by John Galt
1. Iran - Israel will not sit by idly waiting on the Messiah to ‘talk’ to them, they will act. Fall would be the perfect time as the Iranian defenses should be exhausted from all the probing.
3. The U.S. Dollar is losing steam and the threats made by the BRIC nations to create separate trading blocs that do not use the USD is becoming reality. Without the reserve currency status, which will not be at risk this year just the threat of that action, the United States is nothing more than a large Argentina with a big navy and ICBMs.
4. Unemployment is deteriorating at a faster and deeper level than any projections. According to numbers produced from various sources unemployment really ranges from 18.2% to over 20.6% which matches some of the estimated 1893 and 1930’s depression levels.
7. Bankruptcies - Personal and Corporate bankruptcies are accelerating and as we head into the fiscal year end for many corporations, Chapter 11 could be a viable option. As individuals lose hope and can not escape the debt spiral they are filing at a pace unseen since the modification to the bankruptcy laws in 2005.
8. The P/E ration for the S&P 500 is an absurd 15.74 on forward earnings and the NASDAQ an even more absurd 19.22. Traditional recession level ratios are between 5 and 8 (Source WSJ, 7/21). Considering the spin being put on earnings this week, the potential for a major corrective move to the downside is wide freaking open.
9. Manufacturing is not recovering and with little evidence that the automotive sector will come back to life and new single family home construction trailing levels unseen since before 1958 there is no logical reason to think the recovery has begun.
10. The retail disaster is ongoing with further bankruptcies likely, including some historic and major names which will add further pressure to an already devastated Commercial Real Estate market.
11. Import/Export data via rail car bookings, TEU container counts, etc. indicates that our export markets are still declining at about 14-29% per month depending on the port and imports at a 20-28% decline year over year. Thus further verifying the manufacturing disaster is continuing if not getting worse.
12. Real Estate Reality - Despite a mass move of foreclosed homes, the banksters are still sitting on numerous months of inventory which have not but put up for bid or worse, have postponed foreclosure action to prevent further market price deterioration. Add in the CRE disaster which is starting to pile up and the projected delinquency rates in the 8K’s for the real commercial banks (not Goldman) and you can see that any improvement is seasonal only and will begin a steep deterioration in the fall.
- John Galt, http://johngaltfla.com/blog2/2009/07/21/welcome-to-the-eye-of-the-storm/