If you have any money left after seven years of the Obama administration spending spree, which has added in the range of $9 trillion to the U.S. public debt, you might want to hang on.
Because the forecasts are not looking rosy.
CNN reported that the Royal Bank of Scotland is warning that 2016 will be a “cataclysmic year” and investors should take immediate action.
Do not wait. Do not pass go, the bank warns.
“Sell everything except high quality bonds,” Andrew Roberts, told the news agency. “We think investors should be afraid.”
He pointed to the red flags for his bank – falling oil prices, an unstable China, shrinking world trade, rising debt, weak corporate loans and deflation.
In fact, in the American stock market alone, $1 trillion has vanished already in the first few days of January.
“To put that stunning figure in context,” wrote Matt Egan at CNN Money, “it’s like wiping out the combined value of the following tech giants: Google ($508 billion), Facebook ($281 billion), Intel ($154 billion), Netflix ($50 billion) and Yahoo ($29 billion).”
He continued, “No wonder there are lots of signs of rising fear on Wall Street. CNNMoney’s Fear & Greed Index is now flashing ‘extreme fear,’ a dramatic reversal from ‘neutral’ just two weeks ago.”
Roberts, of the Scottish bank, said the world is in a global recession, and this “terrible cocktail” means investors may hope to obtain a “return of capital, not return on capital.”
Just getting their investment back, the report suggested.
“RBS compares the market mood with that of 2008 before the collapse of Lehman Brothers and the start of the global financial crisis,” the report said.
The report pointed out that back in 2008, at least there was China to stimulate the world economy. But that’s not available now.
RBS “warns that without allowing a massive devaluation of its currency – around 20 percent – China can be of no help.”
The report said the China bank spent $500 billion to prop up its currency just last year.
That’s the same path that the U.S. took with its QE, quantitative easing, programs, courses that even one former Fed banking executive said went too far.
At ZeroHedge was a report about statements from former Dallas Fed chief Richard Fisher.
He explains the hundreds of billions of dollars in U.S. currency that the Federal Reserve issued over the Obama administration’s tenure.
“What The Fed did, and I was part of it, was front-loaded an enormous market rally in order to create a wealth effect … and an uncomfortable digestive period is now likely,” he said.
In short, “The Fed is a giant weapon that has no ammunition left,” he said.
He said a “correction” of 20 percent wouldn’t be surprising and most astute managers are “building cash positions,” he said.
He said during the Obama administration, “everyone was looking for the Fed to float all boats. Now we go back to fundamental analysis … the kind of work that used to be done.”
See his comments:
America’s markets have fallen – sometimes by a full percentage point or more – just about every day this year.
And the few bright spots are based on a fear of the negative, Money reported.
“For example, the best Dow performer is Wal-Mart, which analysts say is likely benefitting from concerns that an economic slowdown in the U.S. will force consumers to pinch pennies. Macy’s stock has soared 9 percent this year. But most of that positive response came after the retailer announced plans to cut thousands of jobs.”
“That’s hardly a vote of confidence in the future.”
What will 2016 bring?
According to a report at Business Insider, Goldman Sachs is forecasting a year in which the S&P 500 index “will tread water for a second consecutive year.”
Bank of America Merrill Lynch expects “modest gains” but warns “narrowing returns are to be expected.”
UBS said it expects earnings to improve but “we continue to expect further volatility.”
Credit Suisse forecast “increasing headwinds for equities related to valuations.”
WND reported only a week ago that a New York Times bestselling book called “The Mystery of the Shemitah” had documented, with uncanny precision and overwhelming data, how the biblical Sabbath year correlated with economic cycles, political upheaval and the fall of empires throughout history.
Having suffered record setbacks in the two previous seven-year Shemitah years – 2008 and 2001 – economists and traders were murmuring about what might happen in the fall. But Sept. 13, the day the Shemitah year ended without obvious economic cataclysm, there were sighs of relief among market watchers.
As 2015 ended, however, analysts can now see the forest for the trees. The year was the worst for the market since 2008, a year of economic disaster for America and much of the industrialized world.
Nearly 70 percent of investors lost money, according to Openfolio, an app that allows people to track their investment performance and compare their portfolios with others;
U.S. markets finished 2015 in the red. The Dow was down 2.2 percent. The S&P 500 ended the year down 0.7 percent. It was the worst year for those two indexes since markets collapsed in 2008.
A long-awaited Fed rate hike resulted in the Dow sinking 367 points;
China’s economy slowed, oil prices fell, the Greek debt crisis continued;
The U.S. 30-year Treasury note returned negative 2 percent, the 3-month Treasury bill returned 0.11 percent and the CRB commodities index fell more than 23 percent according to Societe Generale.
And that all was before the plunge of hundreds of points daily to open 2016.
One report says 2015 was the worst financial system for funds – in 78 years — meaning the Great Depression;
Larry McDonald, head of U.S. macro strategy at Societe Generale, said the all-encompassing lag in performance is one reason why major money managers have done so badly this year. The year was most troublesome for hedge funds, the average of which is down about 4 percent, according to Hedge Fund Research.
“It’s been an absolute meat grinder of a year,” McDonald said. “Hall-of-fame legends, [Warren] Buffett, David Einhorn, Carlos Slim, those are my favorite investors of all time and they all had bad years.”
So what does Jonathan Cahn, the author of “The Mystery of the Shemitah” and his previous New York Times bestseller, “The Harbinger,” have to say?
“In other words, this Shemitah was the worst year in 7 years – since the last Shemitah,” he told WND.
Cahn who was widely criticized by people claiming he had made predictions of economic collapse in 2015 when he hadn’t. In his book and in every interview he gave throughout the year he made a point of saying that nothing might happen.
“God can’t be put in a box,” the messianic rabbi said repeatedly. He wrote the book for the express purpose of bringing people back to God.
“The phenomenon may manifest in one cycle and not in another and then again in the next,” he wrote. “And the focus of the message is not date-setting but the call of God to repentance and return. At the same time, something of significance could take place, and it is wise to note the times.”
Ancient Israel was instructed in the Bible to sow the land and reap its produce for six consecutive years. Then, on the seventh year, they’re commanded to let the land lie fallow.
His book documents what appears to be a striking connection between financial downturns in the United States following the end of the Shemitah year.
“[In] 1980 you have recession and then the stock market collapses; you have ’87 stock market collapses and the Shemitah of that, and you have ‘Black Monday’ the worst point percentage crash in history,” Cahn explained. “Shemitah of 1994, the bond market collapses, called the bond market massacre — greatest in history; 2001 you have the stock market collapsing, recession. You have the greatest point crash in world history and you have 9/11, which is the shaking. Shemitah also means shaking.”
According to the Bible, the Shemitah year was set aside as a blessing for the nation of Israel.
Like the weekly Sabbath, the Shemitah year would be a time of rest for the land and for the agricultural society. There would be no sowing and reaping. Instead, God would provide food miraculously for the people, as He did during the Exodus from Egypt.
Leviticus 25:4 says: “But in the seventh year shall be a sabbath of rest unto the land, a sabbath for the Lord: thou shalt neither sow thy field, nor prune thy vineyard.”
However, Cahn points out, if the Shemitah was not observed by the people, it would become a curse, as described later in Leviticus chapter 25. That’s exactly what happened, Cahn says, in 586 B.C., a Shemitah year, when the Temple fell and Judah went into captivity in Babylon for 70 years.
Cahn explains the Shemitah can have several meanings. It can mean a “release” – and in ancient Israel debts were canceled and land returned to its original owners. But it can also mean “to fall, to collapse, to shake,” he says.
But the Shemitah seems to be affecting the U.S. economy throughout much of the nation’s history.