Outlook: 2011 Q4 update

Sorry for the delay, a move can distract your focus a bit.  So data is as of today.  The next update in Jan will be the yearly one where I update the predictions once again.

You can forget about the US defaulting, that mini-crisis came and went with no big fan fare.  But things are rapidly deteriorating.  Greece has technically defaulted, and the people are protesting in the streets with massive strikes by public unions that do not want their money cut.  Italy is not in as bad shape, but the protests there have turned violent.  And now we are seeing Occupy Wall Street (OWS) starting in New York, and then spreading to multiple major cities in the US, and now London.  These peaceful protests will turn violent, but maybe not until spring (I am assuming they will tail off as the weather gets cold). Things are breaking down, and signs are definitely there that a serious crisis is very possible in the next couple of months.  Look for jaw dropping drops in the stock market now.

The employment has flattened as forecast, and I am also sensing the plunge is about to begin, with Lowe's and Gap closing stores and laying off thousands very soon, and you have to wonder how many others are considering the same. State and local governments are also shedding employees, but the Federal government has yet to really begin its trimming.

Inflation continues to climb, and at 3.5% that is pretty high, but again, I am not reading a bunch into it.  Certainly not the hyper inflation that a large group of folks were determined we were headed for 6 months ago.  I still fear QE3, but given the problems around the world and within the US, one has to figure the Federal reserve has to be reconsidering if that is a good idea or not. 

The Dow is breaking down, note over the last 6 months that the peaks are getting lower, and the lows are also getting lower.  Now look back to 2008 and note what a similar pattern ended up with.  If you follow Elliot Wave, you would hear targets in the 4,000 range.  It should absolutely go below the previous low of 6700, so if you are still long, you have to ask yourself why.  Get out!!!

I am not updating the Gold chart, it takes forever and I just do not have time.  It has peaked, but is still very elevated.  I will update it later.

The super committee has failed, and so the debt continues to rise.  Look for congress to eliminate the automatic cuts, but it will not matter much.  I am expecting another credit agency to downgrade the US debt in Jan or shortly thereafter. 

Europe is bankrupt.  If you have money in a Greek bank, get it out and put it under the mattress!!!  Seriously, do it now.  There are a ton of people doing it right now and the banks are running out of cash.  Wait and you may not have any money.  Europe is so bad, that the Federal reserve has broken my previous chart into 2 charts, as the Greek yields are so high that you cannot see Italy and Spain, along with France which are all breaking down.  Look back to when Greece crossed the 500 point spread in early 2010.  Now look where Italy is now.  And the beauty of this entire thing is, Italy has a bunch of Greek debt, so when Greece refuses to pay Italy will be in serious trouble, and her debt is held by Spain, whose debt is held by England, whose debt is held by France, whose debt is... you see how this ends.

Not much to see the revolving continues up, but for how long? I am thinking time for a change in direction, but may be early once again.

The housing market slowly breaking down or just holding it own, depends on how you want to spin it.  But, if governments fall, so will house prices. 

Get your money out of the stock market, consider getting it out of the 401K, and double check your bank, insurance company, and anything else you depend on.  I will post about my close call with MF Global which I almost had signed up for an account with, never considering that they would go belly up with no notice.  But more on that later.  Take charge of your money, else it will slip away.

Patrick