Forecast 2009: There Will Be Blood
Tuesday, February 3, 2009 21:002009 will be a year of complete destruction for the US economy. 5 Million will lose their jobs. The Dow Jones Industrial average will break below 6,000. Municipalities will fail. Insurers will fail. The unemployed and foreclosed American population will take to the streets and begin rioting. The Greatest Depression is upon us.
Sound far fetched? We welcome you to read our archive section from 2007. ChartingStocks.net issued warnings of the coming stock market collapse and successfully predicted the coming depression which is now at hand. At the time, our view was also “far fetched.”
January Barometer
Analysts like to give their full year forecasts in December before the year begins. It makes sense considering the amount of new years resolutions and the endless assortment of “Top 10″ lists for the coming year that one tends to see at year end. From a practical standpoint, however, it makes must better sense to forecast the financial markets after the crucial month of January has past.
Historically, stock movements in the month of January has been an accurate predictor of the following eleven months. Technicians refer to this as the “January Barometer.” According to the Stock Trader’s Almanac, the January Barometer predicts the year’s direction with a 74% probability. To coin the old Wall Street saying – “As January goes, so goes the year.”
So how did January go? January 2009 was the worst January for stocks EVER. All of the major sectors finished the month down while the market (S&P 500 index) lost 11.3%. Traders and portfolio managers also use the barometer to sort through different industry groups. Generally speaking, if an industry group does well in January, it tends to do well the rest of the year and vise versa. Here’s the break down of January performance:
healthcare -0.04%
utilities -1.48%
tech -4.88%
energy -7.94%
staples -7.31%
materials -11.92%
discretionary -13.29%
industrials -15.53%
financials -27.01%
Every major group was down for the month. Healthcare and utilities held up the best which you would expect in a fearful market. These groups are defensive in nature. The US financial sector shed 27% in the month of January alone! Bottom line – The January barometer is predicting a year of carnage.
Great Depression Part Deux
Are we in a depression? In 2007, when we wrote about the coming stock market collapse and depression to follow, it seemed to be a very far fetched notion and was met with disbelief and even a few harassing emails. What a difference a day makes. Sure, the mainstream media won’t dare call it a depression but you must consider that they were denying that we were in recession until very recently. Let’s examine the state of the US economy.
Automobile Industry: The number of vehicles sold in the US has been decreasing at a gradual yet continuous rate since 1999, when nearly 8.7 million vehicles were sold in the US. The auto industry is in depression.
Housing: Home sales and prices have been in a steady decline since the summer of 2005. We are coming up on 4 years of declining levels, whereas a depression is characterized as 4 quarters of declining levels. Housing is in depression.
Retail: The latest retail sales numbers show the consumer is not consuming. The numbers have been falling off a cliff over the last 6-8 months. Retailers have been closing their doors and filing chapter 11 at an alarming rate. Not to mention the constant announcements of layoffs. This trend will accelerate this year. Retail is not in depression but is surely heading there. Fast.
Financials: The financial index is crucial to the economy. Market technicians follow the financial index and use it as a leading indicator to the stock market. When financials begin to under perform the stock market when prices are rising, it’s a good idea to get out of the stock market. The financials began underperforming in in early 2007 and we published pieces warning our readers to sell the financials and the market as a whole. This was the final warning in our view.
The financial sector collapse is continuing. Major banks which were household names in 2007 have disappeared in 2008. The remaining firms are surviving only by government intervention. The largest US banks, Bank of America and Citigroup ARE BANKRUPT. They ARE insolvent. They will surely not exist in their current form by years end. The financial sector is in depression.
2009 Predictions:
Ten or more municipalities will fail this year. This will cause a panic in the municipal bond market as the municipalities will either default or threaten to do so absent a government bailout.
US Government Loses AAA Credit Rating- If the ratings agencies weren’t dominated and owned by US interests, this would have happened in 2008. I believe the situation in the US will become so dire that even the ratings agencies will have to downgrade the United States in 2009 OR begin to issue negative outlook warnings amid global outcry.
A major US insurance company fails: The insurance stocks look to be heading to the same place as Lehman, AIG and Bear Stearns did. The costs of hedging their portfolio risk has been skyrocketing as weary investors fall back on insurance company “Guarantees” to cover there investment losses. They dont have it. Some companies look stronger than others but I’d put my money on Hartford being the one to go.
The largest US banks cease to exist in their current form: As far as banks go, Citigroup and Bank of America are insolvent. They are bankrupt. They’ve been kept alive by trillions in US gov aid but, in the end, they will cease to exist in current form. This may suggest the “Bad Bank” scenario or a complete nationalization but they can not function for much longer as they are.
5 million Americans lose there job in 2009. Sounds like a high number but remember that we lost 3 million in 2008. The first few weeks of 2009 indicates a frightening acceleration in this trend.
Riots/Protests/Social Unrest: With the acceleration of job losses and foreclosures the citizens of the US go the way of Iceland, Greece, Spain, France, Latvia and Bulgaria and begin rioting in the streets due to the economic conditions.
Dow/Gold Ratio Hits 5: This ratio has been declining since 2000. Even throughout the previous “Bull” market, as the Dow was making new highs in cash terms, it was making new lows in terms of gold. In other words, the Dow Jones, adjusted for inflation, has been crashing for almost 9 years. Currently, the Dow is at a 20 year low in real terms. We expect the ratio to hit 5 this year. 5 ounces of gold will buy the Dow Jones. At current gold prices, the Dow would have to be under 5,000 however, we do expect that gold prices advance higher this year and so expect a higher figure for the Dow.
Dow Jones Break 6,000: What of this “Second Half” ralley the media is selling? We beleive it is not only wrong but completely reverse. In our view it is more likely that the Dow rebounds slightly in the early months of 2009 and then continues a sharp decline in the second half. We anticipate the Dow Jones breaking 6,000 in 2009.
Related posts:
Paul Lindbergh says:
February 4th, 2009 at 9:21 am
You have been correct for some time now. Do you have an advisory service suggesting what to buy or short ?
mike says:
February 4th, 2009 at 6:49 pm
“3 million Americans lose there job in 2009.”
ron says:
February 5th, 2009 at 12:28 am
great article i concur………..thk uu
chartingstocks1 says:
February 5th, 2009 at 6:29 am
We don’t offer advisory services though can suggest some excellent advisors.
M.A. Sanders says:
February 5th, 2009 at 12:24 pm
WOW! Great article! I must say this is DEAD ON!
We all know SOMETHING is coming and the worst may be yet to come…
If you want to see how to PREPARE for and GAIN from it check out the site:
http://www.prepareforandgainfrom.com
Whatever says:
February 5th, 2009 at 6:29 pm
Ha ha ha ha ha ha ha.
I’m really on the floor laughing.
“Buy stocks. Short them. Go long. Land of Opportunity. Operators are standing by.”
You are some loco motherf*ckers.
Forecast 2009: There Will Be Blood « Heidi-Lore’s Musings says:
February 6th, 2009 at 11:29 am
[...] [...]
Bruce says:
February 6th, 2009 at 11:46 am
3 million? Itulip is saying more like 10 millions laid off. Hard times are coming that is why I open my website.
D. L. says:
February 6th, 2009 at 11:53 am
I am not qualified to comment one way or the other on your economic predictions, but I think your prediction of “riots/protests/civil unrest” just based on economic bad times is flat out wrong! We are talking about the American people, here! the ONLY thing that will get Americans to carry out any kind of social unrest is 1) lack of food/water/shelter, not with a few million but about 100 million Americans and 2) Obama and his handler Rahm Emmanuel take our guns away. Clinton tried it using the “patriot/militia” conspiracy as a pretext, but saner heads prevailed back then and it failed. They may be able to do it this time…many Americans will turn their guns in, or register them, but many will not. This alone might bring about not unrest but violent revolution. Obama would be stupid to let that happen!
hulk says:
February 6th, 2009 at 3:41 pm
Oh my God! Finally! My lord please destroy America just as it tortured me and destroyed me. Devastate the whole land. Do not leave even a single standing tree nor a house. Let them live in caves. Bring evil rulers among them so that they will tuck the rest in FEMA camps. They will be gassed there lol. Yea if you can’t find bread to eat, try some CAKE!
Warren says:
February 6th, 2009 at 6:33 pm
hulk on February 6th,
2009 3:41 pm Oh my God! Finally! My lord please destroy America just as it tortured me and destroyed me. Devastate the whole land. Do not leave even a single standing tree nor a house. Let them live in caves. Bring evil rulers among them so that they will tuck the rest in FEMA camps. They will be gassed there lol. Yea if you can’t find bread to eat, try some CAKE!
Can not agree more. I think that Americans are cowards and that one will not be easy. America would rather degrade since population does not have any pride and selfrespect. Bad thing is that I am in US but still, after almost 2 decades in US when all I experienced was shame, it would not be difficult for me to leave this world. I believe that US citizens might be first and most welcome to reeducation camps, that foreigners will be still allowed to leave.
US was never designed for people but for criminals and butchers who will soon have their day. World, save yourself. Distance itself from US as more as you can. No business, no banking, no aliances, no help, no culture. That is all designed to destroy you. Be what you are.
Travis says:
February 6th, 2009 at 10:05 pm
Bring on the crash and lets get it over with. Time to end this credit consumer nation once and for all. This B.S. house of cards has been propped up for years now so let it fall and see where the real cards lie. I have had enough of the deliberate dumbing down of our schools system, TV ads relling you what to buy, and so forth.
The United States is now a service economy which means we are washing each others clothes and cleaning each others houses while buying cheap, poisonous Chinese made trinkets with our Walmart salaries. Here’s what our modern day politicians represent: being a fat pig who pins “Country First” buttons on his man titties and chants “U-S-A! U-S-A!” at the top of his lungs while his kids buy groceries with credit cards and his grandchildren are saddled with a Bailout debt in the $$ Trillions which can never be paid off.
Democracy doesn’t require a whole lot of work of its citizens, but it requires some: It requires taking a good look outside once in a while, and considering the bad news and what it might mean, and making the occasional tough choice, and soberly taking stock of what your real interests are.
Global News (02/06/09) says:
February 6th, 2009 at 10:10 pm
[...] Forecast 2009: There Will Be Blood (ChartingStocks): 2009 will be a year of complete destruction for the US economy. 5 Million will [...]
Shrikant Barve says:
February 10th, 2009 at 5:14 am
Will there be wage cut accross the board worldover?
Best policy I feel.
Ed Hardy says:
February 11th, 2009 at 12:22 pm
Nice post. Most blogs or not very informative. At least I learnt somthing with yours.
US Triple-A Credit Rating at Risk - Moodys | Charting Stocks says:
February 15th, 2009 at 4:07 pm
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[...] our forecast for 2009, we warned of the coming riots, protests and overall civil unrest. As the economic crisis deepens, [...]
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Alami says:
March 4th, 2009 at 8:53 am
Thank you for the article chock-full of useful data. I’m currently invested in (actual physical) gold and have seen it consistently gone up in value with no real sign of slowing down. I’m thinking the Dow-Gold ratio will be closer to 3 before the year is through (Gold $2,000, Dow 6000), and will approach 1 (as it had two times since WWII) as inflation rears its ugly head (possibly in 2010) due to all the new money supply.
If you look at the long-term Dow curve, you’ll see that the major support level is 4000, and that’s not inconceivable for that to be the point where investors (mostly foreign ones with U.S. dollars in cash) get back in the stock market and real estate.
Jackson says:
March 4th, 2009 at 9:15 am
There won’t be any riots here in the US. The American people are completely burdened with the good- little- slave mentality. The American people are cowards when it comes to defending our freedoms and prosperity. How many jobs and homes have already been lost? And still nothing like riots have happened. The American people let the elitists walk all over them every time, otherwise we would not have illegitimate income taxes let alone a multi-quadrillion dollar derivatives bubble. That economic destroying death star truly means game over when the bubble DOES burst. Even then, we still won’t have riots and the American people will go quietly into the night without so much as a whimper.
ed says:
March 4th, 2009 at 10:28 am
people are hungry no job, no food, they have to do something. I am sure we will have riot on big cities. let us hope Obama will fix the economy.
Z.O.G. says:
March 4th, 2009 at 12:15 pm
Yep, this is what happens when you allow Jews to run your banking and financial system.
You get what you deserve.
Z.O.G. says:
March 4th, 2009 at 12:16 pm
Barack Obama’s Economic Team
Benjamin Bernanke(Jewish) – Chairman, Federal Reserve System
Timothy Geithner(Jewish) – Secretary, U.S. Treasury Department
Lawrence Summers(Jewish) – Chairman, National Economic Council
Paul Volcker(Jewish) – Chairman, Economic Recovery Advisory Board
Jared Bernstein(Jewish) – Chief Economist and Economic Adviser, Vice President
Douglas Shulman(Jewish) – Commissioner, Internal Revenue Service(IRS)
Peter Orszag(Jewish) – Director, Office of Management and Budget(OMB)
Jon Leibowitz(Jewish) – Chairman, Federal Trade Commission(FTC)
Gary Gensler(Jewish) – Chairman, Commodity Futures Trading Commission(CFTC)
Mary Schapiro(Jewish) – Chairman, Securities and Exchange Commission(SEC)
Sheila Bair(Jewish) – Chairman, Federal Deposit Insurance Corporation(FDIC)
Karen Mills(Jewish) – Administrator, Small Business Administration (SBA)
Christina Romer(Jewish husband) – Chairman, Council of Economic Advisers
Z.O.G. says:
March 4th, 2009 at 12:17 pm
Keep in mind that Jews are only 2% of the United States population.
Z.O.G. says:
March 4th, 2009 at 12:18 pm
The Jews Behind Barack Obama
Rahm Emanuel(Jewish), 48, The White House Chief of Staff for President Barack Obama, Emanuel is a former Illinois Congressman, investment banker, and Clinton White House adviser. A radical Zionist, dual citizen of Israel, and lifelong Mossad operative, Emanuel has been a stalwart ally and liaison to the Jewish community. In Washington he is known to be hot-tempered, foul-mouthed, and extremely effective.
David Axelrod(Jewish), 52, The senior White House Adviser for President Barack Obama, Axelrod was the chief campaign strategist for Obama’s 2008 presidential campaign and the man given credit for getting Obama elected. He engineered Obama’s election to the US Senate in 2004 and stuck with him all the way to the White House. Axelrod’s hard-hitting style is largely responsible for the Obama campaign’s extremely aggressive approach to traditionally Republican strongholds.
David Plouffe(Jewish), 41, The campain manager of Barack Obama’s 2008 presidential campaign, Plouffe is the man who engineered the surprise victory in the Iowa caucuses and reigned over one of the most disciplined campaigns in modern history. When Mr Obama trailed John McCain in the national polls in early September, Plouffe was the man reminding everyone to remain calm. In the end, he was right. Asked whether he’d take a job in the new Obama administration, Plouffe responded: “I’ve done my part.”
Penny Pritzker(Jewish), 49, The chairman of the national finance committee of Barack Obama’s 2008 presidential campaign, Penny Pritzker is perhaps the most powerful woman in America and also one of the richest, as heiress to part of the Pritzker family fortune(believed in excess of $40 billion). Chosen by her late uncle to help oversee the family’s vast portfolio of investments that includes Hyatt hotels, real estate investments, and 40% of the Marmon Group. According to Bloomberg, Penny gets much of the credit for getting Obama elected and for “organizing the best-financed campaign in US history.”
John Podesta(Jewish), 59, The chairman of Barack Obama’s presidential transition team, Podesta was also Bill Clinton’s White House Chief of Staff from 1998 through to the end of his term. In his new role, he has helped Obama to identify Cabinet officials and key members of his new administration. Head of the liberal think-tank Centre for American Progress, Podesta stayed largely out of the Democratic primaries.
Pete Rouse(Jewish), 62, The Deputy White House Chief of Staff for President Barack Obama and co-chairman of Obama’s presidential transition team, Rouse was also Obama’s chief of staff in the Senate. Rouse helped prepare a memo, “The Strategic Plan,” for Obama’s first year in the Senate. Having worked on Capitol Hill for more than 30 years, Rouse has come to be known as “the 101st Senator” for his knowledge and skills.
eric hancox says:
March 4th, 2009 at 2:26 pm
Z.O.G.: Bernanke’s name is Ben Shalom, not Benjamin. Orszag is the one to watch out for. He consulted for Russia and Iceland before each of their collapses. A true strike-out artist.
Jeffry Pilcher says:
March 4th, 2009 at 10:16 pm
@chartingstocks – You guys need to moderate these comments a little. Anti-semitism? Come on…
Dev Lingo says:
March 5th, 2009 at 4:47 am
These projections are probably going to turn out to be pretty close, maybe even a little optimistic. One thing that hasn’t been accounted for, I think, is food and agriculture. It looks like ouput will fall is California, maybe other southern states too. If a big agribusiness firm, like say Cargill or Maple Leaf Foods, goes bankrupt, it would likely disrupt the food commerce system. If a few go, the price of gold might seem cheap when compared to the price of a sack of potatos.
Billy says:
March 5th, 2009 at 12:30 pm
Shooot Z.O.G. you’re scaring me. If that is all true….cripes!! and if so, why not talk about it? I mean it’s not anti semitsm, it’s just puttig 2 and 2 together. This is a forum…if you disagree, make your case, otherwise information stands as evidence, why hide from truth? even if it’s ugly. Anyone have info that debunks Z.O.G.?
Dow/Gold Ratio Hits 7; Multi Decade Low | Charting Stocks says:
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[...] our 2009 forecast, we mentioned that the Dow Jones/Gold ratio would likely hit 5 this year. A milestone was reached [...]
Forecast 2009: There Will Be Blood « Truth11 says:
March 6th, 2009 at 5:58 pm
[...] Forecast 2009: There Will Be Blood Charting Stocks [...]
Igori says:
March 21st, 2009 at 6:55 am
Ну а что еще писать шоб не потерли?
zezowaty Zorro says:
March 24th, 2009 at 3:50 am
WTF to ma być. Co myśleć idiota banana publikować google translator? Polak idiota? Viva Polonia, viva Mozambique!
This says:
May 5th, 2009 at 11:00 pm
This…
Have you been blogging long? The Wall Street Survivor | Pajama Mommy – A Women and Mothers Blogger … is a great blog, you have a great writing style too. Found this post last Wednesday and i’ve been reading your blog since. I’ve subscribed to you…
Jenny says:
August 8th, 2009 at 7:55 pm
Z.O.G. you really need to take a step back and realize this was not done by a ‘Jew’, a ‘Christian’, a ‘Buddhist’ or any person with a particular religious belief; this was done by many, many human’s who didn’t do a very good job of business management, particularly finance.
You need to stop blaming a religious group for the world’s problems, no one group can create this type of economic crisis, it took an entire world of wastefulness.
And for the record… most of the so called Jews I know are fabulous money managers and are very, very capable bankers, finance directors, and accountants. Therefore, your stand on your whole Jew theory is blown out of the water.
scott says:
September 19th, 2009 at 6:03 am
2009 will be a year of complete destruction for the US economy.The Dow Jones Industrial average will break below 6,000. Municipalities will fail. Insurers will fail. The unemployed and foreclosed American population will take to the streets and begin rioting. The Greatest Depression is upon us.
WRONG! Thank god!
chartingstocks1 says:
September 24th, 2009 at 10:05 pm
6,400? close enough..muni’s and insurers survived because of gov. bailouts..and americans are taking to the streets