Bear
Market?
Peter Schiff: Catastrophic Stock Market Crash Will Wipe Out Your Standard of Living
Euro Pacific Capital CEO Peter Schiff says all signs are pointing to a catastrophic stock market crash and that the U.S. dollar and the average American’s standard of living will be the “biggest casualties.”
Schiff, a financial broker and economist who correctly predicted the housing bubble and market crash of 2008, says it’s time to prepare for a global stock market crash after watching October’s market volatility that has seen the S&P 500 plunge 9.4 percent in three weeks.
Per a recent interview with RT America, Schiff says the market is looking more and more bearish:
["All the signs are already there. Look at what’s happening out there. The stock market is falling, 40 percent of the S&P is already in a bear market. Look at homebuilders [DYI: off 30% peaked 1/16/18], the housing stocks, the financials, the retailers – all these are the same things that were happening in 2007 leading to that crisis"]
Schiff, who accurately predicted the 2008 recession, told RT America.
We don’t have much time left in this economic bubble if Schiff is correct.DYI: Insane market valuations, Feds increasing short term interest rates, our citizens and corporate America in debt up to their eyeballs! What could possibly go wrong? All sarcasm aside shoes are beginning to drop with one of my recession indicators – homebuilders Index symbol XHB – moving in a southerly direction.
DYI’s
Recession Indicator Checklist:
- Two year Treasury notes invert ten year Treasury Bonds.
- Widening credit spread…Comparing yields between the 5 year T-note and Vanguard’s High-Yield Corporate Bond Fund [Junk bond fund].
- Falling stock prices…S&P 500 fifty day moving average below the two hundred day moving average.
- Falling Home Builders Index [symbol XHB]…Fifty day average below its respective two hundred day average.
- Purchases Managers Index: PMI below 50.
So
far all we have is recession sounding noise but nothing concrete. The strongest noise is no doubt coming from
the homebuilders index as they are now down from peak by 30%! If prices stay down or continues to drop the
fifty day average will arithmetically reprice itself within a few short weeks
below its 200 day average throwing this indicator into recession territory.
The
2 year and 10 year Treasury securities are NOT inverted however the difference
is only 27 basis points. Anymore rate
hikes by the Fed’s an inverted curve will happen throwing another indicator into
recession territory.
Widening
Credit Spread…So far just a bit of negative noise but not enough to throw this
indicator into recessionary territory.
Falling
stock prices…50 day average below 200 day for the S&P 500. Negative noise with the average below the 50
day average but again not enough for recessionary territory.
Purchases
Managers Index: PMI below 50 is not even
close at 59.8 for September 2018.
Conclusion:
Horns
are not blaring recession; however it is becoming very interesting. DYI’s model portfolio is sitting pretty with
our 55% cash horde waiting for better values ahead. The Great Wait just maybe becoming a bit
shorter. Will monitor and report as
economic and valuations change. Till
next time!
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 10/1/18
Use this site at your own risk.
DYI
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