What’s In Store for The Economic Year Ahead?

Dawn J Bennett, CEO and Founder of Bennett Group Financial Services and host of Financial Myth Busting, recently wrote an article entitled, “The Year Ahead.” According to Dawn Bennett, the so-called “recovery” being promoted by the government and mainstream media is propaganda to cover failed policy initiatives from both the White House and the Federal Reserve. This year’s holiday numbers provide a good example, as consumer spending makes up 70 percent of our GDP; holiday retail sales numbers have been disappointing.

  • Black Friday sales were down by nearly $1.2 billion
  • According to AlixPartners, weak holiday retail numbers are partially a result of upper-middle class shoppers being scared by a fluctuating stock market and waiting until the last minute to shop
  • With 300 point drop in the Dow last Friday, it seems like that volatility will remain a factor for even last-minute shopping
  • Reuters reported that sales growth for the holiday season is expected to be half what it was last year at this time

“2015 has produced an S&P 500 which remains at its highest point in history, but that incredible fact is backed up by nothing,” said Dawn J Bennett. “There’s a measure called the Q ratio, devised by a Yale economist named James Tobin. To find the Q ratio of a company, you divide the market value of the company by its replacement cost. Historically, the Q ratio of the market as a whole tends to average about 0.69. Currently, it stands at 1.04, an indication that the market is sorely overvalued. The Price/Earnings ratio for the S&P 500 stands at 19, when the average in a healthy market is around 15. And the market capitalization to GDP ratio of the S&P 500 is currently 1.82. Just before the crash in 2007, it was only 1.52, and you recall what happened then. Advisor Perspectives recently revised their estimate of margin debt in the New York Stock Exchange. In real terms, margin debt is now 20% higher than it was at the peak of the dot-com bubble.”

Below are Dawn J Bennett’s predictions for 2016:

  • Prediction 1: The Fed will continue tightening monetary policy (not a one-and-done rate hike) until our fragile economy rolls over even more.
  • Prediction 2: The junk bond asset class is going to continue to liquidate. This started in August and September of this year, but really became apparent in the last several weeks. The media hasn’t given it much focus, but they should, since every major crash traditionally starts with a single asset class the first domino to fall.
  • Prediction 3: Corporate profits and revenues will continue to be weak, along with manufacturing and exports in general, pointing to the fact that we are already in a recession.
  • Prediction 4: The Fed’s rate hike will prove to be very painful. It will continue to soak up liquidity for 2016, which could be as much as $800 billion in excess liquidity taken out of an already fragile and illiquid system.
  • Prediction 5: Greece’s problems will become exponentially worse, and Europe’s along with them.
  • Prediction 6: Gold and silver have a strong potential to rise 25 to 50%.

Read more from Dawn J Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-writes-article-the-year-ahead-regarding-the-economic-year-ahead-652454.htm

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