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March 2, 2020 | Phase II Crash Likely Later This Month!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

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Trump says the Fed must lower interest rates and help to lead the world in expanding liquidity for our markets!

Our Fed stepped in and pumped-up the stock markets today (Monday). I am not surprised. This action is meant to delay the next crash. Will it? My sense is that the next phase will develop later in March. Today’s volatility was exceptional and demonstrates that our markets are living with ‘fear’ and ‘trepidation’. Can the Fed engineer a new Bull market given what has already happened? Doubtful!

My sense is that the coronavirus sell-off will start its phase II action later in March. Phase III will follow within a month or so of phase II. The reason for this prediction is the slowdown and crash in production which is occurring globally. Asia is slowing, Europe is slowing, Africa is slowing, Latin America is slowing, Australia is slowing, and the #1 super-power (USA) is slowing. All this will be impossible to reverse with more liquidity and central bank actions.

Yes, the interest rates will decline. We could witness this any day. As I write the U.S. ten year treasury rate is 1.147%. This could go into negative territory by the end of 2020 as our greater recession emerges. Our central planners can not change this cycle change which is now occurring. The temporary liquidity injections make the problem much worse. But Trump wants our Fed to pump more liquidity and then lower rates so a reverse of the cycle might happen. This is unlikely IMO. A cycle change has occurred and this means a recession is soon to arrive.

There could be one last coordinated attempt to pump-up these virtual markets by our central banks. I expect this to happen this month. Our elites do not want to recognize the reality of a global recession and then a global depression. This will not happen without a concerted effort by our central planners to reverse this cycle. Without the coronavirus situation, this might have worked. But with Covid-19 still growing and expanding I do not envision any real reversal.

A RESET of the currencies is likely later this year. The distortions are now growing and I do not envision any stable markets for the balance of 2020 or 2021. The ingredients are built into the mix and these ingredients are mostly psychological. Our markets are psychological. Huge UP’s and DOWN’s in these electronic stock exchanges do not promote confidence or stability. Expect huge volatility and a PHASE II crash by the end of March. Hope I am wrong! But I must provide my real view on these issues. Have a great day and tomorrow will reveal new lessons for all of us!

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March 2nd, 2020

Posted In: Kingdom Economics

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