Why Doesn't The Stock Market Reflect The Imminent Global Depression? - News and Current Events | futures io social day trading
futures io futures trading


Why Doesn't The Stock Market Reflect The Imminent Global Depression?
Updated: Views / Replies:432 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Why Doesn't The Stock Market Reflect The Imminent Global Depression?

  #1 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

Why Doesn't The Stock Market Reflect The Imminent Global Depression?

We seem to be heading towards an economic downturn equivalent to the Great Depression of the 1930s.

This isn't a secret. The synthesis below is derived from: Lawrence Summers, Nouriel Roubini, Simon Johnson, Niall Ferguson, and Paul Krugman to name just a few. This crisis is not happening quickly.

It's more of a slow-motion train wreck—Greece's crisis started in 2009. But that leaves a puzzle—why is the American stock market not reacting to obvious warning signs?

Greece and Spain already have unemployment rates exceeding 20 percent. If that isn't a depression, what is?

Greece is in very deep trouble. Spain (the Euro's fourth largest economy) just needed a $125 billion bank bailout. The weaker economies (Portugal, Ireland, Italy, Greece, Spain) face severe credit crunches as local banks lose deposits (withdrawn because of credit concerns and fear of forced devaluations following a Euro exit).

Serious discussion is already taking place about the demise of the Euro, or even worse the break-up of the European common market—in which case unemployment rates across Europe will exceed 20 percent. National incomes will decline sharply, resulting in large-scale corporate insolvencies, with the crisis spilling over into the U.S. and Asia.

Arguably, the Germans have a sufficiently healthy economy to avert the crisis. But they are reluctant to act—without clear structural changes in the European Union/member states to prevent future problems. Amidst a crisis, it's difficult to make structural changes quickly. The Germans (with some legitimacy) fear that a bailout lacking agreement on structural changes will result in some combination of a larger financial disaster later, and/or the German economy permanently subsidizing some of the weaker economies.

Europe's economies provide little reason for optimism.

The U.S. faces a recession next year if the Budget Control Act takes effect, which is likely if Obama wins and partisan gridlock continues. House Speaker Boehner already announced that if Obama's re-elected, the GOP will treat us to another debt ceiling confrontation. If Romney wins, the Democrats (having learnt their lesson from the Republicans) would be as disruptive as possible. If the U.S. faces a major economic crisis triggered by the Euro's collapse, bipartisan consensus on how to resolve it is unlikely.

China's growth model may be reaching its limit. If the rest of the world's problem is too much ideology, China's is arguably the absence of any ideology except kleptocracy. China lacks a functioning legal system. Its officials are disciplined by shadowy communist party entities, rather than accountable to a transparent legal system. Nominally ruling in the name of the proletarian vanguard, China is governed by princelings and kleptocrats, with friction escalating among the kleptocrats.

Internationally, another regional war appears increasingly likely in the Middle East. The U.S. and/or Israel might have a military confrontation with Iran, over Iran's nuclear ambitions. The Syrian situation has the potential to become a regional conflict (Syria, Iran and Russia fighting Syrian dissidents supported by some coalition of Saudi Arabia, the U.S., Turkey and other countries). A Middle Eastern war would lead to significant oil price increases, and trigger a global recession (at a minimum).

Compared to the financial crisis of 2008, governments everywhere are far more constrained by weaker balance sheets, loss of public trust and crisis fatigue.

I'm not saying everything listed above will go wrong (though if that happens, it would be a "global perfect storm"). However, even 1-2 of these plausible misfortunes would make 2013 a really bad year, and the world will have other challenges we cannot foresee (e.g., another nuclear accident, major earthquakes, etc.).

Depressed yet?

So why is the stock market trading as though all's well? The S&P 500 closed on June 15th at 1343. Based upon stock price divided by earnings (P/E ratio), the market now trades at about 21 times the prior 10 years' average earnings. The long-term 10 year P/E ratio is about 16, so today's premium over that long-term average is difficult to explain, considering the risks listed above. At the top of the bubble in October 2007, the S&P was at 1565. Currently, we're only about 15 percent below that peak, and (again) the market isn't reflecting the referenced risks.

Is it a case of short-term delusions, leading to later major stock market debacles? If so—is it time to go short?

Or does the market know something we don't? Are the risks outlined above really not so bad? Is the market assuming losses will be paid by the government, so let's party like it's 2006? Or could it be that all investments at this stage have poor prospects—so there's no place to hide?

Stay tuned: 2013 will be an interesting year!


Why Doesn't The Stock Market Reflect The Imminent Global Depression? - Business Insider

Reply With Quote

Reply



futures io > > > > Why Doesn't The Stock Market Reflect The Imminent Global Depression?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
IT ONLY TOOK A GLOBAL DEPRESSION TO REDUCE GAS PRICES BY 40 CENTS kbit News and Current Events 3 June 12th, 2012 12:08 AM
Stock Market Correction? Yep, the Market's 'Fever' Has Broken Quick Summary News and Current Events 0 April 9th, 2012 09:20 PM
JP Morgan Stock Breaks Down On News Company's Role As MF Global Lender To Be Probed Quick Summary News and Current Events 0 December 13th, 2011 04:20 PM
David Rosenberg On The Depression, The ECB, MF Global As A Canary In The Coalmine... Quick Summary News and Current Events 1 November 12th, 2011 10:00 AM
Does every stock market in the world have market maker/specialist? lokgotkent Traders Hideout 4 June 18th, 2011 08:22 AM


All times are GMT -4. The time now is 02:56 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-13 in 0.07 seconds with 19 queries on phoenix via your IP 54.163.209.109