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Correction or Bear Market! Which?

September 6, 2015

Have we entered a Bear market or is the present 12% down move a Correction? Our experts state that a market Correction involves a 10% down move in our stock markets. To date, this down move has reached 12%. Our experts state that a Bear market is a 20% or more down move. So according to our experts, we are now in a Correction and not a Bear market. My evidence, however, suggests that we have entered a Bear market and the new evidence which I will share is ‘building permits’. For the month of August, this indicator has declined from expectations and from the prior trend. What does this mean?

Building permit data is a good indicator of sentiment within the real estate community. This is a leading indicator of an emerging trend. Witness: http://www.tradingeconomics.com/united-states/building-permits. This indicator now suggests that real estate may be heading down. Also, multi-family construction is also down for August. Both these indicators suggest that our economy is not sound and that a new trend may have started. Personally, I sense that we have entered a Bear market for the next several years. The beginning is now! The MSCI indicator (emerging markets) is down. The BDI (commodity markets) is now down substantially. And real estate is now down. The Bear is here and few seem to comprehend!

Multi-family is down in August and so is single family! Has a Bear started?

The next few weeks should wake-up traders and investors to this new trend. The current 12% correction will grow (in time) to 20% and then 30%. The new trend for the forseeable future is the new Bear! Mr. Draghi, over in Europe, is now planning more QE for the Eurozone. Sweden is thinking about more QE. Japan is heavily into QE and so is China. Our administrators, at the highest levels now sense that our global economy is failing and that deflation and disinflation is real. Panic will soon set in and our policy makers will create more panic with their foolish policies.

Draghi wants more QE for Europe and Yellen wants higher interest rates! Do these experts understand our speed-of-light Cyber markets?

All our markets have changed and we now live with speed-of-light cyber markets. A change in perceptions can change ‘confidence’ quickly and this can snowball into a hurricane of sell clicks by our cyber traders. Sell clicks mean that our speed-of-light trading markets can drop stock prices in seconds. Circuit breakers may help, temporarily, but when ‘confidence’ changes to ‘fear’ than all the circuit breakers will be fruitless. The Bear has started, in my view, and the change should be evident within a few weeks. Watch the markets over in China for another signal! China markets have already collapsed 42% and much more is likely.

China markets already down some 42%! Is this trend over?

China real estate is in a huge bubble and total public debt is now unsustainable. Also a centralized approach to solving this downward trend in China is likely to turn sentiment to the negative quickly. Fooling the public and investors was easy in a ‘snail mail’ market. But today we live with speed-of-light markets (all in cyberspace). Our computer traders and our electronic exchanges can change events in seconds. This is new and ominous when sentiment changes from ‘confidence’ to ‘fear’. Watch and learn! Enjoy! I am: https://kingdomecon.wordpress.com.

P.S. Indicators which point clearly to a Bear market:

  1. http://www.tradingeconomics.com/united-states/building-permits
  2. http://www.bloomberg.com/quote/BDIY:IND
  3. https://www.msci.com/emerging-markets
  4. http://www.usdebtclock.org/
  5. http://www.marketwatch.com/story/european-markets-rise-as-investors-wait-for-qe-hints-from-draghi-2015-09-03
  6. http://www.bloomberg.com/news/articles/2015-06-23/qe-shows-signs-of-backfiring-in-sweden-as-liquidity-evaporates
  7. http://www.bloomberg.com/news/articles/2015-08-10/russian-economy-shrinks-4-6-as-oil-slump-risks-deeper-recession
  8. https://www.washingtonpost.com/world/asia_pacific/chinas-economy-is-in-big-trouble-but-it-is-not-collapsing/2015/08/25/22e0a4c8-4aa4-11e5-9f53-d1e3ddfd0cda_story.html
  9. http://www.ft.com/intl/cms/s/0/41e1370a-5474-11e5-b029-b9d50a74fd14.html#axzz3kzdUmEAn
  10. http://www.bloomberg.com/news/articles/2015-09-04/china-s-zhou-kept-repeating-the-bubble-burst-at-g-20-meeting
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