Is sanity finally being restored?

ANNOUNCEMENT

I will be speaking at the London Money Show next Friday 7 November. My four-hour presentation is: “Trading Currencies in a QE World” and I will be outlining my tramline trading methods and then covering some currency crosses.

If you are in London then, I will be pleased to meet you!

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The CPI figures for the eurozone have just been released and they do not paint a happy picture (for the EUR and stock market bulls, that is).

The eurozone economy as a whole is heading for deflation – and no amount of last-minute panic measures by the ECB to reduce policy interest rates to zero (and beyond?) or to institute its own QE – something the Germans would have to hold their noses to – can prevent it.

The debt trap has been sprung – rising longer-term interest rates set my Mr Market will kill any last green shoots of GDP recovery. The mood is shifting.

My long-time readers will recall that has been my theme all along – massive waves of deflation sweeping in from its origin in Europe – as per the last Great Depression. And we are finally seeing signs of reality creeping into overblown markets such as stocks.

In recent days, all market have been taking a hit from stocks to T-Bonds to gold to currencies (ex-dollar, of course). This is a sign that the tide is starting to turn and when it gets into its stride, waves og panic selling will hit all markets. This has been my expectation for some months.

We may be at that final Day of Reckoning when the markets are catching up with reality.

And if I am correct, we few bears will be enjoying our picnic very soon.

Incidentally, Dr Doom himself – Nouriel Roubini – and also David Rosenberg, another very prominent bear – have recently turned bullish after over four years of bearish comment into the bull market relief rally! It is a principle of the markets that when the last bear has converted, that marks the top.

Another frightening stat is that there was a record inflow of funds into equity mutual funds and ETFs last month. Yet another great reason to be bearish right now! It happens every time – investors finally get the confidence to wade into stocks at the tops. You couldn’t make it up.

BARCLAYS

This is a share I do follow as it is the bellwether of the UK economy. Financial stocks lead the market down in the Great Credit Crunch and will very likely lead it down in the next one.

But just admire the 257 level. It has acted a solid support at times and then as solid resistance – and this has been going on for years!