Well, I said it! Dow drops, wipes out 2014 gains. Gone.
Thanks a lot Obama!
Because it has to be Obama's fault? It was Bush's fault before right?
When the economy tanked last time, it was Bush's fault. Now everything that we made in 2014 is wiped out. It's gotta be Obama's fault.
And this is how much you need to watch this show because we predicted this a week ago. We knew this was coming. Before anybody was talking about sentiment shifts, I was talking about it on this show.
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The fall of the stock market
There's a lot of stuff going on in the Eurozone right now.
France is bucking the European Union's demand to stay within a budget. It's continuing to run large deficits that it refuses to cut back on.
There is massive concern of deflation in the Eurozone and there's talk from the U.S. that's trying to push the European Union into taking on and doing more stimulus in order to support their economy.
To the layman, they would look at what happened in the U.S. and what happened in the Eurozone and they would say to themselves: well, because we did all of the stimulus in the U.S., that's why the economy has come roaring back.
That's why we haven't suffered as greatly as the European Union has because the E.U. has taken one of austerity. One that has cut back on our debt. And because of those two, that's why there's such a wide disparity between the United States and the European Union.
And unfortunately, that is not the case.
When we dig a little bit deeper, what we find is that that was in fact not what was going on. There were much deeper issues in the Eurozone. Europe is a much bigger problem. That they have much more to worry about than the United States does.
And there are a variety of reasons for that and so I'm going to talk about that with you today and talk a little bit about what they can do to fix it. And really about the flawed economic policy that we've taken here in the United States.
Last Wednesday, if you were watching this show, you not only knew that the market was tanking, that the market was getting ready for a collapse, but you would have known exactly what you needed to do.
Clip from last Wednesday:
So, what do we got going on today? Well first of all, if we take a look, what did I tell you yesterday? I said 'be careful! This market is volatile! I said, this is going to be a critical day. I think we've got more downside. This is not a time where I want to be investing in the market. Why? because I think we're due for a 10% to 15% correction at the least.
One of the things that I was able to derive from the news that was coming out and the reaction of the market to specific news events is I believe that a sentiment shift had happened.
That no longer was the market looking to buy the dips but rather, we were in a position now where we were going to end up in a bad way, where people were going to take money off the table.
And sure enough, what have we seen over the last several days? We've seen the largest decline in 4 years. We've seen the 2014 gains wiped out. And the S&P yesterday was down around 9%.
I still think, this is what I believe, I'm looking for that opportunity to take the short position. I still believe that we're going to see a rally. I think the rally may take 3 days, it may take 7 days. But I think that we're going to get a relief rally.
If I'm right, if sentiment has truly shifted, if there is still a concern, then it's time to start thinking about areas to get short on. I'm going to start looking at rallies as ways to start taking money out of the market and put it on the sidelines.
Now, I may be totally wrong about this entire thing. But recent history would say otherwise. And so I would caution you all, I would say to you what I said last week and the week before that, and that is I think that we're coming to the end of it. I think we're coming to a tipping point where we're going to see a significant decline.
I've said it before but I'll say it again: the market is nothing more than a collection of men and women pursuing their own individual self interest.
What does that mean?
It means that they are all looking after themselves, looking after #1. And unfortunately, the psychology typically runs in groups, in herds. If one guy gets bearish then another guy gets bearish and it tends to build up on itself and then, in a bullish economy, it becomes euphoria.
But ladies and gentlemen, as I've been saying for a long time, the U.S. economy is not in very great shape.
Make sure you watch or listen to the rest of Jason's analysis on the problems the U.S. economy has and why the European Union is taking a different tact that will make them far more successful in the long run.
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What a Texas City Is Demanding These Pastors Do With Their Sermons About Homosexualityhttp://www.theblaze.com/stories/2014/10/15/a-witch-hunt-houston-govt-subpoenas-pastors-sermons-as-battle-over-equal-rights-ordinance-heats-up/
The battle over a controversial equal rights ordinance is heating up in Houston, Texas, with revelations that the city has subpoenaed church sermons, among other documentation, from five local faith leaders.
Officials have requested that these preachers deliver communications that have focused on homosexuality or the contentious equal rights ordinance, which these individuals have fervently opposed.
The subpoenas, which were issued last month, seek, “all speeches, presentations, or sermons related to HERO, the Petition, Mayor Annise Parker, homosexuality, or gender identity prepared by, delivered by, revised by, or approved by you or in your possession,” according to the Houston Chronicle.
City of Houston demands pastors turn over sermonshttp://www.foxnews.com/opinion/2014/10/14/city-houston-demands-pastors-turn-over-sermons/
The city of Houston has issued subpoenas demanding a group of pastors turn over any sermons dealing with homosexuality, gender identity or Annise Parker, the city’s first openly lesbian mayor. And those ministers who fail to comply could be held in contempt of court.
“The city’s subpoena of sermons and other pastoral communications is both needless and unprecedented,” Alliance Defending Freedom attorney Christina Holcomb said in a statement. “The city council and its attorneys are engaging in an inquisition designed to stifle any critique of its actions.”
Reading this had my head on fire. It's absurd. This is pushing the bounds of political correctness to the absurdity. And I'm sick of political correctness. This just borders on stupidity.
This is a freedom of speech issue. This is a government that's suppose to be there to protect the people. They're actively going out there to try to silence the opposition by requiring them to turn over documents that they don't have to.
The government has no right to step in and confiscate and demand to turn over that information. They're not accused of a crime, they're not part of a lawsuit. Nothing. They're just a bunch of pastors who object to this politically correct ideology that's constantly being spread.
This is just the latest instance of a government that seeks to silence it's opposition.
Teachable Moment: The only way to get over a debt crisis is to eliminate the debt, not shift the debt.
Now, that requires pain.
The deflationary cycle: Either reduce government spending or reduce consumer spending leads to increased savings and debt reduction. This is exactly what we want.
In a normal economy, this is a good thing. What it will mean is that well run companies who have good profit margins and have run their companies well will end up surviving. Companies not run well will end up going out of business. And that market share will end up getting absorbed by companies that are running good businesses. And you'll see that companies that ran their companies well, that saved, had good cash flows, will have the benefit of not only of a reduced competition but also of increased demand of their products and services.
What's happening right now is that we're not allowing this deflationary cycle to take place. You saw consumer spending starting to pair back, people saving more because we had a negative savings rate in America going into 2008 and 2009 decline. Then savings rates increased.
But we didn't see a massive decline in the economy mainly because the government stepped in and absorbed all of that reduction in spending by borrowing money.
Don't miss Jason's complete analysis on what the government is really trying to do.
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