Markets across the board from the Dow Jones to the S&P 500 to the FTSE 100 tumbled early this week on a slew of bad data from companies across the board. These bleak earning reports combined with a drop in durable-goods orders to shave off some of the post-Draghi QE euphoria.
Blue chip firms from Pfizer to DuPont to P&G reported poor earnings or lowered future guidance on Monday, while Caterpillar's stock dropped 7.2% on lowered energy industry demand, Microsoft plunged 8.8% on reduced software license sales, and United Technologies Corp fell 1.9% on lowered earning expectations due to the strong dollar.
These stock plunges aren't just important in and of themselves; they're signs that the deflationary undertow of dropping oil prices is spreading to other parts of the economy. In a market hungry for forward guidance, this is contributing to a sell-off. As Peter Jankovskis of OakBrook Investments LLC told Bloomberg yesterday: “Everybody is aware of weakness in crude oil, but you’re seeing spillover into large, industrial companies like Caterpillar and that may be giving people pause. And certainly Microsoft is a bellwether...
Whether or not Draghi was really planning to announce his stimulus program this week, the surprise Swiss franc decoupling of last week left him no choice.
... however the SNB fallout lands and whoever it lands on, it's not doing anything to help the bleak outlook for a world on the edge of deflation.
What we know for sure at this point is that the fallout of this move is going to be massive, long-lasting, and global. Some traders are already predicting the collapse of financial institutions and smaller hedge funds.
There is a case to be made that the potential downside of this round of deflation is worse than catastrophic. There is an estimated $22 trillion worth of global commodities-based derivatives.
For all the hoopla, you might have thought this was going to be something historic. But in retrospect, all the swollen, self-important talk about the Eurasian Union seems horribly out of step with the reality of what has been birthed here.
...deflation remains the bugbear of the Japanese economy, even after the unprecedented easing in recent years by the Bank of Japan.
Why is it that in contemplating the future our thoughts usually turn to disaster and calamity? Why are we seemingly incapable of imagining things going well for a change?
All of these revolutionary actions represent people interacting directly with each other in ways that cannot be interfered with, regulated or proscribed by the globalist institutions that are seeking to bring about their New World Order.
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The creator of the International Forecaster, Bob Chapman.