Prepare for a crash: independent financial advice
Investment climate moving toward a crash
The market continues to give bearish signs. The Conference Board Consumer Confidence index is at 60.8. It should be about 73 in a recession and 100 in expansions. On a chart the index has dropped to a level that is at the lows of the 2002 crash. The bad numbers of the past three years where it was below 60 were last seen in the 1992 recession.
There will be no QE 3 and there will be fiscal tightening with budget cuts in August when the Federal government runs out of borrowing authority. The new Republican members of Congress are determined to cut the deficit even if it causes them to be denied reelection. This is a new era of political will power that is rarely seen in Washington and this determination will result in less fiscal stimulus at a time when the Federal Reserve will stop Quantitative easing.
New political battles over budget
The bond market understands the gathering recessionary storm clouds and cut the rate on the 10 year Treasury bond to 2.95% yesterday. The stock market is too busy experiencing a tech bubble to notice that the economic fundamentals have deteriorated, but the stock market will eventually realize the market is overpriced and then it will crash.
I have written “Can independent investment advice protect investors from a crash?”
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Investors should seek independent financial advice.
Photo from Gregory Szarkiewicz