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Happy New Year!
Last year (2015) likely will represent the top for the bull market that
began in 2009. Stocks finished the year down, representing the first down
year since the March 2009 bottom.
Many analysts will point to the August sell-off as the reason stocks
performed so badly, however, looking at the chart, stocks struggled
throughout the year, long before the August sell-off. Indeed, at best the
S&P 500 was up 3% for the year!
Things are only going to worsen from here.
Firstly, the US Federal Reserve is now tightening. From 2009-2015, the Fed
was always implementing loose monetary policies
whether it by through QE, Operation Twist, or simply juicing the markets
during options expiration weeks.
No longer. The Fed is now raising rates. This will be a major issue for
stocks going forward.
Secondly, the US economy is back in recession.
I don’t care what the Mainstream media says, based on the cold hard data
points stripped of accounting gimmicks, the US entered a recession last year.
This is backed up by:
1) The High Yield Bond market is pricing in a recession.
2) The Credit Markets are pricing in a recession.
3) US inventories hit levels associated with recessions.
4) The ISM manufacturing index is at recession levels.
With the Fed tightening, the recessionary drop is only going to
accelerate.
Finally, corporate profits relative to GDP are at their record high and
rolling over.
Corporate growth can be generated via three ways:
1) Economic growth
2) Financial Engineering (stock buybacks and other profit
boosting gimmicks)
3) Increased productivity
With the US back in recession and the Fed tightening, both #s 1 and 2 are
over. This leaves #3. And while productivity did increase marginally
in first half of 2015, it’s now rolling over again towards 0%.
In short, the sources of growth for US corporates have all dried up.
Stocks have yet to adjust to this, but when they do it’s going to be
an all out collapse.
Smart investors are preparing now.
We just published a 21-page investment report titled Stock Market
Crash Survival Guide.
In it, we outline precisely how the crash will unfold as well as which
investments will perform best during a stock market crash.
We are giving away just 1,000 copies for FREE to the public.
To pick up yours, swing by:
https://www.phoenixcapitalmarketing.com/stockmarketcrash.html
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