October 'Crash' Still on the Way: CEO

[joeblow]

October 'Crash' Still on the Way: CEO

http://www.cnbc.com/id/33305452

Enzio von Pfeil, the chief executive officer of EconomicClock.com, recently predicted another economic crash for October 2009. Von Pfeil claims that stock has ceased to increase and, despite some economic recovery, unemployment is still on the rise.

He states that tensions will be felt worldwide, including Asia and Europe. However, the U.S. will face the brunt of it. Labor and consumer intensive industries will be hit the hardest. Problems will also stem from excessive taxation of working sectors.

Back in July, Enzio von Pfeil, chief executive officer of EconomicClock.com, predicted a stock market crash in October. On Wednesday, von Pfeil reiterated his forecast, saying: "It doesn't have to be a calamitous crash. But I do think we're heading towards something. One sees that the market's become a lot more 'toppy'. It's stopped going up and up and up."

"One sees far too many players in the market that perhaps shouldn't even be there," he added.

One reason for a big selloff is likely to be strong downward earnings revisions occurring in the near future, von Pfeil said.

"There's going to be quite a bit of strong downward earnings revisions going forward, especially the outlook for 2010. And that's simply because the economic clock, of which we tell the economic time, suggests that the excess supply of goods (rising unemployment) is here to stay and you can't keep on making profits if unemployment keeps rising," he told CNBC.

This Earnings Season Won't Be as Dazzling

The worst of the earnings results will come out of labor-intensive and consumer-led industries, according to von Pfeil.

"The key earnings surprises will be in those industries which cannot keep on cutting workers," he said. "In other words, the basic materials and the very labor-intensive industries, like the car industry that very much have already gone through their cost-cutting exercises."

The U.S. will have the worst earnings results, closely followed by Europe as problems in the housing sector and consumer sector remain. But von Pfeil warned that Asia will also be affected by the earnings news from the West.

"The U.S. will come in for major surprises because you do see that the mortgage problems persist. That means that consumption is going to remain low. That means that U.S. consumer stocks cannot fair very well, particularly at the discretionary end of the stick," von Pfeil said. "(Another) region to do very poorly will be over-taxed Europe where the politicians managed to have taxed away any shred of work incentive."

"It is going to be very much in the West that you see these downward surprises," he said. "But again because of technology, it's the inter-connectedness of markets that is going to make those downward earnings revisions in the U.S. and in Europe, particularly in the consumer sectors ripple through and affect Asian market sentiment."

Von Pfeil predicted a "muted jobless recovery coming through."

China Won't Save Us

Another reason for von Pfeil's bearish prediction is that he has a "feeling that there may be some kind of a knee-jerk policy response in China. Given China's global role, could very well lead to some very severe downward market surprises."

"I do think that the Chinese growth story is a little bit of a tin drum that is understandably made to look very good," he said, adding that he doesn't believe so much in the positive growth numbers and outlook for China as he sees labor costs rising.

"I don't believe that China, with a per capita income that is a fraction of America's, is actually going to pull the world out of recession," he said.

[Father Brown]

I've just had the opportunity to listen to part one of Daryl, Ognir, and Mohammed talking about the unsustainability of this recent move in the stock market. I am referring to The French Connection's latest broadcast. I thought they did a great job exploring and explaining the phenomenon from the perspective of banks buying up assets on the cheap with our money and also the unsustainability of this beast. Of course 'our money' means the debt we are assuming for them to go on their buying spree.

I think it will crash again, as I do see an end game strategy forming. But, short of an end game, it may sustain for awhile. But it doesn't matter if these companies lose their value by two thirds. They will still control the hard assets which is what counts.

Listening to Daryl and Mohammed a week or so back, they brought up a great idea in regards to pensions or 401(k) plans that really hit the point home. Out of the park so to speak. That if the company you worked for simply gave you a gold coin every once in awhile, we all would have been far better off. Of course we couldn't have that. That might have actually served to wake people up long ago. More likely it would have simply caused bitching and moaning by the sheeple who viewed Gold Bugs as old fashioned, and this kind of activity as taking good money away from participating in the Tech Stock Boom.

These are the same kind of idiots who complained when the S&P only returned 25% in a year and most of the Growth Companies were getting returns of 34%. Of course we are talking Nominal Returns here. Real Returns in the US Stock Market over 200 years have always only been 7%. But, hey, receiving that 7% by having a steady climb of 10% in the Nominal Return Rate is kind of boring. It may actually make the little guy who is more interested in casinos and lotteries, not to jump in on the great Ponzi Scheme that became evident to anyone with eyes in the '90s.

I would like to see all people pull their Federal Reserve Notes out of the bank and put them under their mattresses. If that idea scares you, put them in a safe. If that is still too risky, take your cash and store it in a Safe Deposit Box in your same bank. This is the only way to fight the system.

But, great shows Daryl, Ognir, and Mohammad. My hats off to you guys for probing the situation at hand.