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End of the Line! China and Germany Look Ready to Pop

June 14, 2015

End of the Line! China and Germany Look Ready to Pop

The U.S. stock market has finally hit a speed bump after more than six years of a Fed- and QE-driven rally. The S&P 500 is up 232% since March of 2009 despite this unprecedented stimulus in the feeblest economic recovery in history.

But since late December 2014, U.S. stocks have gone nowhere as investors face some growing realities.

GDP, retail sales, production and exports are slowing.

The dollar’s sharp rise in recent years has crushed global exports.

Long term interest rates are rising consistently… what I call the beginning of the end of stimulus policies designed to keep rates low forever.

Meanwhile, in just six months Germany saw its key stock market, the DAX, rise nearly 50% from mid-October into early April.

Germany’s bubble has shot up 245% since March 2009 — greater than the U.S., despite its slower economy.

It won’t last!

DAX Germany 2007 - 2015

As I’ve explained many times, starting last year Germany has the worst demographic trends of any country in the world lasting through 2022. It’s even worse than Japan’s demographic cliff in the 1990s!

There’s one reason Germany has held up as well as it has in the last year: the euro.

When the euro falls, German exports soar. Between April 2014 and March 2015 the euro fell 25%. Its long-term peak was in July 2008 at 1.60 dollars. It hit 1.05 in March — 34.5% lower!

Consider that Germany exports 50% of its GDP. That’s one of the highest ratios in the world.

 

…click on the above link to read the rest of the article…

Saxobank CIO Warns “Another Shock Drop Is Coming.. And It’s Coming Soon” | Zero Hedge

October 22, 2014

Saxobank CIO Warns “Another Shock Drop Is Coming.. And It’s Coming Soon” | Zero Hedge.

Saxo Bank’s Chief Economist Steen Jakobsen is predicting another ‘shock drop’ in the markets within a few weeks. With debt and low inflation continuing to create a nervous atmosphere behind most markets, Steen argues that we will hit fresh lows in mid-November. Steen takes the view that central bank policy is creating a ‘fantasy land’ for investors and he points out that the recent ‘day dive’ in markets was a closer reflection of reality. Steen outlines his suggestions for trading ahead of another dip in mid November with targets for the S&P 500 around 1810 and the Dax at 8000 – 7800. Be long fixed income as it is “a free put on the equity market.. and the economic cycle is not yet ready to adapt to a rising interest rate.”

…click on the above link to view the video…

Olduvai IV: Courage
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Olduvai II: Exodus
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