10/12/04
Hi,

As usual I am confused. In the face of record high oil prices ($54 per barrel), the stock market is rising. In the face of Kerry either leading or tying with Bush, the market is rising. What does this say? Ordinarily this would be great, the market rising in the face of bad news, but in this case, I think the market is delusional. Other negative factors are as follows: rising gold pricing (approximately $420/ounce), rising long-term interest rates, and questionable economic growth.

To update Arnold's projections:

DJIA and NASDAQ: We may still have one final spike up to 10,800 DJIA and 2400ish NASDAQ before year end, then by early 2005, both indexes will head south for a long hibernation - before 2006 ends we should see major new lows for both the Dow and NASDAQ.

Gold: I believe that gold should break through $550 per ounce before year end 2005.

10-year and 30-year Treasuries - I believe these rates starting 2005 are heading North - to at least 8% and possibly much, much higher going into 2006 and beyond.

The Economy: I believe we are going to be heading into a recession by year end 2004 and that we should be in a recession by the third quarter of 2005.

Inflation: I believe we will have an inflation scare followed by significantly rising inflation or significant deflation. It will be one extreme or the other, I just don't yet know which.

Real Estate Pricing: There is a bubble on the East and West Coasts (not in the middle of the country). Los Angeles, Orange County and Las Vegas have already seen their highs and prices are already falling dramatically. San Francisco is still strong. I believe New York is peaking or has peaked, as is/has South Florida. The entire bubble should be deflated by year-end 2005.

Arnold

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- posted by Arnold @ Tuesday, October 12, 2004