Participants Must Pay Attention To The World’s Debt Reality

Participants Must Pay Attention To The World’s Debt Reality

$DIA, $SPY, $QQQ

Last week’s terrorist attack in Paris should serve as a warning to participants on the consequences of political and policy weakness

“Just as Western nations can no longer pretend that failing to defend their borders or take the fight to ISIS in the Middle East will protect them from jihadist terrorism at home,” said a special 15 November Edition of the Credit Strategist newsletter, “investors can also no longer fool themselves into believing that markets will defy the reality that the world is buried in too much debt that it can’t repay.”

The Islamic State of Iraq and al-Sham (ISIS), claimed responsibility for the Friday, 13 November attacks that killed at least 129 people and left more than 300 injured in Paris. France responded with a bombing campaign against ISIS targets in Syria and police raids of homes and other sites across the country to prevent additional attacks.

As painful as last week’s bloody reality checks were, citizens and investors need to recognize how poorly their societies and economies are governed and start to demand change.

Stock markets are flashing warning signs of underlying economic distress, even as major stock indexes rally from an August decline of more than 10%. Meanwhile, the prices of materials including Crude Oil, Copper and Steel are collapsing.

“While the cap-weighted market indices have given up only modest ground, commodity prices and the majority of stocks are telling investors that the global economy is in serious trouble,” the newsletter said. “Just as the veneer of peace was shattered by violence last Friday night in Paris, the illusion of economic strength has been battered all year by the destruction of commodity and stock prices.”

Participants need to be aware of how geopolitics affect markets in ways that central banks cannot control by manipulating the money supply and credit growth. The Fed cut interest rates to Zeor+ in Y 2008 as the US economy declined the most in 80 years.

“Today’s global economy is much more fragile than it was on the cusp of the financial crisis, and the geopolitical situation is much more dangerous,” the newsletter said. “Participants who believe that riding the wave of a central bank-induced Bull market endowed them with intelligence are going to be sadly disabused of that illusion.”

Tuesday the US major market indexes finished at: DJIA +6.49 at 17489.50, NAS Comp +1.40 at 4986.02, S&P 500 -2.75 at 2050.44

Volume: Trade came in above average with over 1-B/shares exchanging hands on the NYSE

• NAS Comp +5.3% YTD
• S&P 500 -0.4% YTD
• DJIA -1.9% YTD
• Russell 2000 -4.2% YTD

Stay tuned…

HeffX-LTN

Paul Ebeling

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