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Mark's Market Blog

1-3-16: Mark's Bold Predictions

By Mark Lawrence

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The tea leaves - unemployment claims and PMI - are signaling recession. Are we in a recession? I'm clear that we're not in one today. Are we headed for a recession in the first half of 2016? I'm doubtful about that, but perhaps. In any case, it's definitely time to be very cautious with your investments. The market closed flat for 2015, reinforcing what we already knew: our country - economy, politics, world relationships, markets - went nowhere this year.


S&P 500 July 1 2015 to December 31 2015

The Chicago PMI - purchasing managers index - came out at 42.9, clearly signaling a contraction in business activity. A bit ago we got a similar signal from the Philly PMI.

Unemployment claims are rising, signaling that business hiring is slowing down.

Existing home sales dropped 10% in November compared to October.

China's manufacturing continues to contract. No matter how much money their central bank prints, they can't get Europeans and Americans to buy more of their over priced and under quality goods. I'm ready to call it: China's going in for a hard landing.

Saudi Arabia and Iran are locked in proxy wars on several fronts: in Syria, they arm fighters and fight on opposite sides. In Yemen the same thing. And Syria and Yemen border on Saudi Arabia, so they feel quite threatened. This week Saudi Arabia cut the heads off of 46 people including the popular Sheikh Nimr al-Nimr, a shi'ite cleric, for inciting terrorism. Iran promptly had a "student demonstration" against the Saudi embassy resulting in burning it down. Now Saudi Arabia has severed all diplomatic ties with Iran, giving their diplomats 48 hours to leave Saudi Arabia. Officially the US has no part in this; unofficially, after 75 years or more of backing Saudi Arabia, Obama as distanced himself and pushed us in the direction of Iran. One of Obama's top three advisors is Valerie Jarrett, an Iranian. Israel doesn't like this much either as they have had a behind the scenes partnership with Saudi Arabia for decades. The middle east is getting extremely dangerous. So is the south china sea. The world does not lack for hot spots that could lead to all out war.

Iran fired off an ICBMs in a test last October, a violation of our agreement, depending on who you believe. This last week Iran's president Rouhani ordered Iran's missile program expanded. Obama says he needs more time to decide on sanctions - apparently 10 weeks wasn't enough to make up his mind. Iran has calculated that Obama is going to let a lot of their behavior slide, and I agree with their calculus.

Minimum wage went up on the 1st of the year in Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Massachusetts, Michigan, Nebraska, New York, Rhode Island, South Dakota, Vermont and West Virginia. These 14 states have raised their minimum wage on average from $8.50 to $9, well above the federal minimum wage of $7.25. California and Massachusetts lead the pack with increases to $10; Arkansas rings up the rear with an increase to $8. Obama wanted an increase in the federal minimum wage to $10.10, but failed to get it passed. The Congressional Budget office estimated that such an increase would raise the wages of 16.5 million americans and would have lifted 900,000 americans out of poverty, but also would have cost 1 million jobs. Personally I'm unclear what the CBO means by "americans;" previously I showed that in California two-thirds of the new money went to illegals. I'd like to know what the statistics are in the CBO study about who makes more money and who loses their jobs.

Mark's Bold Predictions.

First, how did I do on my 2015 predictions?

Mark's Bold Predictions for 2016

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