WILL THIS OCTOBER BRING ANOTHER BLOODBATH IN THE STOCK MARKET?

MY DAY JOB TELLS ME THE STOCK MARKET IS
ABOUT TO HIT A WALL

I don’t often write about financial issues, the economy, recommendations on investments, etc.  However, my “day job” is teaching young entrepreneurs how to finance their business.  My official academic expertise is finance.  I teach graduating seniors about the good, the bad, and the ugly of starting businesses – both for profit and not-for profit.  I’ve been doing this for almost 16 years now – longer than I’ve been writing books on history, spirituality, and eschatology.

Consequently, I pay close attention to the so-called “capital markets” (those institutions that loan money or invest it in stocks, bonds, credit lines including venture capital, private equity, business banks, angel groups, and so on).  And its time for me to address the issue of the economy and what I predict will be happening in the near-term and still foreseeable future.

My general prediction has been that America’s economy is still likely to outperform other economies in other parts of the world.  My colleagues that write about the economy have been a broken record predicting the collapse of America and the collapse of the world economy.  They do this in part because they hope the world is going to hell in a handbag to hasten the return of Jesus Christ.  Surely an economic collapse will signify that the world economic system is failing and this is the definitive harbinger that Antichrist is ready to appear and implement his “Mark of the Beast” system.  If you follow eschatology, and I do closely of course since I’ve written over a dozen books that center mostly on the cataclysmic events of the last days, you know that since the 1980s, doomsday prophets have been telling you that America is going to collapse and that the world economy stinks.

US TREASURY BOND FROM 1969
US TREASURY BOND FROM 1969

And yet, America persists.  The World still lines up to buy U.S. Treasuries.  The U.S. still serves as the policeman of the world.  What Mr. Trump and most folks don’t understand is that the reason the U.S. gets away with printing endless amounts of money, is it is the world’s way of paying America for our military.  Most everyone know’s about how organized crime offers “protection” to the unfortunate who are obliged to pay them lest their kneecaps get broken, their kids are kidnapped, or maybe just a big brick comes smashing through the storefront glass.

DOES THE WORLD PAY THE U.S. MILITARY INDUSTRIAL COMPLEX FOR PROTECTION?
DOES THE WORLD PAY THE U.S. MILITARY INDUSTRIAL COMPLEX FOR PROTECTION?

To understand the world economy, the first premise everyone should understand is that the world pays the U.S. “protection money”.  We Americans have established the monetary standard with the help of the British and the Saudis.  It’s called the Petro-dollar and it remains the world’s currency.  Whenever anyone tries to alter the “protection racket” the U.S. has, they get taken out.  Consider Muammar Gaddafi.  He was stocking up on gold and wanted to create his own “AFRO” currency (yep, that was what it was called) backed by gold.  Once that became clear, the French decided it was time to reinforce their colonial claims to this North African nation.  With the U.S. and Britain leading from behind, Gaddafi was taken out.  As Hillary Clinton famously said before a CBS interview began in 2011 (quoting Caesar from 47 B.C.) “Veni, vidi, veci”  [1]   Although in her case, she quipped, “We came, we saw, he died”.  Since that time, not quite so accurately, Mr. Trump declared that Hillary founded ISIS… and owns the Ben Ghazi event retold in the movie, 13 hours, in which the American ambassador, Christopher Stevens, was murdered. Whether the blame should be laid on her doorstep or on Barack Obama’s is a matter for another time.  Clearly, American foreign policy in the Middle East since the year 2000 has been the greatest fiasco of failure to understand what is happening in the world since the Vietnam War.  Bush is just as guilty as Obama.  Its called Globalism.  It is the prime example of how “protection” works.  Europe and Japan let America get away with printing dollars… they finance our debt in the form of buying U.S. Treasuries… so we can keep the Military-Industrial Complex humming along.  $20 trillion in debt?  Oh, our congress is so upset.  But their constant chatter about the debt is misdirection.  The whole matter of national debt is a globalist scam.  Just consider how worried the world is that we can’t make our payments to those who finance our debt.  Notice that the price for U.S. treasuries, the interest rate, may seem low, but the world continues to line up to buy them. The 2-year Treasury pays .75% (less than 1% per annum) in interest.  The 30-year Treasury is 2.55% interest.  Can I borrow a trillion at a 2.55% interest rate for 30 years?  It’s a great deal if you can get it.  NO other nation can sell their treasuries year after year for rates at or under 2% interest payable (as a coupon annually).  Folks, that is the real truth about the national debt.  Its “protection money”.  American bankers and their British counterparts are the beneficiaries.

PUBLISHED JULY 2013
PUBLISHED JULY 2013

In our book, THE FINAL BABYLON, co-authors Douglas W. Krieger, Dene McGriff, and I predicted that the U.S. was NOT going to fall soon.  That the U.S. would persist until late in the “The Great Tribulation”.  I have modified my view as I documented in my more recent

PUBLISHED JANUARY 2016
PUBLISHED JANUARY 2016

book, THE NEXT GREAT WAR IN THE MIDDLE EAST.  I believe the U.S.’ economy will not just crash, but the U.S. itself will be decimated and the nation state will fail.  This will occur because of a first-strike attack led by Russia.  Within months of this event, the War of Gog and Magog will begin.  Unlike most other eschatology commentators, I read Jeremiah 50-51 alongside Ezekiel 38-39.  Who, pray tell, is the daughter of Babylon?  (Quiet now:  It’s the United States.  Go look how many books on Amazon now are agreeing with what we said in THE FINAL BABYLON three years ago).

I continue to believe that the U.S. will be the leader of the “free world” (however much a misnomer that may now be) until this event happens.  I invite you to read THE NEXT GREAT WAR to understand why I believe Bible prophecy teaches us this.  Allow me to say I don’t pick on Brother Bill Salus much because I respect him greatly and think he has a wonderful heart and a terrific ministry, but I disagree with Bill completely that Psalm 83 will happen before Gog and Magog.  Bill argues in his book THE NOW PROPHECIES that we should be looking for Israel to take out its enemies, those that immediately surround it.  I believe Bill is wrong. Many other eschatology teaches from what I would call “the old guard” (such as David Reagan, Hal Lindsey, the late Grant Jeffrey) would agree with Bill.  So maybe I’m all wet.  But then, maybe I’m not.  Bill and I agree on virtually everything else, including the Pre-Tribulation Rapture and the Millennial Reign of Christ.  I should point out that Bill has modulated his view, also now agrees with me that America is at a crisis point, a Jeremiah 7:16 moment, in which it is too late to turn around our fate. [2]  Likewise, I disagree with my good friend Paul  McGuire who looks for a revival for America.  It is always good to pray for revival.  But my view is that it will not happen.  The Lord is coming soon.  It’s time to be prophetic and tell those we know and love, get ready.  Bob Dylan once wrote an album entitled with its featured song about the end of days called, Slow Train Comin’.   This was Bob Dylan’s “near miss” in becoming a Christian. He seemed to opt for Judaism since it demanded more of him (I think). Regardless, my point is that the train is pulling into the station now.  You can hear the squeal of the brakes if you listen closely.  It will come to a complete stop very soon.

But until there is an attack on America, the U.S. will continue to lead the world, politically, economically, and militarily.  The Petro-dollar will persist.  That is why I have stated that Ezekiel 38:13 teaches that the reference to Sheba and Dedan, the Merchants of Tarshish, and its young lions references Saudi Arabia, England, and the United States.  The astonishment they express isn’t because Israel is being attacked.  No the context of Ezekiel 38:10-13 has changed.  The land of unwalled villages isn’t Israel.  It’s England and the United States… with Saudi Arabia thrown into the mix because of “guilt by association” – supporting the currency of the world.  These three have run things since Nixon took us off the gold standard.

2,500 years ago, a Hebrew prophet in captivity in Babylon put these three sovereign states together in a single verse.  What is it they really have in common?  Most every prophecy scholar will tell you it is that they will sit on their hands when Russia (who I believe is Gog from the land of Magog and not Turkey as the Islamic Antichrist supposes) attacks Israel.  Think about who the real players are today in the Middle East… in the world.  Then tell me that this verse has no relevance to today.

The Petro-dollar will continue to be the world’s currency until it is capsized by the attack I believe the Bible predicts.  THEN the Mark of the Beast system will be put into place, likely within 1 to 3 years after it occurs.

So what is about to happen in the economy right now?  Here are my thoughts on what we may see in October possibly, but more likely after the election in November.

IS THE STOCK MARKET GOING TO CRASH? A CORRECTION YES, A CRASH NO.

It is difficult at the present time to be enthusiastic about the U.S. economy, given the probability of a collapse of the stock market as many are predicting. Many suggest that the equity market is overpriced. Donald Trump remarked in his debate comments the other night that the Federal Reserve has created a “big fat bubble” by keeping interest rates low. The only recovery that the U.S. economy has really experienced is on Wall Street, not on Main Street. Consequently, while his commentary may be only campaign rhetoric to emphasize that too many Americans are out of work and only the “fat cats” of Wall Street are making a fortune, there are reasons to believe that his statement reflects reality.

One example is the author of “Rich Dad, Poor Dad” Robert Kiyosaki (who wrote the number one bestselling personal finance book of all time) who predicted in 2002 that 2016 would result in a dramatic correction. Market Watch had this to say about his prognostication:  “In 2002, Kiyosaki wrote that the stock market would crash in 2016 as the first wave of baby boomers began to hit 70 1/2 in 2016 and started taking required-by-law distributions from traditional individual retirement accounts. He still believes that: ‘Demography is destiny,’ he said in the interview.” [3]

Perhaps this timely article sharpens the point sufficiently:

Several noted economists and distinguished investors are warning of a stock market crash. Jim Rogers, who founded the Quantum Fund with George Soros, went apocalyptic when he said, “A $68 trillion ‘Biblical’ collapse is poised to wipe out millions of Americans.” Mark Faber, Dr. Doom himself, recently told CNBC that “investors are on the Titanic” and stocks are about to “endure a gut-wrenching drop that would rival the greatest crashes in stock market history.” And the prophetic economist Andrew Smithers warns, “U.S. stocks are now about 80% overvalued.” Smithers backs up his prediction using a ratio which proves that the only time in history stocks were this risky was 1929 and 1999. And we all know what happened next. Stocks fell by 89% and 50%, respectively. Even the Royal Bank of Scotland says the markets are flashing stress alerts akin to the 2008 crisis. They told their clients to “Sell Everything” because “in a crowded hall, the exit doors are small.” Blue chip stocks like Apple, Microsoft, and IBM will plunge. But there is one distinct warning that should send chills down your spine … that of James Dale Davidson. Davidson is the famed economist who correctly predicted the collapse of 1999 and 2007. Davidson now warns, “There are three key economic indicators screaming SELL. They don’t imply that a 50% collapse is looming – it’s already at our doorstep.” [4]

As the final data point, allow me to cite these keys from financial analyst John Whitefoot:

According to the Case Shiller CAPE P/E Ratio, the S&P 500 is overvalued by around 62%. Over the last 10 years, that average CAPE ratio has been 15. Today, it’s sitting at 24.34. What that means is, for every $1.00 of earnings a company makes, investors are willing to pay $24.34.  To put that into context, the only times the ratio was higher were in 1929, 2000, and 2007. All three instances were followed by a collapse. (Source: Yale University, last accessed September 22, 2015.)

The market cap to GDP ratio compares the total price of all publicly traded companies to GDP. Warren Buffett calls it the single best measure of where valuations stand at any given moment. Who would argue with that? There is obviously a correlation between the country’s economic output and the earnings of its companies. As a result, stocks and their valuations should bear some relationship to the benefits of investing or not investing.

A reading of 100% suggests U.S. stocks are fairly valued. The higher the ratio over 100%, the more overvalued the stock market. It currently sits at 117.3. The Warren Buffett Indicator has only been higher once since 1950. In 1999 it came in at 153.6%. It was only at 108% before the housing bubble burst in 2008.

Eventually stocks and their valuations will run in step. But for that to happen, the stock market needs to experience a significant correction. What could that look like? The S&P 500 is currently at 1,938; Shiller thinks it should be closer to 1,300. That suggests a drop of roughly 33%. Shiller also thinks the DOW, which is at 16,280, should be closer to 11,000; a 32.5% correction. (Source: nytimes.com, last accessed September 22, 2015.) [5]

So what is likely to happen over the next 90 days?  A correction of 15 to 30%.  Where do you hide?  I’m not an advisor so don’t ask me.  But I know this, if Vladimir Putin decides he can live with Donald Trump, the U.S. hegemony will continue on for the foreseeable future.  If Hillary wins, I don’t expect Mr. Putin to be patient.  He will assume that the New World Order policies will simply be intensified by Hillary.  All of the threats he talks about concerning the CIA activity in Ukraine will only make him more likely to pull a trigger of a nuclear kind.

THE 1987 STOCK MARKET CRASH
THE 1987 STOCK MARKET CRASH

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NOTES

[1] Veni, vidi, and vici are first person perfect forms of the Latin verbs venirevidere, and vincere, which mean “to come”, “to see”, and “to conquer” as in “I came, I saw, I conquered”.  It implied it was all done in one master stroke… very swiftly.

[2] “Therefore pray not thou for this people, neither lift up cry nor prayer for them, neither make intercession to me: for I will not hear thee”.

[3] Retrieved from http://www.marketwatch.com/story/rich-dad-author-says-the-market-collapse-he-foresaw-in-2002-is-coming-2016-03-23.

[4] Retrieved http://thesovereigninvestor.com/exclusives/80-stock-market-crash-to-strike-in-2016/.

[5] http://www.profitconfidential.com/economy/7-signs-of-a-u-s-economic-collapse-in-2016/.