Bear Market For Stocks Ahead, Major Economies Headed For Deep Recessions

Posted by: : Paul EbelingPosted on: January 31, 2015 Bear Market For Stocks Ahead, Major Economies Headed For Deep Recessions

Bear Market For Stocks Ahead, Major Economies Headed For Deep Recessions

The world’s major economies are on the precipice of another financial crisis, the down cycle will be deep and painful for stocks.

Expect the worlds stocks markets to get hammered, making now the best time to Short stocks since the Y 2008 financial crisis.

Volatility in financial markets, including Crude Oil’s deep dive to almost 6 yr lows, and China’s slowing economy will help trigger the fall of equities world wide

Do not expect the European Central Bank’s QE program to save the Eurozone economy, the area is a failed experiment in Socialism and doomed.

The major central banks used all of their monetary firepower to avoid the 1st downturn in Y 2007, so this is a dangerous point now. If economic activity far from picks up, but stumbles, then there will be a really painful round of debt default.

Econominst Mohamed El-Erian, sees 2 risks to the global financial system.

“One is you have companies that are unhedged” when it comes to currency moves. The USD  has hit multi-year highs Vs multiple currencies in recent weeks.

US companies already are seeing hits to their earnings. “But that is nothing compared to emerging market corporations that are unhedged.” Mr. El-Erian said.

“The 2nd issue is this notion of lower volatility, the ability of central banks to repress volatility. They are battling. Look at the Russian central bank today. Look at the Swiss central bank today.”

Russia’s central bank is toiling to buoy the Ruble, which has dropped by almost 50% over the past 6 months. And the Swiss Central Bank dropped its ceiling for the CHF earlier this month. “If we shake this low volatility paradigm, then we’re undermining a main element of policy,” Mr. El-Erian said.

Stay tuned…


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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