Global Stocks are Showing Weakier Economic Times Ahead

Filed Under Fundamentals & Charts, Market Commentary |

Our new world, the Global Economy. Many pundits are touting the power of the global economy. New powerhouses that are emerging: India, China, Singapore, and Australia. Most notably are India and China, the two countries who hold (seemingly) half of th world’s population. Tremendous growth potential in either country is obvious but, is it reality? I am not denying 20 years from now India and China will have economies that will rival those of the G8’s best but, is it just straight up? In reality, there are natural swings whereby the economy will experience peaks and troughs but end up higher over a long period of time. The United States certainly has seen its growth and corrections even a great depression. It appears our global economy is about to suffer a correction. What on earth could be foreshadowing a downturn? Stocks!

Downturns in the economy are usually foreshadowed by stock market declines. The United States most notable declines were proceeded by the 1929 crash and the 2000 stock market bubbles. Let’s take a look at India’s, China’s, Singapore’s, and Australians most notable indexes:

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Stocks will foreshadow economic events 6-12 months in advance. Of course history never repeats itself exactly but it will show in different forms. In the end, the same result will occur. After stock declines in the above charts there is no doubt the economies which make up the stocks will certainly suffer substantial losses. Its not like the United States was never proned to long economic recessions, this time isn’t different because human nature never changes.

Look for GDP of these countries to begin faulter and ultimately begin to show recession. This will certainly help the energy picture as well as other demands on agriculture related items.

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