Everyone Is Bullish? Uh-Oh, SELL!
There is no doubt that in the past few weeks (arguably just the past week) there’s been a real breaking of the bearish spirit.
Bullishness is hitting all-time highs, and even some of the folks who were very skeptical about the economy, are turning positive.
Meanwhile, the S&P just broke 1500. As Josh Brown at The Reformed Broker notes, the NYT sent out a rare email newsblast to mark the occasion, that stocks had broken through this barrier, meaning the word is getting out. Stocks are on fire.
Of course, to many folks, their first idea is going to be: SELL SIGNAL.
But this crass contrarianism is silly. The idea that we’ve hit a top just because people are getting bullish, and aware of the stock market isn’t based in anything….
At 8:05 PM ET Friday, discount suit-seller Jos. A. Bank dropped a bombshell.
“[N]et income for fiscal year 2012 is expected to be approximately 20% lower than net income for fiscal year 2011,” they wrote.
According to Yahoo Finance, analysts were expecting earnings to climb around 8 percent from last year’s earnings of $3.49 per share.
Among other things, management blamed Hurricane Sandy, the election, the fiscal cliff, and warm weather.
Strategists keep revising earnings forecasts lower while the market heads higher
Simply put: Europe is only beginning to deleverage
Leading British newspaper the Telegraph reports today:
Ministers today admitted Britain is facing “very, very grave difficulties” after figures showed the economy did not grow at all in 2012.
Economists from the Royal Bank of Scotland said the last four years have produced the worst economic performance in a non post-war period since records started being collected in the 1830s.
“It’s the worst economic performance since at least 1830, outside of post-war demobilisations,” he told The Daily Telegraph. “It’s worse than the 1920s, it’s worse than the Great Depression.”
He said the economy has been “heading this way for a long time” because of the scale of the problems that came to a head in the 2008 financial crash.
The top economist at RBS, which is mostly owned by the Government, said it is difficult to recover when much of the world is facing similar problems.
“It’s the scale of what happened in 2008 but also the build-up to that,” he said. “Compared with other recessions [like in the 1980s and 1990s], this is happening all over the world. There’s not a quick and easy way to export your way out of this.”
(In a separate article, the Telegraph notes that the UK is heading for an unprecedented triple dip, as its economy shrunk .3 percent in the fourth quarter of 2012).
We’ve repeatedly warned that this is worse than the Great Depression …
Bad Policy Has Us Stuck
We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.
Instead of bringing in new legs, we keep on recycling the same old re-treads who caused the problem in the first place.
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- Excessive leverage helped cause the Great Depression and the current crisis, but the government has encouraged more leverage
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
- Government policies send manufacturing jobs and dollars abroad
- Quantitative easing won’t help … it will only make things worse.
This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the people.
With continued volatility in gold and silver, top Citi analyst Tom Fitzpatrick believes that crude oil is now set up to surge as much as a staggering 63% in 2013. This would crush global stock markets, sending the wildly enthusiastic bulls reeling. Fitzpatrick provided King World News with 7 powerful charts to illustrate the danger this situation poses to the bulls. Fitzpatrick has been incredibly accurate regarding his forecasts so KWN takes his warning very seriously.
Here is what top Citi analyst Fitzpatrick had to say, along with powerful charts: “We have constantly articulated the view through our longer term overlays in particular that the US Equity market was establishing a topping phase that could yield a retracement lower in the months ahead of 20%+.
This suggests that price action in the weeks ahead may be quite critical in determining whether this expected turn lower is going to materialize.