Into the plunge?

A threat of a crash

Please note that this entry acts also as a Deprcon Warning (see the end of the post).

From Tuomas Malinen’s Forecasting Newsletter.

Issues contributed:

• Resemblance of the current financial market conditions with those that preceded the Great Crash of 1929 continues to increase.

• There’s a heightened risk of a major October liquidity-drain.

• These sound a warning of a market crash.

In early November past year, I discovered that the global liquidity environment, or the global financial system, had turned increasingly fragile. In mid-February I uncovered the crucial role of China in it, and in early July I published my first warning considering the fall. In mid-July we at GnS Economics published a warning on a ‘last hurrah’ market rally. In it we noted that we are giving a warning of a possibility of a market rally, which may (is likely to) come to an abrupt end in the fall. It turned out, we where right on the money, as the DJIA peaked on the first day of August. In early August we also warned on “precarious August and September” in the markets. 

Exceptionally, this piece will act like as a warning also to the subscribers of GnS Economics Newsletter. Below I will detail what the warning is about and why we are issuing it.

The ghost of 1929

I have been “flirting” with the observation that markets seem to have been following the path of stock markets during the ominous year of 1929 (see, e.g., this and this). Now I have to conclude that we are not talking about mere flirting anymore.