It’s Crunch Time

Lately I’ve been making the prediction that the market and the economy will go through a significant deflationary cycle this fall. Call it a double-dip if you want however the fall is usually bad for financial markets and with the stimulus money all gone, the Fed Funds Rate still grinding down to the bone without it helping any, I can see a big drop in the Dow in the next 2 months. We’ve made it through a lot in the past few months, Greece and the rest of the Eurozone going through debt crisis’, FinReg, Goldman Sachs trial, the Hindenburg Omen, China dumping treasuries and allowing the yuan to rise, Japan falling apart, and that gulf oil spill thing.

It just seems to me like this is the part where everything that happened this year to date comes to a head really soon. I also stand by my prediction that some type of government stimulus will take effect and the Fed will supply more QE to combat the deflationary pressure if I am right that the market does drop. The Bush tax cuts will expire for the wealthy only, meaning 50% of our big spending will see a slowdown, meaning a drop in GDP, followed by layoffs, etc…. I think the President is trying to win a political victory by attempting to tax the wealthy but it’s going to hurt him on the economic issues. He’s been attempting to appear totally anti-bank, and anti-wall st. but this time I think he’s making a big political mistake.

Bottom line is, it’s time to focus if you’re an investor. Stay up to date, look beyone mainstream news, this is not the time to take it easy.

www.zerohedge.com

www.financialsense.com

Stay up to the minute with quality information. ^

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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