Global central bank easing has run amuck, and the results won't be pretty, says London Daily Telegraph columnist John Ficenec.
"From China to Brazil, the central banks have lost control, and at the same time the global economy is grinding to a halt," he writes.
"It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations," he warns. "Time is now rapidly running out."
He claims that the central banks are rapidly losing control.
"The great props to the world economy are now beginning to fall. And the emerging markets that consumed so many of our products are crippled by currency devaluation," he said. "The famed Brics of Brazil, Russia, India, China and South Africa, to whom the West was supposed to pass on the torch of economic growth, are in varying states of disarray."
He offers several signs of doom, among them:
- "China slowdown." The government reported economic growth of 7 percent for the second quarter, conveniently matching its target. But that number is vastly overstated, economists say. Some estimate the true figure is 3 to 4 percent. "The Chinese economy has now hit a brick wall," Ficenec states.
- "Commodity collapse." Broad commodity indices have hit 13-year lows. Gold prices have dropped to a five-year nadir, and oil prices have slumped to a six-year low. "The oil price is the purest barometer of world growth as it is the fuel that drives nearly all industry and production around the globe," Ficenec says.
Elsewhere on the equities front, star University of Pennsylvania finance professor Jeremy Siegel has just put out the fifth edition of his stock market book, and once more the market guru has it right, says Mark Skousen, editor of editor of Forecasts & Strategies newsletter.
The book is titled "Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies."
"If there is indeed a definitive book on the stock market, then look no further than this one," Skousen writes in Barron's.
"The overriding theme is that history matters, not only for policy makers in Washington, but for investors making the right kind of investment choices."
Siegel confirms some important market maxims, Skousen notes. "Most mutual fund managers fail to beat the market; dividend reinvestment is good; compounded interest and dollar-cost averaging are winning strategies for individuals; and for most people, long-term investing beats short-term speculating."
And Siegel remains bullish on stocks. "No one has made money in the long run from betting against stocks or the future growth of our economy," he writes.
Siegel, who called the stock market's bottom in early 2009, certainly has been proven prescient by the S&P 500's threefold surge from its March 2009 low.
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