for us!


'Just-in-time' deliveries are great as long as they do arrive just-in-time. If those deliveries are late it can cause many problems. With food deliveries just as an example a week or ten days without a delivery would cause many shortages. 
Will it happen soon :dunno:


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## Tweto

hiwall said:


> 'Just-in-time' deliveries are great as long as they do arrive just-in-time. If those deliveries are late it can cause many problems. With food deliveries just as an example a week or ten days without a delivery would cause many shortages.
> Will it happen soon :dunno:


We did Just-in-time at the factory I worked at. We wanted the deliveries 24 hours before we needed them.

Most of the food outlets operate with a 3 day supply or less. Stop the trucks and within a few days they will be out.


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## Tweto

This is from Citi Bank

Citi: World economy seems trapped in 'death spiral'

Katy Barnato	| @KatyBarnato 
3 Hours Ago
CNBC.com

Grant raises red flag on global recession

Mark Grant, Hilltop Securities, discusses how a slowdown in China, tanking oil prices and Fed uncertainty will likely impact worldwide markets.

The global economy seems trapped in a "death spiral" that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned.

Some analysts - including those at Citi - have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

"The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday.

"Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)... and repeat. Ad infinitum, this would lead to Oilmageddon, a 'significant and synchronized' global recession and a proper modern-day equity bear market."

Stubbs said that macro strategists at Citi forecast that the dollar would weaken in 2016 and that oil prices were likely bottoming, potentially providing some light at the end of the tunnel.

"The death spiral is in nobody's interest. Rational behavior, most likely, will prevail," he said in the report.

Crude oil prices have tumbled by around 70 percent since the middle of 2014, during which time the U.S. dollar has risen by around 20 percent against a basket of currencies. 

The world economy grew by 3.1 percent in 2015 and is projected to accelerate to expand by 3.4 percent in 2016 and 3.6 percent in 2017, according to the International Monetary Fund. The forecast reflects expectations of gradual improvement in countries currently in economic distress, notably Brazil, Russia and some in the Middle East.

By contrast, Citi forecasts the world economy will grow by only 2.7 percent in 2016 having cut its outlook last month.

Global economy 
World economy on edge of recession: Citi

Overall, advanced economies are mostly making a modest recovery, while many emerging market and developing economies are under strain from the rebalancing of the Chinese economy, lower commodity prices and capital outflows.

Stubbs added that policymakers would likely attempt to "regain credibility" in the coming weeks and months.

"This is fundamental to avoiding a proper/full global recession and dangerous disorder across financial markets. The stakes are high, perhaps higher than they have ever been in the post-World War II era," he said.

Just 151,000 new jobs were created in January in the U.S., in the latest sign that the world's biggest economy is slowing. Economists are concerned about an industrial or manufacturing recession in the country, following some warnings from companies in earnings seasons and recent weak manufacturing activity and durable goods orders data.

However, some analysts say markets are overegging the prospect of a global slump.

"Many markets are now pricing in a significant probability of recession and when we talk about recession, we're talking particularly about a U.S. recession. Do you think that is likely or not? To me, the odds are too high; the market is pricing too high a probability," Myles Bradshaw, the head of global aggregate fixed income at Amundi, told CNBC this week.

The Royal Bank of Scotland just last week said to sell every thing (I believe they were talking about the stock market)


Tweto


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