The Prospects For Asset Prices: A Very Dangerous Moment
Posted August 23, 2015
Last week the global economic slump caught up with Wall Street. Global stocks joined global commodities in a broad-based selloff that took the Dow Jones Industrial Average – and many other indices around the world – into correction territory. By market close on Friday, investor sentiment was verging on panic. What should investors expect next week and during the weeks ahead?
In the new Macro Watch video, uploaded today, we consider the outlook for equities, bonds/interest rates, property prices, commodities and currencies.
Topics include:
Will panic selling resume when markets reopen on Monday?
Where will the S&P Index be at the end of 2016?
Will the Fed hike interest rates or launch QE 4?
Will US home prices continue rising?
How much further can commodity prices fall?
Is Dollar Strength about to give way to Dollar Weakness?
The Outlook for Emerging Market Currencies
The Outlook for Gold
China’s bubble is deflating, commodity prices are crashing, and the currencies and economic prospects of the commodity producing countries are being crushed. Now, the sudden plunge in US (and global) stock prices is destroying trillions of dollars of wealth and undoing the positive wealth effect that had been responsible for much of the (weak) economic growth that had been achieved during the last year. The global economic bubble is deflating rapidly.
This is a very dangerous moment.
If you are a Macro Watch member, log in now and watch The Prospects For Asset Prices to see how much worse things could become if policymakers fail to act swiftly.
If you have not yet joined, click on the following link:
http://www.richardduncaneconomics.com/product/macro-watch/
For a 50% subscription discount worth US$250, hit the “Sign Up Now” tab and, when prompted, use the coupon code: dangerous
You will find more than 17 hours of video content available to watch immediately, including two video courses:
1. The Global Economic Crisis Explained, and
2. How The Economy Really Works
A new Macro Watch video will be added approximately every two weeks.
Richard, another incredibly insightful Macro Watch video. As a registered investment advisor, I rely on your charts and commentary to help guide clients. I concur that QE has been the driving force behind US stock markets, and will undoubtedly reduce my defensive positions when QE4 arrives. My fear is the diminishing effect QE may have on the markets (law of Diminishing Marginal Returns). If QE becomes an ineffective tool for the Fed to prop up the stock market, what then? I remember Hank Paulson pleading for $700B in the fall of 2008. He got his wish, but I think the next time a Treasury Secretary demands authority to save the world with a massive spending request, they may not be so fortunate. Viable options to save our economy are diminishing. Thanks for your updates, keep them coming. Macro Watch is a bargain and tops my subscription list.
Richard,
Great read. Can you comment on a previous update where you discussed reverse-repo. Can you update where we stand on that, and is that still a stealth way for the FED to provide liquidity to the system the next few quarters without explicitly announcing another round of QE?
Thanks,
Adam
Excellend recap. I have a bet with a former IMF Economist that QE 4 starts before year -end. The winner gets a steak dinner and it looks like I may be on track to win that bet depending upon the timing lol.
I also use your charts with clients to simply and clearly explain how the global economic game works. Thanks, Jack D. CFP.