I think there is FAR more downside risk than upside. There is no growing economy that I can see in the near future. Stocks worldwide are artificially propped up by debt created to pay debt. IE printing money. All current politicians are doing is trying every trick in the books to stay in power and delay the timing of the next crash. There is crushing debt and deficits across much of the world. The US is borrowing a third of what they spend. Europe is as bad. THe US is printing about half a trillion a year. Money from nothing. Even China is stagnant, as well as india. World wide shipping, (BDI), is down, has been for some time, and is a key indicator. It does not matter who is in the Whitehouse. The piper will have to be paid. GM is in trouble again and the stock the government owns is worth 25 billion less than when they bought it. Exports are down worldwide. Be wary of the stock market. The talking heads on TV have been part of the reason for the recent bear market rally. Personally I am in cash and short term paper, and am waiting for the next large market adjustment to as low as 6000-8000 on the Dow before buying back in again. It may not go that low, but I think it will be very significant and be like the buying opportunity in the spring of 2009.
Here is an article from a newsletter I often read, that came out just this morning.
Global Recession Closer Than You Think
~ by Michael Lombardi, MBA
The global economy is deteriorating quickly. As the days pass, more economic news is released, suggesting that the global economy is taking a wrong turn and that a global recession is looming.
We all know what happened in 2009; the global recession occurred when the demand around the globe collapsed. In 2009, world exports saw their biggest contraction since the Second World War. (Source: “WTO sees 9% global trade decline in 2009 as recession strikes,” World Trade Organization, March 23, 2009, last accessed November 7, 2012.)
Fast-forward to the fall of 2012 and regions around the world are witnessing dramatic slowdowns in their exports. Those countries that were once the leaders in exports in the global economy are now seeing a marked downward slide in their trade.
In 2005, exports from the European Union (E.U.) accounted for 40% of the global economy’s total exports. In 2011, it exported only 34%. (Source: Word Trade Organization, October 2012.) Now, with the eurozone crisis taking a heavy toll, exports into the global economy from the E.U. are facing a further decline.
New manufacturing export orders in the eurozone have been declining for 16 consecutive months. Germany, France, Austria and Greece are at the forefront, seeing substantial export slumps. (Source: Markit, November 2, 2012.)
Similarly, in 2010, the U.S. was responsible for 21% of all the exports in the global economy. In 2011, this decreased to 16%. With the U.S. still not recovered from the Great Recession of 2009, U.S. exports are showing weakness once again. The U.S. Purchasing Managers’ Index (PMI) for October showed that new export orders have now fallen for five consecutive months. (Source: Institute for Supply Management, November 1, 2012).
Export orders for manufacturers from the emerging markets to the global economy have fallen for three straight quarters. They are experiencing the worst decline since the first quarter of 2009. (Source: “HSBC Emerging Markets Index Q3 2012,” HSBC, October 10, 2012, last accessed November 7, 2012.)
Growing exports—what a country makes and wants to ship to buyers outside of its boundary—are fundamental to strong economies. But with exports declining around the world, a global recession becomes a very stark possibility. I’m really surprised the media hasn’t picked-up on the worldwide trend of falling exports.
Looking ahead, seeing exports decline consistently and rapidly, it makes me more concerned about a possible global recession springing up on us in 2013. Economic conditions around the world are poor. This time around, a global recession will create bigger problems than it did in 2009, as central banks have run out of weapons to fight it. Interest rates can’t fall below zero; the more money printed, the more the chances of rapid inflation. The year 2013 could prove to be a very difficult year.