Europe’s Nightmare comes to a head this year. We’ve been discussing forecasts for the year 2012 and beyond and today we’ll cover the European Sovereign Debt Crises. We’re writing this on a Friday to post on Monday. If we had put this up yesterday, you might have said, “What are you talking about, they fixed that problem today.”
Today’s news is that they don’t have a deal and Greece may default. What will the news be by the time you read this on Monday? We have no idea, but we’re focusing on the big issue that does not change whether or not Europe has a conference and declares an agreement.
The reality is that the European debt crises cannot be solved in any reasonable way. We had a live symposium almost two full years ago where we told the entire audience exactly this fact.
It doesn’t matter how confidently the politicians assure us that they have it all under control. It doesn’t matter how slickly the media impresses us with the brilliance of these same politicians and bankers. The hard cold reality is that there is too much debt and no way to pay for it.
It’s a difficult call to say that the stock market will be lower at the end of 2012. There are some serious factors on the side of higher as well as lower values. On Wednesday, we explained some of the reasons why we think 2012 will be another extremely volatile year for the markets.
Today, we’ll cover some of the reasons the market could go much higher and also why we think the market will instead, end lower. We live in interesting times and the confluence of possible events will be what determines where the markets go. All we can do is guess which events will occur this year.
Currently, the stock market is priced reasonably. It’s just below its long term Price To Earnings (P/E) Ratio of 16 at around 14.5. This means that the stock market is priced below its long term average.
This fact has many professional money managers drooling at the possibilities for the year because if a Black Swan event doesn’t show up to take the markets down the markets will probably climb this wall of worry in dramatic fashion to have a great year. Many people believe that the fears are overblown and will be dealt with. That’s what’s always happened before, right?
Well, for as long as we’ve been alive perhaps, but no, that’s not how it always goes. Every 80-100 years there’s really a very tumultuous change that occurs.[click to continue…]
Did you know that the US stock markets ended slightly up last year? It probably didn’t feel that way to you though. And we don’t mean to say that they were up a lot…they were simply barely up. But the way they ended gives a totally different picture of the ride to get there. We’re continuing a series on predictions for the year 2012 and beyond. Today’s prediction…
2012 will see extreme volatility in the stock markets again. Actually, we think they’ll be even more volatile than last year, but such a thing is really in the eye of the beholder. If you were exposed to the huge losses and recoveries of last year, then you might feel like you just finished running a marathon and find yourself gasping for breath. If you’re not exposed this year, you might barely notice the news mentioning upticks and downticks.
2012 has begun with a bang, up about 6%. That right there would normally be enough for us to predict a big up year in the market since most years tend to follow after the January start. And perhaps it will be, but I’m expecting those gains to be erased sometime fairly soon. And then…Who knows?
But we can’t call this, The Year of the Black Swan, and not expect volatility, right? In our next post, we’ll explain why we tend to think the stock market will end below where it began the year, but we’re not nearly as confident in that prediction as we are that the year will see huge moves in multiple directions.
US Dollar Devaluation is at our doorstep. We’re in a series of posts expanding on the predictions we’ve recently made for the US Economy in the coming year and beyond.
There seems to be clear evidence that this is Ben Bernanke’s fall back plan if his deflation fears gets strong enough. And oh by the way, his remarks last week implied his fears are quite high. He said that growth is still extremely sluggish and that there are no inflation fears (we don’t know where he got his tea leaves, but they ought to go in the garbage). He implied that a stronger response could be on the way this year if things don’t improve. So what could that look like?
One of the things that’s striking about this speech is that most of his solutions are unprecedented. He even admits that the consequences of these actions are unknown because they haven’t been used before. He clearly states that he doesn’t believe these actions will be necessary, but lays them out anyways to show that the Fed has “big guns” left even if it gets interest rates all the way to zero and still hasn’t kick started the economy. (Which is exactly what Austrian economists have long predicted would happen, but the Keynesians & Monetarists would have no part of listening to the Common Sense Kooks).
Before laying out all the points Bernanke made with commentary. Let me give you the bottom line. He laid out a ton of extreme measures that could potentially be used. As of now, 11 years later, he’s used every one of them except the very last one…to destroy the value of the US Dollar. So you can bet that this is exactly what his plan is if he feels like the US economy is getting worse. And again, just last week he stated that that’s certainly a possibility.
So What is Ben Bernanke’s Step by Step Plan to Kill the US Dollar? [click to continue…]
In 2012, the Economy will…Yesterday, we began a series on predicting what will happen in the economy and markets in 2012. We stated that in today’s post, we would give you some bullet point predictions and then follow up with a series of posts to round out the information so that you understand how firmly, or not, we believe each guess and Why.
Some of these predictions will be pretty basic. We’ll guess things like…Which direction will the stock market move over the course of 2012? Other predictions will be of much larger things. These are what we’re calling “Black Swan” events. These are unlikely, and we do NOT believe that all of these things will happen.
Yet we do have reason to believe that there’s a fairly strong chance that at least some of these Black Swan events could happen. And the economic ramifications would be far greater to each of us than knowing how many iPads Apple sold last quarter.
We have no particular reason to believe that most of these events will happen in the year 2012. One or more of them certainly could (some will and some won’t). But these are all events that it would be good for you to think through and ask yourself what ramifications the event would have and if you’re prepared for each. Seek the Lord for guidance on how you should prepare yourself for this season in all ways (we happen to focus on the two main areas of your spiritual and financial life here.)
Caveats to come, let’s get straight to the predictions for markets in the coming year… [click to continue…]
Today, we’re doing something we’ve never done before and probably won’t do again anytime soon. We’re reprinting the monthly newsletter (sign up here if you don’t receive it) on the same day it’s going out to subscribers. We usually don’t post them to the blog at all, or if we do post them it’s with a delay. However, we’re starting a new series with this letter and thus need to explain it here on the blog as you’ll see below…
Your February 2012 Kingdom Calling Newsletter
2012: The Year of the Black Swan
Wikipedia defines the term coined by Nassim Taleb this way… “The black swan theory or theory of black swan events is a metaphor that encapsulates the concept that The event is a surprise (to the observer) and has a major impact. After the fact, the event is rationalized by hindsight.”
2012 appears to have some good investment opportunities. Sure, a lot of people are negative on the economic outlook, but that’s always the case at the bottom of a cycle, right before/as the stock market booms. Several of the people whom I admire for their abilities to speculate when to be in the market and when to be out of it, see great opportunity now to be in the stock market.
Lower than average stock prices mixed with Central Bank money printing as far as the eye can see should lead to big moves up in the market, right?
The sense that I have is that no matter how much that might seem to make sense, it’s just not going to work. This is the year of the Black Swan… [click to continue…]
Some big financial news has been coming out recently, so we thought it a good idea to share some of the important recent events with you. You can check out the last few posts of this series here,here, & here. Of course, you’ve probably already seen the biggest news of the week which is that Ben Bernanke and the Fed have lengthened the time that they plan to keep interest rates at near zero until 2014. This means that all the “good news” that the financial media is spinning for the economy is NOT what the Fed itself is seeing.
The Fed also seemingly left the door wide open to more QE (money printing) as they don’t seem to be able to find the inflation that the rest of the world is experiencing. We’ll talk more about that soon as we’re about to make numerous predictions for the coming year. Most markets got a shot in the arm at this additional confirmation that the Fed will print as much as it takes to keep nominal prices higher (particularly gold and silver).
On Monday, we shared an ancient parable out of China that probably pre-dates the Kingdom of God’s advancement into that land (as goes on in amazing ways today). But it’s an amazing parable that has often come to mind when sharing with others that teaches an important lesson. Today, we’ll share a few thoughts on how this relates to your life and mine as a believer in this broken world.
The circumstances in our life are always arranged by God for our benefit. And thus they are always good even when our flesh might find them to be horrific.
Paul said, “And we know that in all things God works for the good of those who love him, who have been called according to his purpose.” (Romans 8:28)
When we are young in the Lord, we can easily get caught up in the external, carnal circumstances of our life. We can get carried away with happiness because we had a very successful day at work or because our favorite football team wins or for many other things which are purely products of this carnal world.
Or we might be filled with depression & despair because we’re out of work or because the person we would like to begin a relationship with has just begun one with another. These things seem so overwhelmingly horrible that they can crowd out the Truth.
The Truth that is if one is truly working to give every area of his/her life over to the Lord, then the Lord is bringing every circumstance into your life to help you and grow you. Your circumstances right now might be truly horrible from a natural point of view, but it will pass. The Lord desires to be with you in this moment. He desires to teach and grow you in the circumstances that have come to your life.
He desires that you look to Him in all things, knowing that more joy, more peace, & more love await you both in the here and now and in your very bright future. As time passes, He might bring you the exact thing that you desire. Or He might grow you past desires of the flesh to find a greater joy in Him and the things He has for you. He is truly everything that you need and that your eternal spirit truly desires! And He knows what you need, and will not forget those needs as you are a precious son of His (Luke 12:24)
There was an old & wise shepherd who lived in the north of China.
One day, the best of his few horses ran away. His neighbors came by and tried to console him. He replied, “Who knows this might be a blessing?”
About a month later, his horse came back with a flock of wilder horses. His friends came by and exclaimed, “Wow, you are so blessed to have this happen out of nowhere to make you a rich man!”
The wise man said, “Maybe, who knows?”
Years later, he had a son, who enjoyed riding horses as he grew up. One day, as he mounted a fine horse, the stallion took off running and with a quick burst bucked the young man wildly off him. He flew through the air and crashed to the ground badly breaking his leg.
Now the old man needed his son’s help shepherding and this was certainly a dramatic and unexpected setback. How would they get the work done needed to tend their sheep and other affairs without the young man’s help?
The wise man’s friends again came by, but this time they said, “You were right! It wasn’t a blessing that you found all those horses, it was a curse! What will you now do without the help of your son?”
The wise man said, “We will see, who knows, maybe it’s a blessing that he broke his leg?”
