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Sprott Comment July 2009 ...

In the major global stock market indices, from the US to Europe to Emerging Markets, you contend that we are in a Primary Wave 2 up, and that the really nasty selling panic will ensue in the next downdraft of Wave 3, which will carry substantially below previous lows of March 09. Yet, hard global economic data (monthly industrial production, leading indicators, consumer sentiment) point to recovery globally by the end of this year. How does your Wave Principle square with the hard economic data, which indicate that even a retest...

Japan was unsuccessful in containing deflation for much of the 1990s. Interest rates were maintained near-zero for almost 15 years, with July 2006 marking the first time this policy was abandoned. Only in 2008 did Japan again sustain positive inflation rates. One of the systemic side-effects of this long period of low interest rates is the so-called carry trade, with investors taking loans at very low interest rates in Japan and investing in higher yielding assets in countries with higher interest rates, typically emerging market...

LAST WEEK Iwrote that iconoclastic economists have been warning of deflation for almost five years, based on subtle signs that Alan Greenspan hasn't been supplying enough liquidity to meet the needs of the U.S. economy. And now — finally — these warnings have come true in the form of declines in the consumer price index, the producer price index and several other widely followed measures of prices. So suddenly everyone's talking about deflation — and not just the iconoclasts.Deflation isn't kind to stocks. For openers, deflation...

After two years of what has been described as financial "doomsday," "Dante's Inferno," and "the Devil's Arcade" -- some big-named banking stocks have started to boldly go where no corporate share has gone in a really, really long time: UP. Last count: Five major U.S. firms have repaid their portion of the $700 billion Troubled Asset Relief Program bailout. Some (like Goldman Sachs and Morgan Stanley) are even reporting huge second-quarter...

Stock markets, whether in Europe, Asia, or the United States, all appear headed lower throughout the remainder of 2009. With global equity markets moving in sync since topping in 2007, a view of the DJIA will suffice.The decline from the 2007 high above 14,000 was in 5 waves (an impulse) and the recovery from the March low is a corrective 3 wave affair. Market movements in the direction of the larger trend occur in 5 waves. Similarly,...

by Robert Reich The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.Unfortunately, V-shapers are looking back at the wrong recessions....

Is the most powerful of all waves right around the corner? The short answer is "YES."The long answer will help you anticipate where and when …First, let's describe wave 3. If wave 3 was a superhero, he'd probably be The Flash (though he could be The Hulk). Like The Flash, there's no mistaking wave 3's characteristics: It gets to where it's going in a hurry.It usually catches everyone by surprise, andYou'll know it when you see it.Robert...

The stock market’s rally has been impressive. The major indexes are now up about 40 percent from their recent lows, give or take a few percentage points. And for anyone who scooped up more speculative shares on weakness, the profits could be even higher. Personally, I don’t ever recommend purchasing shares of companies with shoddy business models, consistently unprofitable operations, poor track records of caring about their shareholders, etc. But I realize that many investors did buy these kinds of stocks as aggressive ways...

What are the most important and enduring characteristics of the Great Depression? And what should we monitor to determine how severe today’s situation really is? The stock market will give important clues. But the economy, especially unemployment, defines depressions. That should be obvious. However, after the stock market rallied off its March 2009 low, the media and many pundits seem to be fixated on the financial markets to determine the severity of the crisis and to call its end. To see if the bulls’ hopeful thinking holds...

July 5, 2009- Market Summary In this week's report we'll take a look at a common reversal pattern, known as a head and shoulders, which is starting to form on the charts of several major indexes. For those who need a quick refresher, you'll find that this pattern must go through four main steps to signal a reversal. The first step is the...

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