Financial Markets Analysis: How to Survive Deflation

The stocks bear market reasserted itself by the end of last week in response to across the board bad earnings reports and economic data accompanied by revised IMF forecasts of marked slow down in global economic growth. The stock market trends are in line with the forecast for 2009 that targets new stocks bear market lows for the Dow of 6,600 and FTSE 3,400 as per my earlier newsletter and associated syndicated article of 22nd January.

Other markets also continued to move inline with the forecast trends for 2009, with Gold breaking back above $900 to target $960, and the U.S. Treasury Bonds continuing to trend lower by targeting $120.

Financial Market Forecasts for 2009

• 22 Jan 2009 - U.S. Treasury Bond Market Forecast 2009
• 22 Jan 2009 - Gold Price Forecast 2009
• 21 Jan 2009 - US Dollar Bull Market 2009 Update 4
• 20 Jan 2009 - FTSE 100 Index Stock Market Forecast 2009
• 20 Jan 2009 - Dow Jones Stock Market Forecast 2009

The global economies continued to fall of the edge of a cliff in the face of real deflation that has made itself visible in CPI inflation data, as mainstream economic forecasters continued to play catchup and revise GDP forecasts lower for all major economies as witnessed by the IMF's latest revision for UK GDP for 2009 from -1.3% barely 2 months ago to now -2.8%, which is inline with my expectations for UK GDP contraction of 3% for 2009, but more on that in the UK Recession Watch to be published later this week.

The primary concern amongst investors is the implications of deflation on portfolio allocation for primary asset classes of cash, real estate, stocks, bonds and commodities during 2009 and beyond, with that in mind Robert Prechter has made available for free to our readership his in-depth 60 page Deflation Survival Guide e-book.

Your deflation investing analyst.

Nadeem Walayat

Market Oracle.com.uk

Nadeem Walayat is the editor of MarketOracle.co.uk.and has over 20 years experience in trading and investing.