Huge Market Correction Coming? Oil Headed Lower?

     A few months ago I predicted that the DOW would experience a several thousand point pull back within the next year, and it appears that may be around the corner, as the market dips over 229 points at the time of this writing.  Many are giving reasons such as; the market is getting ahead of itself, or the earnings are good, but not great.  The reality is what most of us know, and feel, and that is the economy has never really recovered to anything that resembles the recent past.  So why would the market surge from just over 6000 to over 15000 during Barak's administration?  Quoting Alan Greenspan, 'Irrational Exuberance'. 

     When we see companies like Cisco laying off workers, and Walmart missing earnings estimates by a couple billion dollars, it is a sign that things are much worse than the market has shown.  Our government has been printing money as if it really did grow on trees, but none of it has made it to the lower-end consumer.  Jim Cramer of CNBC said, "We have to deal with the four walls of the corporate canvas, and they are simply not able to turn this macro positive into micro earnings gains."  This from the former hedge fund trader who is never shy about sharing his opinion.

     If I was to make an educated guess, I would say that the government paper that is entering into the economy through the banks, is actually flowing from the banks into commodities and other hard assets.  The banks have been unwilling to lend to the average consumer, and it is well known that banks don't like to leave money just sitting pat, so oil and other necessities of life seem to be the only good investments.  The chart to the left shows that since Obama took office, when government spending began to skyrocket, the price of a barrel of oil went from $66 in January 2009 to over $107 today.  

     With my own money, I would put it in Gold, Silver, or another hard currency.  The longer we put off the needed huge correction, by voting in huge spenders, the worse it is going to be when we are forced to face the reality.  Think of your kids.

By Jeffrey Brandon Lee