• 14 hours From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 19 hours Are Smart TVs Spying On Us?
  • 21 hours Is Fossil Fuel Divestment A Waste Of Time?
  • 2 days A Russian Billionaire’s Space Quest To Save Humanity
  • 2 days Markets Take Breather As Consolidation Continues
  • 2 days Economic Woes Weigh On Copper Prices
  • 2 days World's Largest IPO At Risk Following Drone Strikes
  • 3 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 3 days What’s Behind The Silver Sell-Off?
  • 3 days The Retail Apocalypse Is Accelerating
  • 3 days The Top Tech Stocks Of The Year
  • 4 days America’s Workforce Elderly Workforce To Double By 2028
  • 4 days Toyota Tests Solar-Powered Prius
  • 5 days Why The Gold Rally Flatlined
  • 5 days The Uranium Sector Can’t Catch A Break
  • 6 days Upcoming Fed Meeting Has Investors On Edge
  • 6 days Global Gold Sector Outlines Responsible Mining Principles
  • 7 days China’s Giant Vampire Fund Loses $120B
  • 7 days McDonalds To Roll Out Robot Drive-Thru Clerks
  • 7 days Savvy Investors Are Betting Big On This Little Data Company
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Chris Vermeulen

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Contact Author

  1. Home
  2. Markets
  3. Other

Latest GDP Forecasts Confirm Things Will Get Ugly

The future looks bleak for stocks and not just the US market, I'm talking about global markets are poised to enter bear markets which we have seen already started to see. Subscribers and I have been short the Japan and China market for several months and these two markets have dropped dramatically already and the bear market has not even started yet!

Just take a look at the chart below which shows the declining GDP in January. Real GDP is down the trend it's not going to stop for a long time yet. The economic outlook appears dismal in the upcoming financial quarters and is likely part of the reason stocks have crashed in January.

GDP Now


The Fed Fund Futures Indicate another Minor Rate Hike in 2016

The Fed Fund Futures Indicate another Minor Rate Hike in 2016

After the highly anticipated rate hike in December market participants have toned down their expectation of another FED rate hike in the near future. I believe that instead of another rate increase, the FED will start thinking about back-peddling to correct their mistake of raising rates that definitely has created a reason to sell stocks. They did this during a time when the economy was and still is very "fragile".

If you look back in history you will see clearly that the FED has the tendency to raise rates just before major corrections in the stock market. Or better said, they start to raise rates when the economy is still too fragile and they trigger the selloff in stocks.

John Williams, San Francisco FED President, said, "We got it wrong" referencing the earlier statement by FED officials regarding crude oil prices being good for the economy.


The FED is Not the only One with Easy Money Policy

Crntral Banks Balance Sheets

This graph clearly shows how the US FED, the ECB, the Bank of Japan, People's Bank of China, the Bank of England and many other nations, have been implemented an easy monetary policy at the same time as the FED.

Remember all markets are linked so when one has an issue so to the others. In 2008/09 it was not just the USA having financial issues, it was a global issue and many countries started easy money policies to help their economy stabilize. It just some counties have different ways of doing things and many don't openly share what they are doing as they don't want to show signs of weakness.


World GDP

World GDP continues to decline even with global efforts of many counties trying to help boost the economy. The world is struggling and is going into "economic contraction" which could plague us for many years. China slow growth trajectory is likely to continue and the US forecasts are also pointing to slowing growth. The odds favor that the growth in 2016 will be much lower than what has been currently reported.

Look at the graph below to see the global GDP line falling.

World GDP


Concluding Thoughts:

In short, all this negative talk about the world economy is depressing and not what we all want to hear, see, and worse - live through.

Let me mention that for every negative there can be a positive outcome. And this this case, when the stock markets crumbles and the economy falls into the gutter there is a way you can profit from the event. In fact, when the market crashed in 2008 many of us made a fortune from the falling stock prices and weak economy.

 


In my next article I will share how I made a couple million dollars from my computer during a time when 95% of individuals lost half of their life savings and their homes. But you must optin to my free newsletter at www.GoldAndOilGuy.com to receive this special report!

 

Back to homepage

Leave a comment

Leave a comment