As long as China supports N. Korea (a pathological new dynasty) shows no respect for the rights of investors seeking the truth, and arrests Americans

As long as China supports N. Korea (a pathological new dynasty) shows no respect for the rights of investors seeking the truth, and arrests Americans seeking the truth, China will become an increasing risk of total economic collapse and anti-western nationalization/confiscation of property.

Things I Believe

John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Reprint Policy

1) Investors dangerously underestimate the risk of an abrupt and possibly severe equity market plunge
http://www.hussman.net/wmc/wmc101220.htm



World Markets:
The economic policies of China are now ant-inflationary while American policies are anti-deflationary. That will cause investments to continue to move to China the same as the American Economy enjoyed from 1800 until the Clinton bubble burst.

There is no way to know truth about China's corporation's anymore. China imprisoned an American and gave him an eight-year sentence because he was in China doing investment research to see if the balance sheets and income statements were truth or a fraud. Seeking truth is now apparently a criminal offense in China. That means that we can no longer trust Chinese financial information because fraud in China cannot be exposed. As long as China supports N. Korea (a pathological new dynasty) shows no respect for the rights of investors seeking the truth, and arrests Americans seeking the truth, China will become an increasing risk of total economic collapse and anti-western nationalization/confiscation of property.

Economic reports:

This Week
Dec 28 9:00 AM Case-Shiller 20-city Index Oct
Dec 28 10:00 AM Consumer Confidence Dec
Dec 29 7:00 AM MBA Mortgage Applications 12/24
Dec 29 10:30 AM Crude Inventories 12/25
Dec 30 8:30 AM Initial Claims 12/25
Dec 30 8:30 AM Continuing Claims 12/18
Dec 30 9:45 AM Chicago PMI Dec
Dec 30 10:00 AM Pending Home Sales Nov

Market Outlook Dec 28, 2010
In 2004 the market sunk the first week and then began to recover at mid year. That was after the 2003 rally that the hedge funds held high to the end of 2003. That situation is we believe the closest to what we have today. We expect high volatility in early 2011.

The market is still near its high for the year just where the funds want it to be. However on a cash flow basis it is not. At this point volume is down 50% since last May. Volume of late is the lowest we have seen since the Obama recession.

Obama is requiring securities firms to report not just client purchases and sales but also profit and loss. The securities firms, in doing that, have decided to tell their clients in advance so the clients know that they can take some losses to decrease capital gains taxes to as close to zero as possible. Obama will take it otherwise. It will minimize the amount that investors pay in capital gains this year. In demanding more information to harass some investors, all the investors are getting the information needed to drive their taxes as close to zero as possible. In the past investors did not often sell fractions of their under performing investments as much as they will going forward under socialism.

World Markets
Asian markets were down again last night. China's market was down -1.7%, Hong Kong down -0.9%, India down -0.1%, and Japan down -0.6%.

European markets are flat this morning in a range of about 0.1% to0.4% half way through their day.

US pre-market futures are flat at about 0.2 % at 8:00 AM EST.