I wrote two email articles (edited for better accuracy) that I forgot to post on my blog, so for record keeping purposes, I will do so now.
As usual, please reminded that you are responsible for your own investment decisions. I am here to share my opinions and information, but you enjoy the gains, and suffer the losses. So, make your own decisions, for better or for worse.
As usual, please reminded that you are responsible for your own investment decisions. I am here to share my opinions and information, but you enjoy the gains, and suffer the losses. So, make your own decisions, for better or for worse.
http://sg.news.yahoo.com/ap/20100104/tbs-as-singapore-economy-3c8dc0d.html
Singapore's economy shrinks 6.8 percent in Q4
THIS is what I am talking about, when I said that the Long Term Outlook of the Dow should be below 6,500. This news is fresh from the oven. Singapore is the first country to report its GDP data for 4th Quarter 2009, i.e. within 5 days AFTER 31st December. US GDP data will only come out on 29th January 2010.
The significance of this news is not that there is a relapse into economic recession, but rather the fact that it is 6.8% negative, which is comparable in pain to some really bad recessions. In short, there was a lot of economic and financial pain experienced in Singapore between October to December 2009. So much for a happy Christmas.
You cannot use the rubbish media definition of an economic recession of 2 negative quarters because it is biased. It takes one quarter to get out of recession, and when the GDP was 0.1% positive, the media announced to the world that a country is OUT of recession, and then, it takes two quarters to announce another recession. Just stick to positive and negative GDP growth to get a feel for the economic pain. Also, pay attention to the numbers to understand how much pain is being experienced.
Don't forget that if you were once earning $10,000, and your earnings drop significantly to $7,000 in the recession, it is little consolation, nor any news to celebrate when your boss announces a salary increment of $100 for you. The $100 increment amounts to a raise of 1.4% on the low base of $7,000, and does nothing much to bring your salary back to normal of $10,000. This is the TRUTH of the economic pains in the world right now.
Worst, the world is about to experience further income cuts, even from the low base of $7,000, and what you just saw from the news is like your salary being cut another $483, from $7,100 to $6,617. Can you feel the pain? So much for the $100 increment a few months ago.
Most businesses are suffering from significant drop in sales turnover and profitability, and there is nothing to suggest that this trend will not persist for the foreseeable future, without any significant changes for the better. If anything, the future looks even bleaker with time, and there is an increasing possibility of even further drops in turnover and profitability in the next one to two years.
The funny thing was, I kept analyzing the economic data, trying to remain unbiased as I searched for signs of positive or negative Economic Growth in the future, and my Economic Growth Forecasting model could not give me any positive results, even though EVERYONE in the world kept talking about an economic recovery. Now, I know that my Economic Model didn't lie to me, and it was the commentators who were biased in their assumptions. Some actually used the wrong model to make their forecast, and this was evident from the way they talked.
For your information, what is Foreseeable Future is defined by me as "AS FAR AS I CAN SEE, until new information changes the outlook".
This is THE MAIN WAVE of the ECONOMIC TSUNAMI, and it is almost upon us. I expect the economy of US and Singapore to also experience bad results for 1st Quarter 2010.
The first economic recession of 2008 was like a fall from a 3 storey building. You end up half dead in hospital's Intensive Care Unit (ICU). You slowly recover, and the champagne bottles start to open in the view that you will be back on your feet in a few months' time. NOW, the doctor suddenly finds you have some symptoms of a relapse. Complications have arisen. You are not out of danger yet. You are still recovering from your bone breaking fall, but because of your low immune system, you have caught other diseases. You are in danger of becoming very ill.
How ill? What is this illness? What medicine to prescribe?
All these questions cannot be answered at this stage because at present, only the negative symptoms are appearing, while the cause is less certain. COMPLICATIONS, not an accident, is the cause of this Main Wave of the Economic Tsunami.
The facts we know are clear. There is a hell of a lot of economic and financial pains being experienced, and the world economy is extremely fragile. It only takes a snap of a single match, to light up the bonfire.
From our perspective, this is about businesses and consumers having to suffer too long from low income compared to the hey days, while prices of everything remain higher than the income fall. Without a relative fall in prices, People and businesses are still tightening their belts on the overall, and despite whatever any Government or media has to say, the people know the pain is there, with nothing in sight to change that view, for the foreseeable future.
There are some pretty bad economic storms out there, and it is brewing into another major Financial Tsunami. It is coming, my friends. You might want to consider getting out of your stock positions if you have any, and wait for a more opportune time to reinvest.
I quote from an email I wrote on 29th December 2009 in response to a very interesting article per website link below, of the growing income gap between the rich and the poor, i.e. before the Singapore GDP announcement: -
http://silverbearcafe.com/private/11.09/unraveling.html
In the last few months, I came to the conclusion that there is no point lamenting about the gap between the rich and the poor because that is exactly what capitalism is about. The only thing we have to worry about, is
"Which side of the fence are you on?"
I think there is no solution to this economic problem. The prophecies of George Orwell's "Animal Farm" will keep repeating itself, whoever is in power, and the world will cycle through great eras, down to bad economic eras, and we are seeing the movement towards worser and worser economic conditions, in the economic super cycle.
Economic Depressions cause a change in wealth on a massive scale. It provides the necessary earthquake to break the existing economic structure and its foundations to the core, leaving behind vast devastation for all. And from the ashes of disaster, a new economic era is born. This was how economic history has been, and this is how it will be.
America had it great for a long time, not because of capitalism, but because they had plenty of land, and was the industrial might of the world. Next, the US$ became the world reserve currency, and this allowed Americans to spend 750 times more than they should have, if the US$ were not the reserve currency. There is no way America can repay the debt it owes the world.
The mound of sand is looking like it is about to topple. We do not know exactly when the last grain of sand will do the whole mound in, i.e. cause it all to fall down, but it's a question of WHEN, not IF. Debts have to be repaid. Full stop.
The grain of sand is actually the US Treasury issues, whether short, medium or long term notes. The over subscription for such notes are falling, and is down to 2.1 times now, from a high of 3.6 times. It was only a couple of months ago, that it was 2.9 times.
The key, the next shoe to drop is the Interest Rate Derivatives. It is said that there are around US$140 trillion in Interest Rate Derivatives, and the horror story is .... what will happen if the US Interest Rates rise significantly? Some are expecting the IRD to cause major losses on those who have underwritten the assurance of continued low rates regime.
My point .... no, the world is not falling apart overnight. But, every day, it is getting closer to economic disaster. We don't know exactly when it will happen, but we have a clue in the form of Interest Rates. The Fed has to raise interest rates significantly, at a very fast pace, too fast, and this will catch everyone off guard, and cause massive losses. But the Fed is resisting this move, knowing the next crisis to come, for as long as they can. So, when the Fed does make a move, you know that it is not voluntary in nature.
This is the current situation. Of course, the danger may pass, if they reach a good agreement with PBOC (People's Bank of China), to continue to support the US Treasuries, so ... this is not an imminent disaster, but a real danger that needs to be accounted for. The key is in the future Fed Interest Rate .... not the normal moves, but the ones that seem very unlike a normal Fed policy. That's when we know something has gone terribly wrong.
As for the alarm bells on capitalism, the current situation in US is nowhere near as bad as the Great Depression, not to mention the times of Industrial Revolution. To understand the Great Depression, see the movie, "The Grapes of Wrath". For life in the Industrial Revolution era, see Les Miserables.
My outlook for the world economic and financial markets for 2010?
I am too busy to write blog articles nowadays, so I will just requote what I wrote to a friend earlier today in response to his recommendation of an Elliott Wave Theory blog, and before the Singapore GDP number was known to me.
Thank you for sharing. I went to the website and his chart on the Rising Wedge, with falling RSI seems to confirm my opinion that the US Stock Market liquidity driven run up is almost over. I actually sent an email to Victor, over the weekend, to get out of any positions if he can, but I am too busy to write any articles on the outlook.
If you look back into my April and August Outlooks, the only two times I wrote Dow Outlooks since April 2009, I set a target for 10,500 to 11,000 as the maximum peak potential. We are in that critical zone, and there is no reason nor price behavior evidence for me to change my outlook set then. Of course, I was wrong on the duration of the run up .... but hey, I'm no God. Hahahahahahaha. Forecasting is a probability game, and I won't get it right the next time, but sometimes, it does work.
The big strategic picture is usually quite reliable, compared to the short term forecast due to noise from news and short term fear and greed sentiment.
My long term forecast is still one of extreme pessimism, i.e. below 6,500 on the Dow, before the economic challenges are all over. BUT, we will have to reassess the situation at the 8,900 to 9,200 region, and depending on the news and price behavior, we will need to make a decision whether THIS new downturn is the 1st wave of a 5 wave Long Term Bear Market (my macro economic view), or merely a Downward Correction in a Long Term Uptrend (the general consensus macro economic view).
You will note that I do not believe in ALL of Elliott Wave methodology, i.e. too much wave counting. Instead, I believe in what I think is quite reliable, the wave structures that can arise, and try to assess the various scenarios, as they unfold, .... with a view to making money.
In other words, don't get lost in the details of EWT. Be flexible. Stick to the simple principles, and make money from it. Of course, the making money part is the tough part, but, it all starts with the thought right?
In short, this is going to be hell of a year, to find opportunities to make money, because the world economy and financial markets are going to experience one heck of a roller coaster ride this year. Meantime, go easy. Smell the roses, enjoy the fresh air, and just stay out of trouble. Life will be great if you can do just that.
Best wishes,
Ooi
The significance of this news is not that there is a relapse into economic recession, but rather the fact that it is 6.8% negative, which is comparable in pain to some really bad recessions. In short, there was a lot of economic and financial pain experienced in Singapore between October to December 2009. So much for a happy Christmas.
You cannot use the rubbish media definition of an economic recession of 2 negative quarters because it is biased. It takes one quarter to get out of recession, and when the GDP was 0.1% positive, the media announced to the world that a country is OUT of recession, and then, it takes two quarters to announce another recession. Just stick to positive and negative GDP growth to get a feel for the economic pain. Also, pay attention to the numbers to understand how much pain is being experienced.
Don't forget that if you were once earning $10,000, and your earnings drop significantly to $7,000 in the recession, it is little consolation, nor any news to celebrate when your boss announces a salary increment of $100 for you. The $100 increment amounts to a raise of 1.4% on the low base of $7,000, and does nothing much to bring your salary back to normal of $10,000. This is the TRUTH of the economic pains in the world right now.
Worst, the world is about to experience further income cuts, even from the low base of $7,000, and what you just saw from the news is like your salary being cut another $483, from $7,100 to $6,617. Can you feel the pain? So much for the $100 increment a few months ago.
Most businesses are suffering from significant drop in sales turnover and profitability, and there is nothing to suggest that this trend will not persist for the foreseeable future, without any significant changes for the better. If anything, the future looks even bleaker with time, and there is an increasing possibility of even further drops in turnover and profitability in the next one to two years.
The funny thing was, I kept analyzing the economic data, trying to remain unbiased as I searched for signs of positive or negative Economic Growth in the future, and my Economic Growth Forecasting model could not give me any positive results, even though EVERYONE in the world kept talking about an economic recovery. Now, I know that my Economic Model didn't lie to me, and it was the commentators who were biased in their assumptions. Some actually used the wrong model to make their forecast, and this was evident from the way they talked.
For your information, what is Foreseeable Future is defined by me as "AS FAR AS I CAN SEE, until new information changes the outlook".
This is THE MAIN WAVE of the ECONOMIC TSUNAMI, and it is almost upon us. I expect the economy of US and Singapore to also experience bad results for 1st Quarter 2010.
The first economic recession of 2008 was like a fall from a 3 storey building. You end up half dead in hospital's Intensive Care Unit (ICU). You slowly recover, and the champagne bottles start to open in the view that you will be back on your feet in a few months' time. NOW, the doctor suddenly finds you have some symptoms of a relapse. Complications have arisen. You are not out of danger yet. You are still recovering from your bone breaking fall, but because of your low immune system, you have caught other diseases. You are in danger of becoming very ill.
How ill? What is this illness? What medicine to prescribe?
All these questions cannot be answered at this stage because at present, only the negative symptoms are appearing, while the cause is less certain. COMPLICATIONS, not an accident, is the cause of this Main Wave of the Economic Tsunami.
The facts we know are clear. There is a hell of a lot of economic and financial pains being experienced, and the world economy is extremely fragile. It only takes a snap of a single match, to light up the bonfire.
From our perspective, this is about businesses and consumers having to suffer too long from low income compared to the hey days, while prices of everything remain higher than the income fall. Without a relative fall in prices, People and businesses are still tightening their belts on the overall, and despite whatever any Government or media has to say, the people know the pain is there, with nothing in sight to change that view, for the foreseeable future.
There are some pretty bad economic storms out there, and it is brewing into another major Financial Tsunami. It is coming, my friends. You might want to consider getting out of your stock positions if you have any, and wait for a more opportune time to reinvest.
I quote from an email I wrote on 29th December 2009 in response to a very interesting article per website link below, of the growing income gap between the rich and the poor, i.e. before the Singapore GDP announcement: -
http://silverbearcafe.com/private/11.09/unraveling.html
In the last few months, I came to the conclusion that there is no point lamenting about the gap between the rich and the poor because that is exactly what capitalism is about. The only thing we have to worry about, is
"Which side of the fence are you on?"
I think there is no solution to this economic problem. The prophecies of George Orwell's "Animal Farm" will keep repeating itself, whoever is in power, and the world will cycle through great eras, down to bad economic eras, and we are seeing the movement towards worser and worser economic conditions, in the economic super cycle.
Economic Depressions cause a change in wealth on a massive scale. It provides the necessary earthquake to break the existing economic structure and its foundations to the core, leaving behind vast devastation for all. And from the ashes of disaster, a new economic era is born. This was how economic history has been, and this is how it will be.
America had it great for a long time, not because of capitalism, but because they had plenty of land, and was the industrial might of the world. Next, the US$ became the world reserve currency, and this allowed Americans to spend 750 times more than they should have, if the US$ were not the reserve currency. There is no way America can repay the debt it owes the world.
The mound of sand is looking like it is about to topple. We do not know exactly when the last grain of sand will do the whole mound in, i.e. cause it all to fall down, but it's a question of WHEN, not IF. Debts have to be repaid. Full stop.
The grain of sand is actually the US Treasury issues, whether short, medium or long term notes. The over subscription for such notes are falling, and is down to 2.1 times now, from a high of 3.6 times. It was only a couple of months ago, that it was 2.9 times.
The key, the next shoe to drop is the Interest Rate Derivatives. It is said that there are around US$140 trillion in Interest Rate Derivatives, and the horror story is .... what will happen if the US Interest Rates rise significantly? Some are expecting the IRD to cause major losses on those who have underwritten the assurance of continued low rates regime.
My point .... no, the world is not falling apart overnight. But, every day, it is getting closer to economic disaster. We don't know exactly when it will happen, but we have a clue in the form of Interest Rates. The Fed has to raise interest rates significantly, at a very fast pace, too fast, and this will catch everyone off guard, and cause massive losses. But the Fed is resisting this move, knowing the next crisis to come, for as long as they can. So, when the Fed does make a move, you know that it is not voluntary in nature.
This is the current situation. Of course, the danger may pass, if they reach a good agreement with PBOC (People's Bank of China), to continue to support the US Treasuries, so ... this is not an imminent disaster, but a real danger that needs to be accounted for. The key is in the future Fed Interest Rate .... not the normal moves, but the ones that seem very unlike a normal Fed policy. That's when we know something has gone terribly wrong.
As for the alarm bells on capitalism, the current situation in US is nowhere near as bad as the Great Depression, not to mention the times of Industrial Revolution. To understand the Great Depression, see the movie, "The Grapes of Wrath". For life in the Industrial Revolution era, see Les Miserables.
My outlook for the world economic and financial markets for 2010?
I am too busy to write blog articles nowadays, so I will just requote what I wrote to a friend earlier today in response to his recommendation of an Elliott Wave Theory blog, and before the Singapore GDP number was known to me.
Thank you for sharing. I went to the website and his chart on the Rising Wedge, with falling RSI seems to confirm my opinion that the US Stock Market liquidity driven run up is almost over. I actually sent an email to Victor, over the weekend, to get out of any positions if he can, but I am too busy to write any articles on the outlook.
If you look back into my April and August Outlooks, the only two times I wrote Dow Outlooks since April 2009, I set a target for 10,500 to 11,000 as the maximum peak potential. We are in that critical zone, and there is no reason nor price behavior evidence for me to change my outlook set then. Of course, I was wrong on the duration of the run up .... but hey, I'm no God. Hahahahahahaha. Forecasting is a probability game, and I won't get it right the next time, but sometimes, it does work.
The big strategic picture is usually quite reliable, compared to the short term forecast due to noise from news and short term fear and greed sentiment.
My long term forecast is still one of extreme pessimism, i.e. below 6,500 on the Dow, before the economic challenges are all over. BUT, we will have to reassess the situation at the 8,900 to 9,200 region, and depending on the news and price behavior, we will need to make a decision whether THIS new downturn is the 1st wave of a 5 wave Long Term Bear Market (my macro economic view), or merely a Downward Correction in a Long Term Uptrend (the general consensus macro economic view).
You will note that I do not believe in ALL of Elliott Wave methodology, i.e. too much wave counting. Instead, I believe in what I think is quite reliable, the wave structures that can arise, and try to assess the various scenarios, as they unfold, .... with a view to making money.
In other words, don't get lost in the details of EWT. Be flexible. Stick to the simple principles, and make money from it. Of course, the making money part is the tough part, but, it all starts with the thought right?
In short, this is going to be hell of a year, to find opportunities to make money, because the world economy and financial markets are going to experience one heck of a roller coaster ride this year. Meantime, go easy. Smell the roses, enjoy the fresh air, and just stay out of trouble. Life will be great if you can do just that.
Best wishes,
Ooi
Posts
No comments:
Post a Comment