Global Economy Slowing Significantly… that is front page article headline that will be in tomorrows Wall Street Journal. A few bits from the article:

The global economy — which had long remained resilient despite U.S. weakness — is now slowing significantly, with Europe offering the latest evidence of trouble.[...]

[...]In a fresh sign of the pressures facing the American economy, the Labor Department said Thursday that U.S. consumer-price inflation hit a 17-year high in July, rising 5.6% from a year earlier.[...]

With the European growth report, four of the world’s five largest economies — the U.S., the euro zone, Japan and the U.K. — are now flirting with recession. China is still expanding strongly, but also shows some signs of slowing.

The global weakness marks a sharp reversal of expectations for many corporations and investors, who at the year’s outset had predicted that major economies would remain largely insulated from America’s woes.[...]

Our long time readers will recall that we have always argued against the claim that global growth will keep the United States economy afloat. We warned a very long time ago that global growth would deteriorate and the evidence of that happening is now overwhelming. Those who believed that the global economies were decoupled from the US and would be isolated from the woes of America have been shown just how wrong that theory was.

Large corporations who have recently reported that foreign sales have kept them above water will soon not have that global strength to keep them safe. As world economies continue to decline the worldwide sales they need will decline as well. And they will not be able to benefit from foreign exchange rates as much either as foreign currencies are declining as their economies are swirling the toilet bowl. A global flush would appear to be on the horizon.

The movements in the major indices of the market have been nothing short of crazy. As Lisa said last night everyone is attempting to find what to put money in. Sector rotation seems to be turning on a day to day basis anymore. In all the searching for the next best investment the indices and sectors are experiencing some wild swings. The media has gone from orgasmic at times to end of the world and back again in recent weeks. Anyone who watches CNBC for objective information on what the market is doing will be sorely misled and left bewildered and confused.

Lisa and I have remained steadfast in our long term view and projections of the markets. We don’t flip flop just because of short term enthusiasm. The famous Jesse Livermore always made his most money when he stuck to his thesis, when he followed the crowd he lost the most.

The S&P 500 chart is beginning to show us a rising wedge pattern. This is a bearish indication and if this pattern continues to be reinforced then we can expect a substantial break to the down side. Can’t say when, but the developing pattern says we will at some point break lower.

 This morning was the issuance of the Consumer Price Index and the weekly jobless claims. Both were bad and show further deterioration of our economy. The two charts shown here are the CPI and the weekly jobless  claims. Each show a worsening trend.

 

 

This weekend I will present my first video summary of the market.

See you in the morning…