Evidence Of A Downtrend In
The US Stock Market
Paris, France – What happened on Friday? A “moment of
truth” arrived for Europe. But what is the truth? We’ll
have to wait to find out.
rose 259 points. Gold was up $28.
cares? Up, down…up, down… Every day brings more ‘truth.’
But what we want is a truth with legs. We’re not day
traders. Not week traders. Not even year traders. We want
a long, sure…mega trend. We want the Dow at 900 in 1983.
Or gold at 260 in 1998.
there today that is equivalent? How about 10-year US bonds
at 2.20% yield? For upside, we can’t think of a single
other thing. US bonds have been in a long, long uptrend —
basically — since they’ve existed. From 1791 to the
present, they’ve gone up. Of course, there have been some
major problems along the way, notably in the ’70s when it
looked like the Fed had lost control of inflation.
Otherwise, bond yields have gone down as prices have gone
time for a turnaround? Maybe not just yet. We’re still in
a Great Correction. Bonds should continue to go up — for a
while. But just wait…this is a truth that won’t go away:
US debt is expanding…as its ability to pay declines.
the big trend for the US stock market is probably down
too. Just a guess, mind you. Why? We’ve given you the
reasons…but since you seem to have forgotten, we’ll give
them to you again:
60 years of credit expansion, credit is contracting. That
means less household spending, which means lower sales and
market began in January 2000. It never reached its
rendezvous with a real bottom. Ergo, the ultimate bottom
still lies ahead…
rose since 1982…since 2000, they’ve been going nowhere.
Now, it’s time for them to go down.
of the ‘growth’ in the last 20 years has come from more
and more debt at the household level. Now that debt is
shrinking…growth should shrink too…
are 70 million baby boomers who desperately need to save
money for their retirements. They used to borrow and
spend…now, they will have to pay back and save.
credit grew, it took more and more credit to produce an
extra unit of output. Adding more credit now will not help
the real economy expand…
feds can’t engineer a recovery, because unlike a
recession, the problem is not that debt is too expensive,
but that they have too much of it already…
economy softens, the feds take more and more of it into
custody. The feds invest badly, leading to less real
output…which must supports more and more zombies…
European economy is sliding towards another recession;
this will hurt the US economy too…
whole world economy is weakening; it could drop into a
persistent unemployment undermines consumer spending…
prices are still falling, which will further reduce
household net worth and reduce both spending and
use in the US is falling…more inputs of energy do not
produce enough extra output to pay for themselves…
energy use in the emerging markets is increasing,
supporting energy prices and putting more pressure on US
else? Want more reasons? Stay tuned…