Chris Lee | forex

Where Do We Go From Here?Double-Dip?

Jul 3rd 2010 at 10:58 PM

The stock markets had a bad week.It didnt end very well especially after the NFP came out on Friday.

I guess the main questions American citizens are facing : Are We In A Recession? Is this a Double-Dip?

Perhaps if u ask the BULLS (those bundits who bet the Dow will hit 12k by Dec), they will say that this is a minor correction and we would be on our way to a BULL Run again.

But unfortunately the numbers speak for themselves. I am not an economist,neither a rich banker, so my opinions are of what is happening at the ground level,as well as speaking to friends and partners.

Let me share with you just 7 signs that not all is "right"

#1) In May, sales of new homes in the United States dropped to the lowest level ever recorded.  The truth is that the

American people know economic hard times are coming and so they aren't running out and buying expensive new homes that they can't afford.

#02) The Center on Budget and Policy Priorities recently said that U.S. states in fiscal 2011 could be facing the worst budget situation that they have experienced since the economic downturn began in 2007.

#03) Federal Reserve Chairman Ben Bernanke is publicly saying that the U.S. unemployment rate is quite likely to remain "high for a while".

#04) The National League of Cities is warning that large numbers of cities across the U.S. will be facing horrible economic conditions over the next couple of years....

"City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions.  These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts."

#05) Bob Chapman of the International Forecaster is very pessimistic about the state of the world economy as we head into the second half of 2010....

"There is still no question in our minds that Greece was a setup to lead to a deflationary collapse later and the Greek people refused to listen. As a result it is now apparent that Greece is even worse off than the elitists imagined. We do not see European bailouts going any further. The result is the US and UK will follow. Financial Europe is history. You should all keep in mind that this is child’s play. Wait until England and the US go down, perhaps before the end of the year."

#06)Unemployment is stubbornly high and the number of jobs created in the Private Sector is insufficient to dent the high unemployment rates. 1.3 million Americans face dire consequences if the government does not extend the unemployment benefits for several months. Even teaching jobs are not spared. When austerity measures are forced upon local state governments,many state employees find themselves out of jobs or a massive pay cut or even asked to work part time simply because the state is not able to pay them. California may be one of the 1st states to witness this 
after the Gov Arnold ordered state employees to be paid minimum wages.

#07)The S&P 500 has fallen below its support level of 1040 and more troubles to come if support at 1000 is broken.
Then all hell will break loose. Dow Jones is already in the red this year at -6% below 10k levels. NASDAQ is also under water having broken below 2200 support level. Gold is normally a safe haven when the stock markets go down but on Thursday last week,it lost more than 40$ in just 1 trading day. Perhaps people are selling their gold positions to cover their stock losses or perhaps many are simply selling gold and taking profit. You do the math.

For individuals, I guess the best way to protect yourself is to START THINKING of saving up for a rainy day.And I mean REAL CASH, liquid cash that we can use anytime.

However I have also spoken to various friends who say there will come a time in the following months to buy CHEAP Blue Chips and cash out when the economy recovers.

So really it is up to individuals to manage their own portfolios. However the message is clear... we CANNOT depend on BAILOUT monies to survive. The US has a debt of $1 trillion and if the government does not do something about this instead of printing dollars like there is no tomorrow, the only people who will suffer are the taxpayers..

Chris Lee
Freelance Forex Trader and investor

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