Market bull or bull trap?

I am more convinced than August 2008 when I started this blog that a global recession is upon us. Back then there was only one result a market downturn unlike seen since the great depression. What about this time? 

 Its a bit more complicated. This time the market failure is global, NOT being led by the USA. One could argue China is leading this downturn, something I predicted would end the next bull run after 2009 bottom. The 2020 pandemic was a detour of our destination. Lets recap the evidence we are on the brink of an epic multi-year market failure. 

Russia economy 

Russia's demand and free trade with the world severely curtailed.  Russia's economic demand is no longer a world influence.  Their influence is restricted to possibility of refraining from selling natural resources and buying weapons.  Hardly a global leading position.

CHINA failing

China was closed for years due to COVID, they re-opened with expectation that China demand would fan global economy and inflation.  Instead they opened and their economy is in a freefall.  The real estate market has collapsed upwards of 50% in the last year and isn't letting up.  Unemployment soaring to over 20% for younger workers.   Their demographics are so bad, even China had to adjust their total population DOWN by a 100 million, a stunning development for a country that the world assumes lies on all fronts.  To compound matters, China ordering destruction of farms to replant with wheat with predictable bad outcomes ahead.  Finally capital flight out of China continues, forcing the yuan to fall to new lows with no bottom in sight.

Saudi Arabia & Oil

Saudis are slashing production stating oil prices will soar, only to continue to see oil prices fall.  Steel prices are falling, copper, and soon to be gold IMO.    There is no hiding in resources in this downturn of demand.

USA

US dollar is the global reserve currency, and it's bond market is in contango.   Near rates are higher than longer rates.  This indicates the future has lower rates due to a slower economy.  Further USA has been laying off, unemployment is rising, and prices are falling.  Some areas of the country are seeing material lower prices for homes.  Covid and technology are going to depress commercial space for a generation.  USA does have going for it a stronger economy than other developed nations.  Also onshoring (bringing work back to USA) and tech developments like AI.  Lastly in a deflationary world, many may bring their wealth to US assets.  This could mute any stock market decline and create a new USD bull run.

But all of this isn't a robust economy, its relative to other countries.

Timing

Market could make new highs or the market is going down shortly.   I think we will have our decline starting before or early July.  Given we had a bull run since 2020, and before that a bull run since 2009, timing by a month to squeeze out a little more profit is a fools game.

USD short term bonds (1-2 year) is best, pay off debts, and longer term holds in INDA or EWW.

Good luck!

Inching closer to deflationary event

We are inching closer to a more material market decline.

I am still mildly hopeful that its weeks or months away, but it could be days.

The reason for my optimism is across the world, as bad as we see it in US with layoffs and banking failures, other countries are dealing with their own issues.

As the global reserve currency, it gives us strength to deal with challenges.

I suspect for USA the catalyst will the government spending less due to debt ceiling.  This should accelerate liquidity issues.

China is in a free fall AFTER they opened their economy.  Companies across the world are exiting China as fast as they can.

It will be interesting to see how CCP will deal with their economy implosion.

Assuming they survive, it doesn't look good for them as their demographics is a disaster.

To learn about China's current debacle of an economy, here is one of many videos I have watched.

NOTE: the only safe place for money now is US "1 year" treasury bonds.  Even if USA defaults, I suspect all payments will be made whole.

I don't advise any bond over 2 year, as I do think we will have odd market action into a global decline.

Good luck!