Richard Russell – People Are Going Broke & It Will Get Ugly
KingWorldNews.com
July 15, 2014
At nearly 90 years old, the Godfather of newsletter writers, Richard Russell, warned that he expects this ongoing crisis to get very ugly. The 60-year market veteran also included some very troubling guest commentaries warning that, sadly, people are simply going broke in the United States.
Russell: “The market fooled me. I thought the Dow would advance to a new high, unconfirmed by the Transports. But what actually happened was that the Transports advanced to a new record high, unconfirmed by the Dow! If the market turns down from here, and the two Averages break below recent lows — well, it could get very ugly.
The dreaded fact that nobody wants to face — the world is suffering from a deflationary depression. Germany, the strongest economy in Europe, is slowing down. China, too, is suffering from a real estate collapse. Economist John Williams predicts that second quarter GDP will be down. If so, with two successive quarters lower, the US will officially be in recession. With the US, China, and Europe sinking, I would expect the various central banks to fight deflation and open their spigots wide.
I read Barron’s early Saturday, and I was surprised at what I read. Therefore, I read Barron’s page-by-page a second time, and I was not mistaken, Barron’s had turned cautiously bearish. The lead article by brilliant editor Randall Forsythe noted that despite the fact that employment news was good, consumers are not spending. I include charts below of companies mentioned in the lead article in Barron’s.
Actually, I think the dreaded news is now out and accepted that second quarter consumer spending will be down. Considering that consumer spending accounts for 70% of Gross Domestic Product, this is a serious situation. For this reason, I’m giving up on my thought that the Dow will have the strength to test its recent record high.
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