As part of my daily routine, I read the news…lots of news. I have begun to notice a particular cycle in the news that mimics the much maligned lemmings. A theme, in the news cycle, if you will, and that theme suffers from the bickering of the major players in the media.
Today’s theme is the economy. Take a gander at these key headlines from The Drudge Report:
BIDEN: 'We're moving in right direction'...
Worries about recovery deepen...
'Hindenburg Omen' creator exits stock market...
Economy in 'Depression, Not Recession'...
Dow Faces 'Bouncy Ride to 5,000'...
Typical Slow Summer -- or Something Darker?
New Home Sales Sink to Lowest Pace on Record...
Investors Scatter to Safety...
MORGAN STANLEY: Government Bond Defaults Inevitable...
Of course whatever Biden says, the exact opposite is true. And everything else in this list is the exact opposite.
These are not stories from the “alternative” media, these stories are coming from the Financial Times, CNBC, the Wall Street Journal and Bloomberg.
Despite my Business School training, I have come to recognize that the financial markets oftentimes act irrationally. We are at the precipice of one of those moments.
About two weeks ago, it was suggested to me by a friend who is in the business of investing other people’s money, that the DJIA would drop to around 9,000 before the 2010 midterm elections. I took my meager investments on that very day out of all my stocks and bonds (except for an Emerging Market fund and a precious metals fund). Since that time the DJIA has declined over 5%. The economic news that has come out in the past two weeks makes his prediction very logical.
I received another call from this same friend this morning. Logical is no longer in play for the next couple of weeks. Despite all the negative economic news that has come out in the past 48 hours, and despite the bad news that will come out in the next several days, a glimmer of hope will be hyped in the press and the markets will likely rise. That’s right, rise! And that rise could be as much as 10%.
In short look for the DJIA at 11,000 within the next two to four weeks. And in the four to six weeks after that, a 15-20% downward correction.
In addition, I believe we will begin to see official unemployment numbers rise in September and October to near 10.6%.
I am not a financial expert, nor am I basing these predictions on traditional economic analysis. And this is definitely NOT financial advice. The predictions are based on observations of the political economy and specific knowledge I’ve attained through private sources.
Plant a garden, get to know your neighbors, get out of the stock and bond market, lock and load…we’re in for a bumpy ride!
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{ 2 comments… read them below or add one }
Wow! The perfect article. Thank you for that very high compliment.
I mentioned a “glimmer of hope” on the economy to spark the sucker’s rally. There was a just such an event in the news this morning.
From a Reuters story,
“Gross domestic product expanded at a 1.6 percent annual rate, the Commerce Department said, instead of the 2.4 percent pace it had estimated last month.
However, the reading was a touch better than market expectations. Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, revised down to a 1.4 percent growth rate. ”
In the “newspeak” of our times, even though the GDP has been revised downward dramatically, it was not as “bad” as economists expected. So maybe the recovery is not as anemic as many were expecting.
Is this the trigger for a rally? Maybe. Market opened about 50 points higher this morning.
Jerry,
You have written the perfect article regarding this moment in time. I too share a penchant for news and trends. I sadly have less at stake in the market than many, but in the end a good gut feeling is better than market history indicators.
I think your “non-advise” is spot on. Between now and mid-November there’s only way to know fer sure what is gonna happen.
Step away from your desk for a trip down the hall, return in 5 minutes to find the market down 500 points, and hear emergency measures are kicking in to slow the bleeding. Then you’ll know fer sure.
I’ve got this gut feeling the Hindenberg Priciple will come into play this fall. That will be only the 1st domino.
Hint: We are at the beginning of a commercial real estate meltdown that will match what has happened in the housing market. At least that’s the whispers from those too important to say it loudly.