The current situation is simply a repeat of past patterns. There is nothing new here. The mass hysteria and reaction from the media is the same. This is nothing but Déjà vu. The theme never changes. It’s like a broken record repeating the same nonsense over and over again. It goes likes; something bad is going to happen a stock market crash is imminent, take cover and run for the hills. Sure, in the short-term the markets have experienced some violent moves, but fast forward, in every case, the markets recouped and traded higher. People will mention Japan as an example of a market that is still trying to play catch up decades later. Well, what happened in Japan happened in a different era?
We are now in the era of massive currency wars; in other words, every nation is hell-bent on debasing its currency or it is being forced to because major players have jumped on the bandwagon. In such an environment, normal rules, do not apply, and central bankers usually respond by flooding the markets with money. Regardless of this issue, look at this long-term chart of the Dow and it clearly illustrates that every so-called disaster was nothing but a buying opportunity.
Ultra low oil prices:
we are told that low oil prices are bad for the economy. Hold on, was it not too long ago they were telling us that high oil prices were bad for the economy, so which one is it. Many oil companies will go bankrupt, but the ones that are left will emerge strong and be ready for the next bullish phase. It is because oil prices are low that car sales jumped and set a record last year; 17.5 million vehicles were sold and many consumers started purchasing Gas guzzlers they were avoiding before due to high gas prices. Ultra low oil prices are the equivalent of central bankers injecting roughly $1 trillion dollars into the global financial system, as that is how much the global economy will save at these rates.
The China factor
The claim here is that china’s economy is slowing down, and as a result have a negative impact on our economy. U.S. Corporations export roughly $500 billion year worth of Goods to China. We have an $18 trillion economy; hence, this is a non-event in our books.
Uncertainty after the Fed’s raised rates.
For heaven’s sake, the Fed only raised rates by a paltry 0.25%, so what is all the fuss about? In our opinion, even another 2-3 rates will do nothing to derail this economy as rates are being raised from ultra-low levels. We actually think that the Fed will be forced to come out with another stimulus sooner than later as this economic recovery is nothing but an illusion.
Other related stories:
- Raytheon Company setting up bullish pattern (Jan 27)
- what’s behind crash in Crude oil prices? Mass Psychology (Jan 26)
- Economic Illusions: economy Improving but wages dropping (Jan 25)
- Median household Income declining: Obama Economic Recovery a sham (Jan 24)
- Deadly Conflict In Syria: Blood, Guns and Money (Jan 23)
- No U.S Economic recovery:1 in five children on food stamps (Jan 23)
- Crude oil Market Crash: Technical Outlook for 2016 (Jan 21)
- Belt & Road Initiative: Taking China’s culture beyond borders (Jan 15)