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Things look eerily similar to 1936: From devaluations lifting stocks to inflationary side-effects of money flow and from short-covering, money-on-the-sidelines, Jobs, Europe, low-volume ramps…


1936 Redux – It’s Really Never Different This Time

While chart analogs provide optically pleasing (and often far too shockingly correct) indications of the human herd tendencies towards fear and greed, a glance through the headlines and reporting of prior periods can provide just as much of a concerning ‘analog’ as any chart. In this case, while a picture can paint a thousand words; a thousand words may also paint the biggest picture of all. It seems, socially and empirically, it is never different this time as these 1936 Wall Street Journal archives read only too well… from devaluations lifting stocks to inflationary side-effects of money flow and from short-covering, money-on-the-sidelines, Jobs, Europe, low-volume ramps, BTFD, and profit-taking, to brokers advising stocks for the long-run before a 40% decline.

Things look eerily similar eh?

 

But when we look at the headlines in the Wall Street Journal from mid 1936 to mid 1937 as the market topped out (orange oval), dipped, was bought back, then collapsed 40% in 3 months, nothing ever changes…

 

Government Bailouts Repaid – Bullish Implications…

N.Y. Central Has Repaid All Government Loans
The Wall Street Journal, 978 words
Dec 1, 1936
WASHINGTON Numerous railroad developments here yesterday were climaxed by the announcement of RFC Chairman Jesse H. Jones that New York Central had repaid all of its government loans, totaling $16,858,950, most of which was not due until 1941.

….

For a wonderful comparison of this Fiscal Cliff with the one in 1937 see Steve Keen’s presentation before congress in Dec of 2012:

http://www.debtdeflation.com/blogs/2012/12/11/briefing-on-the-fiscal-cliff-at-congress/

 

CENSUS: RECORD 1 IN 3 US COUNTIES ARE NOW DYING

WASHINGTON (AP) — A record number of U.S. counties – more than 1 in 3 – are now dying off, hit by an aging population and weakened local economies that are spurring young adults to seek jobs and build families elsewhere.

New 2012 census estimates released Thursday highlight the population shifts as the U.S. encounters its most sluggish growth levels since the Great Depression.

 

Major US CEOs’ Outlook On Rising Jobs, CapEx Worst Since Early 2010

Despite the plethora of propagandist panderings, the reality of the Business Roundtable (BRT – an association of chief executive officers of leading U.S. companies) findings are far less enthralling than the headlines might suggest. In fact, despite the protestation that their economic outlook ticked up – which as the chart below shows so evidently – is merely a reversion to the lows of 2011; the sad ‘fact’ is that expectations for higher Sales, CapEx, and Employment are as bad as they have been since early 2010. CapEx, the much-vaunted miracle driver of revenues this year, is below Q4 2009 levels of expectation. Even the BRT itself offers up the words ‘moderate’ when describing the changes and yet the mainstream media pounce on an uptick like cardinals to the new Pope. It appears that we will have to wait another quarter to see what the CEOs of the nations largest companies are really doing as their stocks soar to record highs.

The BRT CEO Economic Outlook in context… back at the lows of the pre-crisis and post-crisis 2010 lows – and as is very clear, the hope in the blue lines continues to be dragged back to reality of the economy (green line)…

 

European Employment Drops To 2006 Levels

If anyone is confused why European stocks just hit their highest levels in nearly 5 years (if not all time highs – there America with its 48 million foodstamp recipients has it beat), the chart below should provide some lack of color. According to Eurostat, in Q4 the number of persons employed in Europe compared to Q4 declined by 0.3% in the Euroarea, and 0.2% in the Eu27. The decline was -0.8% and -0.4% for the EA17 and EU27 compared to a year ago. Of course, if the Fed and ECB keeps pushing stocks higher, monetary illogic dictates that eventually this number will rise because somehow having more diluted claims on money floating around is good for jobs. Just not yet.

The Greek Unemployment Nightmare Continues To Get Worse

 

Italy’s Worst-Case Scenario Has Become The Most Likely Scenario

Ever since Italian elections yielded inconclusive results a few weeks ago, everyone has been wondering what happens next and how markets will digest the process.

Center-left candidate for prime minister Pier Luigi Bersani was expected to come out on top. While he managed to do that, center-right rival Silvio Berlusconi and anti-establishment candidate Beppe Grillo took a bigger share of the vote than anyone expected. Now, Bersani has to form a coalition with one or the other in order to form a government, and both routes could be problematic. (For more on that, click here.)

That means Italy could be headed straight back to elections, introducing further uncertainties that could result in unfriendly scenarios for markets.

Luca Jellinek, head of European Rates Strategy at French investment bank Crédit Agricole, suggests that the worst case scenario going forward is also most likely.

 

NYSE Matched Volume Drops To New Decade Low In February

Someone is obviously not complying with the central-planner script and rotating fast enough into equities.

In February, total NYSE matched volume (defined as the number of shares of equity securities and exchange-traded products executed on the NYSE Group’s exchanges), dropped 13.6% from a year ago, 9.4% from January, and at 20.5 billion shares in the 19 trading days of February, represents a fresh decade low for the exchange (source).

 

For some odd reason every 13th year since the 1974 stock market low, a historical event/year has taken place….13 years later.

from kimblechartingsolutions:

CLICK ON CHART TO ENLARGE

Is the number “13” Lucky/important to the stock market?

For some odd reason every 13th year since the 1974 stock market low, a historical event/year has taken place….13 years later.

1974….Stock Market low

1987… Stock Market Crash

2000…Tech Bubble Peak

2013…Another important historical year at hand?

 

Stay tuned!

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  • Bill Downey

    Good article —– the inflation everyone thinks is coming to economy is going to stock market —- it cant go to economy because no one BORROWING to expand —- OR CANT qualify. Not saying it won’t come later but will probably be only for necessities and not non-essentials. Right now its been going in stocks. IF that comes to an end then we’ll have to see. But someone is going to have to borrow it — and right now the government is doing it. Without more borrowing and more debt, the fractional reserve banking system will implode.