December 23 As fear of a global recession grew, people from all over the world flocked first to American stocks and then more specifically to the DJI’ 60 stocks and the Standard and Poor 500 stocks. That drove them to higher highs just as the NYSE, the small cap, and stocks of developing nations began to be hit with recession. Those corporations and nations that depend on mining and oil were hit first because the world recession causes supplies of minerals and energy to fill up all available storage until finally the commodity prices plummet. The slowdown began earlier this year, commodity stocks were falling at the end of summer and oil and gas energy have plummeted this past month.

http://futures.tradingcharts.com/chart/CL_/M?anticache=1417442887 

You can see from the Obama government’s crude oil chart that oil dropped significantly in the Clinton’s 2000 recession hitting a low of $10.87 per barrel.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=F000000__3&f=A 

We told you about that problem on Dec 1 when the news media was saying the price of oil would bottom above $87.50.  We also said we would have a year end rally and the overvalued world stock markets would take the next step down in January.  But we pointed out that in the past the stock market cheer leaders never stop cheer leading until the market is down over 25%.  We expect average prices will hit bottom in 2015 or early 2016 at about 60% below their highs.   The flocking of frightened investors into the DJI set a new record today.   Popular stocks will not avoid the contraction. 

As we previously discussed, Obama’s government economic statistics go beyond simple incompetence and are clearly manipulated.  We saw how the housing market did well in the summer but froze up at the end of September even as many people put their houses up for sale.  Some towns have twice as many houses for sale now as in the summer and almost zero buyer interest.  Here it is three months later and Obama’s statistics are only beginning to show what Americans already knew. 

Dec 23

New Home Sales Nov 438K down sharply from 458K

Durable Orders Nov -0.7% down sharply from 0.4%

Durable Goods -ex transportation Nov -0.4% down sharply again from -0.9% last time.

GDP - Third Estimate Q3 5.0% pure incompetence or bullshit

Foreign Markets:

The favored “BRICs” (Brazil, Russia, India, and China) of a few years ago are sinking and several nations are near bankruptcy again.  Another socialist is about to be elected in Greece, the proverbial canary in the EU mine shaft.

http://www.wsj.com/articles/greek-leftist-party-syriza-spooks-some-investors-1418310035?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB12483005598294434483704580330582292837658.html

 China has attributed their high stock prices to the same stock manipulation crimes that occurred the last time their stock prices ran up.  Obama socialists and the Chinese Communists cannot stand those richest 2% who shrewdly invest in their country’s future.  They believe equality of poverty is better than a system that encourages merit and competence because socialism favors the incompetent.  But price run ups usually are a product of corruption.  In America we have also have both government and private entities overstating valuations. 

http://www.freenewspos.com/en/latest-news-article/c/2199384/china/china-investigates-possible-stock-price-manipulation

Some people sell overpriced stocks in mediocre companies to retirees.  In 2007 many retirees quit the market after losing more than 50% of the money they had saved.  Most of them switched to bonds which are now also overvalued and which will collapse when the FED raises interest rates.   Most brokers now are also bankers and money in the bank is still insured to $200,000.  Money in cash at a brokerage usually is uninsured.  Some people break their IRA’s into 3 or 4 bank accounts for more insurance.  More experience investors sometimes invest in ETF’s but bullish ETFs are a disaster in a declining market (look at URE in 2007 and 2008).  ETFs are only for fairly active experienced trading and often a bearish ETF is held for less than one month at a time.  But a bear market is much more volatile and some people are capable of switching back and forth between bull and bear ETFs.

At this point in time some investors are gaining experience to see if they can safely use bearish ETFs in future declines and possibly alternate back and forth.  However, the ETF URE shows the risk of holding on to an ETF in the wrong market.  Gold unfortunately is only another commodity when there is no inflation.