Market forces May 26,2009
German exports and corporate spending plunged in the first quarter, dragging Europe’s largest economy into its deepest slump on record. Exports dropped 9.7 percent from the fourth the Federal Statistics Office in Wiesbaden said today. Gross domestic product fell a seasonally adjusted 3.8 percent from the previous three months, the office said, confirming initial estimates we provided.
Oil fell below $60 a barrel on Tuesday, pressured partly by a firmer U.S. dollar and expectations an OPEC meeting later this week would keep the producer group's output steady. London Brent crude was down $1.31 today at $58.90. President Obama plans to institute sharply higher taxes on oil products to reduce dependence on oil by 80%. The higher taxes will reduce overall energy consumption and cover some of the cost of developing alternative renewable and nuclear sources of energy. France started in the late 1970s and is now 85% independent of oil. China and America also have the world's largest supply of coal, far exceeding the worlds oil reserves. Clean coal combustion is now being actively developed.
The indicators we follow appear more ominous. We were estimating a 10% to 15% market pullback. It is now appearing as though the markets could go down over 30% and set a new low this summer. For our spiral (parabolic SAR) analysis we use fast, median, and slow cycles. The fast and medium turned negative and Tuesday may be the day even the slow index turns negative while the MACD index confirms a sell indication.
Market Outlook
NBC/GE/Pravda's credibility has been very low, as in recent weeks they have put a lot of lipstick on some ugly equities recommendations to pump up stock prices. Signs were they wanted to dump their inflated investments on you and I. Well perhaps they are now done unloading because the "Wall Street money" now seems to be going negative. The end of the May will tell us if US employee 401 plans are now growing fast enough to avoid a new market low. Even though more people are being laid off and those forced into retiring are not being counted as unemployed, the current lack of diversion of cash into good real estate opportunities helps support stock prices. But as real estate strengthens equities will once again appear less attractive than real estate at current high stock PE multiples. Most corporations have losses not earnings. Reported PE ratios are fictitiously low because they are based on future earnings estimates pulled from NBC/Pravda's hats and various parts of other analysts' anatomy.
Last night Asian markets were down sharply. China down -0.8%, Hong Kong down - 0.8%, India down -2.4%, and Japan down -0.4%.
European markets are down in the range of -0.9% to -1.4% mid way through their day.
US futures indicate the markets will start today flat. Lately optimistic investors are encouraged to buy earlier in the day and funds and day traders then sell off.
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