Stock Market Losses May Have Only Just Begun
December marked the largest single month funds transfer into bonds according to a closely watched report from Bank of America Merrill Lynch. It was yet another signal of smart money investors fleeing the stock market in an effort to shield their assets from the ongoing wild volatility and continuing losses afflicting equities. Yet according to a number of respected analysts around the U.S. and the world, these stock market pullbacks may have only just begun in earnest. Some are even predicting markets will plunge a further 20 percent this coming year 2019.
It is another reason for safeguarding your investment and retirement portfolios with IRA-approved precious metals. The fact is that gold makes sense in an IRA because it is impossible for you to experience stability in your investments if you only hold volatile assets like stocks. Now is the time to make a move to include the Top 5 gold coins for investors before the bloodbath in the markets gets any worse.
Investors Flee to Bonds In Record Numbers for December
The December survey of fund managers was not good news for markets. It revealed that investors have been fleeing the stock markets in favor of safe haven bonds in all-time record numbers as the global liquidation of equities gathered steam and speed. Merrill Lynch put it this way in a significant warning:
“Investors are approaching extreme bearishness… This month's survey [found] the biggest ever one month rotation into the asset class” of bonds.”
This is a major revelation from what might be the most widely watched research report survey by Wall Street investors and insiders. The graph below from the report says it all:
More disturbing than this, BOAML's report uncovered the fact that over half of investors anticipate a weakening in worldwide economic growth in the coming year 2019. The survey was quick to point out that this is “the worst outlook on the global economy since October 2008.” The greatest concern for investors for seven straight months now is the trade war between the U.S. and China. A closely related leading concern surrounds the deteriorating economic conditions in China.
The report also unveiled a startling revelation on the most popular trade in markets. The so-called FAANG trade of Facebook, Amazon, Apple, Netflix, and Google has ceased to be the “most crowded trade” for the first point in almost an entire year. In fact, each of the five technology behemoths are either at or approaching bear markets. What has replaced this much-revered trade is a long the American dollar – short the emerging markets combination trade.
Analysts Are Starting to Predict A Dismal 2019 Coming for Markets
The last months of 2018 have taken global markets hostage on a wild ride of volatility radiating out from Wall Street. The result so far has been a variety of stock markets sliding into official bear market territory. Now experts are stating that this trend likely will accelerate and grow worse in 2019.
The dreaded bear markets have been absent for most of decade now since the end of the Global Financial Crisis and Great Recession. These bear markets are characterized by a decline of 20 percent or greater from a high. They have become a worldwide phenomenon as the DAX of Germany, the Nikkei of Japan, and the Shanghai Composite of China have all reached bear market marks. Within the United States, in the last two weeks the S&P 500 and Nasdaq Composite both reached bear markets.
The dangers to markets appear to be far from over too. Fed watchers believe the Federal Reserve will keep on increasing interest rates in 2019 even with President Trump vocalizing opposition to their actions that are clearly dampening the markets. Concerns of a full-blown economic retrenchment around the world are deepening as the ongoing trade war between the two greatest global economic powers shows no signs of improving. CCB International Securities Global Strategist Mark Jolley predicted ominously:
“I would love to be more optimistic but I just don't see too many positives out there. I think the worst is yet to come next year. We're still in the first half of a global equity bear market with more to come next year. My core scenario will be a credit event, which will further weigh on equity markets, which will definitely weigh on high growth sectors like tech.”
Jolley believes the greatest dangers are lurking in credit markets. As the Fed is signalling two more interest rate increases for this coming year 2019, firms are going to discover it is becoming harder and harder to manage their debt servicing, Some over-leveraged companies will have their credit ratings downgraded, while others will default on debt. It is this weakness in national and international credit markets that will cascade into stocks, according to Jolley and analysts that see macroeconomics his way.
There is another related but more general reason for concern. With the Federal Reserve tightening up their monetary policy, less money and credit will be available to investments, according to Mizuho Bank's Head of Economics and Strategy Vishny Varathan. He stated that:
“There is really no conviction for markets to buy back because they are not sure this is the bottom, and so they are thinking this is the proverbial falling knives.”
The International Monetary Fund would agree with these assessments. The IMF has downgraded their global growth forecasts thanks to increasing trade tensions plaguing the U.S., China, and other major trading partners. They pointed out that this is finally beginning to affect economic activity around the world.
Respected Analyst Predicts Full Bear Market From These Levels Over Debt
Others are more bearish and negative even than these sobering assessments. Respected Wall Street veteran analyst and Chief Strategist Todd Horowitz shared his stark concerns on where equities markets are soon heading into the New Year with:
“I do think we are going into a recession, I think that next year is going to be a very rough year for markets, and I can see another 10 to 15 to 20 percent [decline], and a sell off. I think we are entering very rough times because of all these things that are going on, because of the weakening economy. We have got way too much debt in this country.”
Horowitz has some extremely valid points here. The total debt levels for corporate America touched more than $9 trillion by the middle of 2018, per data from the Securities Industry and Financial Markets Association.
As if this is not bad enough news, Horowitz dared to declare what others have only whispered so far— that American banks have become “probably over leveraged once again.” He warned that:
“We allow the banks to continue to accumulate massive debt and nobody realizes that the banks have been buying up loans from all these peer to peer lenders and some of these smaller lending institutions.” It looks good on the bank balance sheets “only for the moment.”
Consider yourself fairly warned by a respected name in the investment and finance industry.
At Unsettling Times Like These, Gold Is Your Portfolio's Best Hope
What does it all mean for you the retail investor trying to preserve your hard-earned retirement savings and portfolio? You can not rely on the stability and strength of global investment sentiment, a calm geopolitical climate, or wiser heads to prevail with government economic policies. You need to prepare for the continuing instability and volatility in global equities markets with IRA-approved gold to help cushion your portfolio in financially difficult and dangerous periods like these. Look into a gold IRA rollover now while there is still time.