Monday, January 11, 2016

Market Fundamentals Are Falling Apart!.........

Market Fundamentals Are Falling Apart!

"What we have learned from history is that we haven't learned from history." 
 
                                                                                                                 Benjamin  Disraeli

You have the commodities business in freefall, with pricing and demand falling off a cliff. The Baltic Dry Index that measures the cost of shipping various resources by sea just fell to 471, the lowest level in its 31-year history.

You have demand for Initial Public Offerings falling off the table, with total deal volume coming in at just $30 billion thanks to a late-year swoon. That makes 2015 the worst year since the crisis year of 2009.

You have the auto loan boom/bubble sputtering and threatening to implode. That's going to be a major problem for a key sector of the economy, one that helped prop up overall employment and GDP for the last half-decade.

You have high-yield bond spreads exploding to their widest levels since the tail end of the last recession. And if anyone tells you it's just energy, plug your ears and run like heck! Spreads are widening fast for bonds in several other sectors.

Lastly, you have the Federal Reserve starting to raise interest rates based off the message sent by employment statistics. But the unemployment rate and job creation figures are lagging indicators. They weaken after sales start to fall, inventories start to surge, lending standards start to tighten, and asset prices start to slump.

That means it's increasingly likely history will show the Fed waited too long to began a hiking cycle. And therefore, it's only going to make an already tumultuous environment even more volatile.

So the recent stock market weakness is a major problem from a FUNDAMENTAL-based perspective. It tells me that this is the beginning of 
 a new bear market.

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