Yes, 2014 is an absolute total disaster just waiting to ignite. In “Doomsday poll: 87% risk of stock crash by year-end” we analyzed 10 major crash warnings since early this year. Since then, more incoming bogies raced across our radar screen. Ticking time bombs from Congress, the Supreme Court, sex, carbon emissions, Big Oil, NSA, IRS, Tea Party austerity. Relentless. Mind-numbing.
So many are tuning out. Denial. Truth is, bubbles are everywhere. Ready to blow. The evidence is accelerating, with only one obvious conclusion: Max 98% risk at a flashpoint. This 2014 crash is virtually guaranteed. There’s but a narrow 2% chance of dodging this bullet.
Here are the 10 bogies, drones targeting markets, stocks, bonds and the, global economy:
1. Bubble With No Name Yet triggers the biggest crash in 30 years
All three of the big worldwide financial bubbles that have blow up in the last three decades have “been fueled by the Fed keeping policy rates below the nominal growth rate of the economy far too long,” says global strategist Kit Juckes of the French bank Societe Generale.
The three bubbles: The Asian Bubble in the early ‘90s, Dot-com Bubble of the late ‘90s and what Juckes calls the Great Big Credit Bubble that triggered the 2008 Wall Street meltdown.
Juckes warns that we’re now trapped in the fourth megabubble fueled by the Federal Reserve in the last 30 years, since the rise of conservative economics. He calls this one, the Bubble With No Name Yet. OK, we invite you to send in your nomination to name the new bubble. But whatever you call it, do it fast, it’s close to popping, like the Asian, Dot-com and Credit crashes the last 30 years.
2. Marc Faber’s Doomsday warning on Bernanke’s disastrous QE scheme
Faber laughs at Bernanke’s remark that the economy would be strong enough later this year so he could take his foot off the gas, that is begin “tapering, or scaling back it’s stimulative quantitative easing (QE) program later this year.” Yes, laughed.
According to BusinessInsider.com, “embracing hyperbole,” Faber “suggested that QE would basically be a part of everyday life for the rest of our lives,” adding that back in 2010 in the early days of Bernanke’s disastrous experiment, Faber warned “the Fed’s headed for QE99.”
3. Economy is already crashing, GDP will get even worse in 2014-2016
Over at Huffington Post Mark Gongloff warns: That “dramatic downgrade of U.S. economic growth in the first quarter revealed the economy’s lingering weakness, exposed the folly of Washington’s austerity obsession and slapped the Federal Reserve’s newfound optimism right in the face.” And with politics deteriorating, it’ll get worse.
Gongloff piles on the bad news about 2014: GDP “grew at a 1.8% annualized pace in the first quarter … revising down its earlier estimate of 2.4% growth … The first quarter’s dismal growth was at least better than the 0.4% GDP growth of the fourth quarter of 2012. But it was still far from healthy, and economists don’t see it getting much stronger any time soon.” And that’s real bad news for the markets going into 2014.
4. Precious metals: ‘Going dark! Economic cycles point downward’
That’s the headline flashing red warnings. After reviewing 20 cycles tracked by 20 other experts, GoldSeek.com concluded: “There are many cycles that suggest a stock-market correction or crash is near … Preparation is important. You still have a little time remaining before the ‘window’ closes!”
Traders heading for the exits: “Unsustainable trends can survive much longer than most people anticipate, but they do end when their “time is up, at the culmination of their time cycles.” They analyzed more than 20 cycles: “Nearly unanimously point to tectonic shifts in the months and years ahead.”
Yes, they hedge on the timing but the ticking time bombs are loud, close. And “the precious-metals crash, starting in April of 2013, was the first warning of what is coming globally.”
5. Gross warns: ‘Ponzi Scheme! Tipping Point! Credit Supernova!’
Bond King Bill Gross admits, “QE must end.” Trillions of cheap money “has distorted incentives and inflated asset prices to artificial levels.” But now Gross says “the Fed plan may be too hasty.”
What? Hasn’t his firm made enough money off Bernanke’s cheap money printing? So he’s blaming “lower growth on fiscal austerity,” even as Bernanke keeps blowing up the Fed’s balance-sheet bubble by trillions under the delusion he’s America’s savior because our dysfunctional Congress failed?
Gross shifts, makes no sense: Just four months ago he warned the Fed is blowing a Credit Supernova, a new monetary bubble that would implode Bernanke’s arrogant risky experiment putting America’s future at great risk by bankrolling a Wall Street Ponzi Scheme and blowing a huge financial bubble.
Now, like an addict who can’t stop, Gross writes in his Tipping Point blog that QE will run to 2015. Earlier it seemed like the Bubble With No Name Yet should be renamed the Bernanke Bubble. But now, with Gross and Pimco’s $2 trillion at stake here, maybe we should call it The Gross Bubble.
6. Cycles happen. We’re now in the 5th year of a typical 4-year bull rally
Everyone on Wall Street, Main Street and Washington keeps forgetting the fundamentals of market cycles. Please remember: Investors Business Daily’s Bill O’Neill, author of “How to Make Money in Stocks,” says market cycles average 3.75 years up, nine months down.
But “averages” are old data, not future facts. Happy talk won’t restart a bull. And more warnings won’t puncture an old bubble. Cycles have lives of their own, move up and down when they damn well feel like it. That’s nature.
7. Political wars guarantee intense volatility through 2014-2016 elections
Sorry, folks, but if you’re an investor hoping America’s political internecine wars will improve in the near future, just don’t invest. The war between Congress with it’s abysmal 10% approval rating and the president, the war between the Dems, GOP and the tea party, is going to get even worse, upsetting markets and the economy even more.
Why? Just add in the intensifying anger after the Supreme Court’s decisions over same-sex marriage issues and gays, add in the growing anger over abortions, Obamacare, gun control, food stamps, the new voter suppression pushed by GOP governors, plus more threats by conservatives and the tea party to dig in their heels and fight to overturn everything and increase austerity too.
This is all bad news for investors, just as America’s 30-year bond bull is ending.
8. Employment futures weak as pensions drain states, municipalities
Any “jobs recovery is years away in most cities,” says USA Today. And in reviewing famed analyst Meredith Whitney’s new book, “The Fate of States,” she warns that “excessive pensions crowd out both liberal goals such as education spending and tax cuts that conservatives want.”
Yes, pensions for retirees at state and municipal levels are preventing recovery. Corporate pensions are also a big problem, widening America’s inequality gap: Drug company McKesson’s CEO has been boss for 14 years, but will retire with a $159 million pension, while the income of America’s average wage earner has stagnated for 30 years.
9. Investors brains are so distracted, in denial, they won’t get out in time.
A Bubble With No Name Yet is still a bubble. But, Americans are too distracted, too numb, too in denial to hear the warnings. Reminds me of my headline back on March 20, 2000. “Next crash, sorry you’ll never hear it coming.”
But the crash hit. The economy tanked. The recession lasted 30 months. Wall Street lost over $8 trillion of our retirement money. In the first decade of the 21st century, from the 2000 dot-com crash till 2010 disaster Wall Street’s had a negative inflation-adjusted performance. Today Wall Street’s returns are just barely beating inflation. No wonder investors feel cheated by Wall Street’s casinos.
10. Economics is killing the economy, but like coke addicts we won’t stop
Nobel economists like Joseph Stiglitz, environmental activists like Bill McKibben, George Soros and the Institute for New Economic Thinking, politicians like Al Gore and other modern thinkers all warn us that traditional economists (and the banks, businesses and government agencies they work for) are addicted to bad economic theories, And they’re sabotaging America’s future.
The theories, yes, and also the bad statistics traditional economists use to mislead America: The worst offender, GDP is a narrow, misleading measure of America’s long-term growth. And second, our obsessive focus on short-term numbers, daily stock closings, quarterly earnings, annual returns, is stunting America’s long-term growth.
Bottom line … Societe Generale strategist predicts biggest bubble in 30 years … Hong Kong’s Dr. Doom predicts QE forever … GDP economy already crashing … precious metals “point downward, going dark” … Gross screaming about Bernanke fueling Wall Street’s Ponzi Scheme, a Tipping Point igniting a Credit Supernova … O’Neill’s reminder, in the 5th year of a 4-year bull rally … political wars guarantee increasing volatility through 2014-2016 elections … state, local, corporate pensions killing job growth … investors distracted, numb, in deep denial … classical economic thinking is killing America’s future … tick, tick go the ticking time bombs … place your bets at Wall Street’s casinos … the risk is only 98% in 2014 … or is it 100%?
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.