Stocks still face deflationary collapse - Robert Prechter, August 17, 2009

[straty01]

Elliot wave is CRAP!!

Oh, it was a wave 3, but now its an abc correction!, Fuck me!! you can't trade like this!! Somebody KILL this fucking dickhead!!

Oh, US dollars will rally in 2010, WTF would they!!! they are worth shit!!

[ctrader09]

@straty01 The USD is up huge in 2010, so keep your fucking mouth shut you ignorant fool

[herbs814]

@straty01

USD rallied in 2010, but this was probably just an upward 1. The more decisive move to the upside in USD would likely begin in September.

[straty01]

@herbs814 USD has been belted over the last 2 months. If the Fed does QE again what do you expect the USD to do?, what did it do last time they implemented QE? Instead of giving the money to the banks why not do something PRODUCTIVE with the money, not allow banks to prop wall street up, its time to get real folks

[straty01]

@herbs814 we could possibly be heading for a correction on stocks, the dollar way have bottomed after Fridays NFP, we will have to wait and see what bubbles ben says next week, maybe we are nearing the end of wave 2 and the most powerful wave 3 is due

[Mario30356]

Sorry, but we are over 1000 points above since he made that comment.

Where is the depression?

Oops, Elliot has waved good bye to the bears!!!

[eesloan4]

@Mario30356 Only up 1000 points. But have not moved at all since then. And is gave back 1000 points when it went to 1100. It seems that it may be hitting a stall point.

[frank299]

Media lies to find a hero and attract viewers and suckers.

I'm still waiting on a link where Prechter is clearly bullish in march and suggests buying equity.

I can prove his neutral position and where he clearly says he is not bullish on equity.

[Nuanceqwest]

As far I can see this man has a

water- tight case.

[TommyFNG]

Prechter needs to read Alf Fields stuff

[Nuanceqwest]

I like the way that he explains that IF YOU ARE A TRADER we have offered opportunities to go short. That is very responsible of him.

But I cant help but think that people are irrational when the thought of dollar signs bubble above their heads.

[aviomaster]

- o God MAria you are soo HOT , talking about the economy , and Bernanke that puts some twist to it ... I wonder what underwear you wearing ...

[abe2517]

Disinformation at its finest. Gold literally quadrupled in value over the decade as the USA engaged in nationally bankrupting wars of aggression. Nine years later and we're still at war, still losing jobs, still printing monopoly money, still facing long-term entitlement insolvency, and the clown's suggestion is what? A two year chart and some ad hoc rule of thumb to scare the uninformed out of tangible commodities and in to paper money? DISGRACEFUL!!!

[Nuanceqwest]

Dude, markets are going to fall. Gold is not going to 1200.

Everything on the stock market is leveraged and when the debt starts getting called in asset liquidation is imminent, including that of Gold and Silver to pay off debt.

[abe2517]

It's silly how many people still think our debts are payable. Have fun dude...

[Nuanceqwest]

That's just the thing mortgage and commercial property can be liquidated.

What happened in 2008 when people realised that we couldnt pay our debt? Did Gold skyrocket? The debtholders started selling everything to pay it off. Including stocks, crude oil, gold, silver and property to recover what they could.

[abe2517]

Exactly, we Americans are headed for IMF Structural Adjustment Program style austerity in both the public and private realms. See how well that worked out for Zambia and Indonesia.

[michael38921]

I think its still possible to have gold up/stocks down, at least relative to one another, Prechter had a good chart on that relationship as well

[Nuanceqwest]

Im telling you that everyone looking for inflation is going to get blindsided by deflation.

It is absolutely critical that people get things right. People's life savings are riding on the deflation/inflation argument.

[michael38921]

well, to be honest, I am more "afraid" of inflation than deflation. I have no problem short selling into the larger trend. Feeling pressured to buy to not fall behind, that is what is scary.

[Nuanceqwest]

It is an absolute pre-requisite that the overwhelming majority of participants are bullish before the market crashes.

[herbs814]

the pressure to buy out of fear of falling behind inflated investment benchmarks comes from excessive money creation and credit supply (high leverage). as long as there is a credit crunch, investors and consumers are more likely to defer purchases and to face forced selling, rather than fear missing out on a rally. no investment asset besides gold (and some foreign stock markets) has regained its highs; not domestic stocks, real estate, or silver, oil and gas, or agriculture.

[herbs814]

The dollar falls as long as the credit outstanding grows faster than actual productivity (tangible wealth). Credit outstanding has declined year over year for the past 8 months (past 12 months for non-liquidating debt such as credit cards) as credit paid off (or defaulted upon) has exceeded newly originated credit. As credit contracts, the value of the outstanding credit increases due to scarcity. Debtors hold dollars at a premium to pay off bills. Creditors also value dollars fearing nonpayment

[ctrader09]

@herbs814 I could not have put it better. You're sound like somoene who has done their homework rather than talking out of ignorance.

[straty01]

@ctrader09 why has gold risen in price vs the USD for 10 years now peanut? Prechter himself has been bearish on gold for years, just like a broken clock he will get it right eventually. In the 1970's the USD was worth 300 yen, today it is worth 86 yen, In 2002 the USD was worth 1.60 vs the Canadian dollar, today it is worth 1.0173, now tell me how 'strong' the USD is?

[ctrader09]

@straty01 Gold has risen in terms of all currencies, not just the USD. The Global fiat money system is collapsing, and the Dollar-denominated debt is contracting, so the remaining Dollars become more valuable. The only reason the Dollar is so weak is all the credit inflation. This has not been currency inflation, like zimbabwe or Wiemar Germany, this has been CREDIT inflation, courtesy of U.S. banks. When all that credit inflation is undone, the U.S. Dollar should be MUCH stronger than it is now

[straty01]

@ctrader09 well we agree on something at last, social mood is deflationary, debt implosion looks likely, interesting how the Yen has appreciated so much, given their population growth required to service their 200% of gdp, when they can no longer service this debt domestically they will get into a 'debt trap', US states also require more funding, China's real estate bubble looks wobbly,philly fed data last week was terrible too, its the paper bugs vs gold bugs, long USD for me too

[30percentplusreturns]

Most people on these posts have it all wrong. Sure we will have deflation, but measured in gold, not dollars. In dollars we will have massive inflation. People just dont get this point. Gold will buy you so much more 3 years from now while cash will buy you less. The inflationists and deflationists are both right, just their measuring sticks are wrong.

[neil9327]

Not sure about that.

While the economy is debt-deflating, assuming no further government stimulus, then there will be high demand for dollars to pay down debt. This demand will increase demand for dollars vs assets such as gold. In the short term.

[surferaw949]

30percent is absolutely correct. Everyone is looking at the inflation/deflation debate as an either/or, and that's the problem here. The behavior of gold/PMs is proof of that. Besides, I am a military officer that gets my salary from Helicopter Ben's Printing Press. I have a hard time believing that in the next few years, I'm going to be like some kind of king gobbling up assets on some kind of fire sale. There are way too many of us on the government dole for that to happen...

[surferaw949]

Money is making its way into the system, you just can't readily detect it if you're using the wrong measuring stick. Besides, it doesn't take "money velocity" to start inflation. People who say that are just studying the numbers, and are no more informed than Bernanke, Geithner and the other gov't shills that got us into this. The element of human psychology and a "run for the exits" out of the dollar will be the trigger. It can happen at any time. You better be ready NOW.

[surferaw949]

I meant to say "hyperinflation" in the previous post. I realize that inflation (expansion in the supply of money and credit) has already started.

[frank299]

What BS media glorification.

Bob did not suggest to buy stocks in March, He suggested for shorts to cover and be neutral.

Anyone disagree, simply send me a link were Prechter says buy in March.

Lies lies, typical CNBC

[neil9327]

I would agree with his deflationist views but for the fact of government/fed interference.

Not once in this video does he mention the money printing that is going on. Money printing is quite capable of arresting any deflation if done enough. What it does though is store up a lot of inflation, with corresponding dollar devaluation, when the economy eventually starts to recover.

[ednan9]

if you read his book - conquer the crash - he says money printing cannot overcome the huge consumer credit thats is out there- and when this credit crunches and people won't be able to pay bills and debters won't be able to collect their money - then the prices will fall. I agree with him on the principle but when it happens is certainly the 64 million dollar question. I think he is off on timing

[neil9327]

Well I have not read the book. But how can he say that money printing cannot overcome the huge consumer credit deflation? Surely money printing is easy - the fed just printing money notes, giving them to government to spend; and there is no upper limit to this?

[ednan9]

well its says that the credit problem is $53T and the deficit is something like $10T which is still a lot.  So that why the problem is too huge to be covered by money printing. Yes I guess Fed can prunit $53T but then you can pretty much use dollar as toilet paper as the inflation will eat up dollar -

[ctrader09]

money printing is capable of creating CURRENCY inflation, not asset inflation. there has been so much debt, CREDIT INFLATION, and asset price inflation over at least the past 10-20 years, that when all that debt becomes worthless, so will the assets that back it. could we see the dollar decline in value? Yes and I think it will, but not until a lot of debt it purged from the system, and in the process there is going to be credit destruction and a collapse in prices

[neil9327]

Why do we have to wait until all the debt has been purged from the system before we see the dollar decline in value? All that needs to happen is for the market to see that the US is printing and likely to continue printing to realise that they better go short the dollar and trash its value.

Yes there will certainly be pure credit deflation. But this will be more than offset by money printing, which will result in a net rise in money supply and prices.

[ctrader09]

I agree that governments can devalue currncies, thus creating currency inflation, but bernanke does not have the ability to, and thus will not, prop up asset prices. even with all their money printing, they simply cannot keep up. remember, the big credit inflation bubble, demoniated in dollars, has to pop, and when it does no amount of money printing by the fed can keep up with the credit destruction in the global economy

[neil9327]

But with respect you have not answered my point about WHY they can't keep up.

If the Fed keeps on printing money, and does that by bidding high prices in the market for assets, then that if done enough Will keep the nominal value of assets high surely.

I mean to take it to extremes, in the example of "DOLLARCRISIS" above, if Ben Bernanke sends everyone a 1 trillion dollar bill, are you really suggesting that a car or house will not rise in value as a result?

[ctrader09]

well, it is not so much what the fed does as it is the psychology of people. The fed is pumping all this money into banks but they are not lending it out. SOCIAL MOOD is changing, as prechter suggests, and that will render any efforts by the fed to inflate useless. In other words, the fed can send all the stimulus into the economy it wants, but if social mood is negative people will not spend, instead try to conserve and save. simply put, you can lead a horse to water but you can't make it drink

[maxine2win]

ctrader09, you views sound sensible to me

but will rising energy (oil) prices counter any deflationary trend

[Choros22]

The key point is that what is driving down the dollar is actually foreign holders of dollars China Russia Saudi Arabia and others moving out of dollars and this happens regardless of deleveraging in the domestic economy and will have very powerful consequences for the dollar. Prechters technical analysis seems to completely ignore the fundamentals. This will cause American markets to react out of the dollar as a consequence. Debt destruction will happen simultaneously.

[30percentplusreturns]

ctrader, you couldnt be more wrong. We will have massive inflation, not deflation. Deflation is propoganda from central banks so they can print money and justify it. We havent had deflation. The collapse of commodity prices last year was from lehman and bear going bust. It was forced liquidation of their contracts. Oil is higher now in a depression than when the economy was good in 2005. Why is that? Its inflation and its going to get a lot worse. Just look at gold and silver.

[bluecat1122]

I know from a technical perspective the dollar looks as if it's on it's lows, but I don't see a fundamental reason for it to rise aside from technicals, even if the market falls from here. Does anyone else have an opinion on that?

[herbs814]

The fundamental reason for the dollar to decline is that the dollar is already massively inflated and the money demand will collapse under the pressure of servicing the debt and demographic changes in consumption patterns. More loans will be paid off or go into default than would new loans be initiated. Market pessimism will reduce appetites for leverage and encourage saving and debt repayment, rather than more borrowing. as much as the govt/banks may increase $supply, they can't bolster demand.

[MarcusCMarcellus]

I agree with you. Listen to his interview on King World Radio, 9/3/09 or so, in which he explains his reasons better. You can also download for free his 60 page argument on his website. Personally, I like him but I think he over-invests in "socionomics," which is basically the insight that the collective mood is not what predicts the markets but is instead a trailing indicator of how the market has been performing. He mitigates this w/his "wave principle," re: herding. read: contrarian.

[Briguy]

Technicians like to say that the technicals happen first and the fundamental reasons arise later. Prechter's focus on investor sentiment is logical because when only 3% are bullish on something, you can get it at a great price. We'll see how this develops.

[jimt46]

Some folks here don't actually have his work in front of them. Here is a synopsis. Gold, down to complete the correction from '08 then exploding higher. Dollar, up during deflationary period then collapsing. Stocks, completing wave two up now then down hard in wave 3. He was not neutral in February but called for a multi-month rally and had traders long from March 18th. His comment was that the market was now too dangerous for most investors so stay out. for the duration.

[herbs814]

only thing I would disagree with:

US stocks seem to be in a corrective wave b (2009-2010), with a downward c to follow (2010-2012). What makes you think that US stocks are in an impulse wave 2, or that there would be a 4-5 after this third wave down (2010-2012)?

[frank299]

Media Lies, Prechter did NOT turn bullish on sticks in March or suggest to buy/go long and be in the over 50% rally.

Typical CNBC lies to attract viewers.

Prechter turned neutral.

[high5flyer]

He said the rally was going to be significant in February. His belief is we are in an overall bear market so it is better to just hold onto cash and wait for the buying opportunities of a lifetime. He is very conservative for his clients b/c he knows how important it will be to have dollars due to his deflationary beliefs. To him, it is better not to risk it. So, he did go neutral for his clients b/c of his conservatism, but he was bullish with respect to what was going to happen in early March.

[najaka5]

I a man old whore, being hearing this guy for the pasr 25 years. His record sucks..he i sa scam artist, stupid reportes just keep repeating what they hear..mainly that he has 'an uncanny record". He did NOT call the crash of 87, he had been calling the end of the world from 50% lower levels. On Tuesday (day after black Monday) he SHORTED into the hole. He in effect shorted at the bottom.

[BringBackCapitalism]

Bring Back Capitalism! Free "Bring Back Capitalism" bumper sticker at bringbackcapitalism . com/free.html

[soulharvest2012]

I'll grant him this. He has the uncanny ability to piss everyone off. Gold bugs, stock bugs, commodity bugs, just about everyone. Is he wrong? Was he wrong in Oct 07? Was he wrong in Mar 09? No and no. Is he wrong now? You decide.

[BringBackCapitalism]

Good Point. Even Marc Faber recently changed his tune. It's possible that we'll go through the deflationary depression, immediately followed by hyperinflation.

[mechanicalengineer3]

Gold and silver will not drop since the value of US dollar has been dropping....oil will go up to $80-90 at the end of the year......

[herbs814]

pessimistic dollar sentiment now matches pessimistic stock market sentiment in early march 2009. since then stocks have risen 50% in 5 months (the sharpest rise being march to may).

if you can't understand why the dollar would rise, it would be because defaults, delinquencies, paying off debts, and reducing leverage would exceed inflation. as Prechter says, the dollar is the most inflated (pre-weakened) currency, so when the economy contracts, the dollar is most disinflated (relative strength)

[BringBackCapitalism]

It's hard to argue with Bob and the Charts, even if you're a Hyperinflationist. What would you have predicted for the dollar when the first leg dropped? It's very possible the pattern will repeat itself as he suggests. We all know things are about to get much worse. This is a Depression for sure!

[jp2059]

he should change his name to prickter.

what a total waste of space. yeah, just keep talking and maybe someone will believe you. if the dollar goes up at all it will be temporary. the dollar is doomed

[BringBackCapitalism]

PRECHTER is at a level above nobel winners. Faber, Rogers, Shiff and others make a strong case for a declining dollar. But only Prechter and Shilling can point to recent history (i.e. 2007-2009 first part of depression) to show what actually happened. As a ultra-conservative real estate investor, it's clear that dollars are already 5xs more valuable than they were in 2007.

[herbs814]

and 2010-2012 will match or exceed the drop we saw in 2007-2009. if the banks overcorrect and reinflate (hyperinflate), real estate still won't be the primary beneficiary. after bubbles are popped, they don't reflate the same asset. the market moves on to the next asset bubble, likely silver, copper, water, ethanol, or agriculture. real estate is still overvalued and likely to fall 50% from real (in real terms).

[BringBackCapitalism]

I agree. I'm selling 50% of my metals and a lot of my real estate, even the properties with strong cash flow. Why, becuase without wage inflation, rents and prices will continue to drop.

[herbs814]

In fact, it's best to sell real estate when the cash flow is still strong. Investors would pay a multiple of cash flow. Sell while cash flow is still high, before taxes and insurance premiums rise. When cash becomes scares and business slows, municipalities look to property taxes and states raise income taxes and sales taxes. And when investment returns fall, insurance premiums rise. Get out of real estate before insurance contracts have to be renewed.

[ednan9]

sorry but you lost some short term money

[BringBackCapitalism]

You're right, but the opportunity cost were bigger at this point. We're going down.

[ednan9]

any time frame ? i agree with you. The economy is screwed. talk to the old people and baby boomers and you will hear the real story.

[BringBackCapitalism]

When the banks finally POP from their foreclosed inventory, and the market is flooded with commercial and residential real estate that nobody wants to own at any price. Maybe a couple years away.

[Schweizer135]

Just watch. He has figured it out. Oil, Gold, Stocks are all going to go down hard. Bernanke can't print money fast enough to keep up with dollars that vanish as loans default, so each dollar is worth more as a result.

[kswatcher]

He's been calling for gold to go below 680 for almost 8 months.

[herbs814]

@kswatcher

He's been consistent. He makes long-term calls on public videos. These videos are not the place to get short-term trading advice. He sees major changes in trend ahead of time and gives people plenty of time to prepare.

Gold has now put in a head and shoulder and broken below the 50dayMA. RSI, stochastics, and MACD have declined even as gold reached its 1250 peak. This represents a negative divergence that confirms that the bull market ended at US$1250. Gold is now in correction

[trublu97]

@herbs814 1250 gold topped? Wrong again, Ace.

What other charts ya got?

Maybe you can put those darts to use, because I would bet the darts over your E-wave voodoo...

Prechters long term calls? You mean the crash he called in 2002? (and 2003, 2004, 2005, 2006, 2007, 2008....Nailed it! time to write a book and go on the CNBC tout channel!)

Yeah, the "call" is there will be corrections in the future? Nooooo Wayyyyy. The market changes, that is the call? Stall long the dollar, pal.

[herbs814]

@trublu97

calls are always preliminary (and protected with stop losses). just because gold has extended its rally a little bit higher, you're willing to get sucked in at the top?! USD is rising. Gold is topping below 1500.

Do you not realize that gold and stocks are declining in upward momentum, breadth, and volume -- in preparation of a severe correction to the downside? 2011-2012 will feature a stock market crash even more severe than 2007-2008... severe enough to take gold down with it.

[trublu97]

@herbs814 a "bit" higher? Gold is 150-200 bucks higher and silver is 100% higher.

Gold is topping now? Wait, I thought your charts said it was topping at 1250? Sound like your charts are just guesses. So, predict the top, get blown out. Repeat until right and put out advertising showing you called the crash.

CRB, all time high. Silver is up 100%, gold stocks up 100-500%- 1000% in junior space. Oil( topped out at 72-not!), up 30% and climbing.

[trublu97]

@herbs814

How is the "charts tell me gold is done at 1250" looking?

ah, so sad-too bad. People wonder why 5% of the people control 90% of the wealth?

Its because 95% of the people are dumb asses and use charts/lines to make decisions.

How is the prechter news letter doing? Instead of getting 11 years of constant gains, prechter has been losing big trying to short. well, he hasn't, but the dumbass subscribers have.

[trublu97]

@kswatcher I can go one, better: He has been/was calling for gold to (no has to) test $239 bucks before it could start on the bull trend when gold was $330. This was in 2002. Jim Sinclair offered an open bet at the time, of 1million dollars that gold would hit $500 bucks (a 65% increase) before it printed $300 bucks (only a minor correction of 10% at the time).

He passed, which tells you all you need to know about this joker. Which is this: talk is cheap, unless you are subscriber.

[chlovejesus]

Yeah That's right. He is bearish on gold for short term.

[karenbcz22]

Does he mean ALL commodities will reverse.

In that case, does he mean Gold & Silver will DROP?

[BMWg84]

BULLCRAP

[nikog82]

why? (seriously)