Today's Market
by Dr Invest

What can I report? I know! Nothing has changed. What you saw in 2012 is what you see in 2015. Your saying, "O yeah, my portfolio has grown since 2012!" You just think your portfolio has grown and that is the problem.

Recently Marc Faber explained, "Your dollar doesn't buy as much as it did ten years ago! Median income in the U.S. has decreased from $58,000 annually to $52,000 annually." Faber says, "Because of QE and bond buying, the dollar has been devalued so it takes more dollars to buy the same things you bought ten years ago. The only reason the dollar appears strong is because other currencies are so weak, but when you compare the actual value of the dollar, relative to the U.S. dollar of ten years ago, it takes more dollars to purchase the same things."

We can applaud the fact that the price of oil is down and so we are rewarded at the pump. But food prices are dramatically up, the cost of insurance is dramatically up, the cost of healthcare is dramatically up, the cost of housing is dramatically up. In our area a two bed room duplex rose from $800 to now $1,100 per month. That is almost a 38% increase in rent alone, and many families work two part-time jobs because a full 40 hour a week job can no longer be acquired. Thanks to Obamacare, businesses no longer hire full-time employees so they are not forced into the government healthcare system. There is discussion about forcing employers to pay a higher minimum wage, but this will turn out badly as well. Employers will just get rid of non skilled workers and the unemployed with grow.

More good news in the strong economy we now have. Catepillar is cutting 10,0000 jobs, just like IBM, JCPenny, Sears, HP, and many other corporations. But don't forget, our strong economy will quickly help these unemployed find jobs. (If you are from another country, I am joking. Our economy is pitifully weak and the fundamentals of our economy has been sinking over the past year.)

In the S&P 500 chart below, you will see the long-term patterns going back to 1970. The "strategic number" is an algorithmic measure comprised of multiple factors which measure risk. When it is close to 100, risk is very high. When it is close to 0, risk is very low. In between, risk is about normal, and trend following can be employed. The "strategic risk range" shows the rough range that the market is likely to be in during the intermediate term.





This is a chart used by QUANTS to determine the trend of the market. The S&P is already well into a downtrend.

Experimental Monetizing

No, I've never heard of lowering interest rates below 0%, but it has already been done in Denmark; other central banks are already discussing the method and it has been discussed by our own Federal Reserve. This exactly what Peter Schiff has been saying. He claims that Yellen threatened to raise interest rates to make it appear that the economy was stronger than it really was, all the time knowing that she would remain at the 0% interest rate. Now there are suggestions to implement negative interest rates just in case there is a truly horrific recession.

Today, Yellen said that her intent was to raise interest rates this year, but would be ready if the market turned down.

Conclusion

As I began, nothing has changed. The economy remains weak and declining. This typically results in a continued downtrend. Expect six months before we begin to see unemployment returning and the admission that we are in a recession, but for now we should see lower lows as the market slips further into a recession.

(note: the above information is for entertainment purposes only and should not be used as investment advice.)