Crude Oil
Topped at $147 in July 2008, and has been in a bear market ever since, despite the most aggressive inflationary monetary policy by world central banks on record. The first leg down completed in late early 2009, and then staged a counter-trend rally up into the May 2011 top. Despite calls for $200 oil, true to Elliott Wave form, oil prices will break the 2009 lows as deflationary pressures intensify in the next leg of the bear market.
Commodities
Topped in July 2008, staged the first leg of the bear market into late 2008, had a counter-trend rally into May 2011, and topped out at a perfect Fibonacci 61.8% retracement of the initial decline in May 2011, and is now resuming its larger bear market. Here too, prices will ultimately break the late 2008 lows as global deflationary pressures intensify.
There is a lot of talk on the mainstream media about falling oil prices being "good for the economy" and hence positive for economic growth by supposedly putting more money in the hands of consumers. This is not the case, despite the propaganda and false information. Rather, the dynamic that is taking place is that the global economy is heading into depression, and demand cannot keep pace with supply. Falling commodity prices, rather than being "good" for the economy, are simply indicative of the liquidity strains that are appearing in the system, and the global economy heading into depression. Ironically, this is in part due to all the central bank intervention and manipulation, proposing more leverage, debt and liquidity to fix a solvency problem. Further, oil producers are strapped for cash and need as much of it as they can get, and hence are refusing to cut production even at these low price levels. This simply exemplifies the shortage of money in the world, which leads to the next chart, the U.S. Dollar.
U.S. Dollar
This is the one market that has been hated all along this decade-plus long topping process in risk assets. After a Supercycle bull market in equities, along with a greater than 96% devaluation of the U.S. Dollar through the issuance of massive quantities of dollar-denominated credit over the past century, this whole credit inflation scheme is set to reverse in a big way, with, ironically, fiat currencies as the beneficiary. The U.S. Dollar should out perform relative to the other world currencies for quite some time as the deflationary collapse ensues.
Crude Oil and Commodities have come a long way down since the Summer of 2014, and are due for a relief rally. However, this rally will only be counter-trend, and after its completion, both will continue their larger bear markets.
Shipping
The Baltic Dry Index Measures shipping costs for dry bulk commodities. It is a good measure of global economic activity, and as is clearly evident, all is not well on the global economic activity front. Not only did this index not come anywhere near a new all-time high during this reflationary period since 2009, shipping prices have actually made a new low below 2008 levels. The collapse, weak bounce, and new lows in Shipping prices simply serve as further evidence of the developing global economic depression.
Real Estate
On a national average basis, home prices have not made a new high, either. The next leg down in the global deflationary depression will draw home prices to new bear market lows and the failure of this index to move to new all-time highs further exemplifies the secular bear market, the failure of the central banks' efforts to reflate and the much, much stronger underlying deflationary forces that are present.
Equities
Most markets have NOT made new all-time highs during this reflationary period. One of the only exceptions has been equities. Due to central bank inflation and manipulation, U.S. equity prices have carried to a new all-time high as reserves added to the banking system, rather than meeting their "intended" purpose of being lent out to the public, have been leveraged up by commercial banks and used for speculation, which has in turn bid up equity prices to artificial levels. I put intended in quotes because the intention of this phony inflation scheme was never for the reserves to get out into the public, but rather for the fraudulent central bankers to help their banker friends on Wall Street at the expense of Main Street. A truly sad situation indeed. However, despite this attempt at keeping the global ponzi scheme banking system afloat, natural forces will prevail and the equity market, too, will resume its bear market as the final leg of the supercycle bear market gets underway, within the context of the larger Grand Supercycle Bear Market that began in 2000.
In Summary
All these markets are currently driven by liquidity, and the relative weakness in foreign markets and commodities is warning that all is not well on the global liquidity front. The depression will not become apparent to most until equities decline a long way, but Elliott Wave and statistical analysis are warning that the bear market is not over, and that another devastating leg down lies ahead. Stocks, commodities and real estate will likely all bottom together at the ultimate low, with greater than 90 percent declines in each of these asset classes occurring before the Supercycle Bear Market is finally over. As per "Elliott Wave Principle: Key to Market Behavior, "Declining "C" waves are usually devastating in their destruction. They are third waves and have most of the properties of third waves. It is during this decline that there is virtually no place to hide except cash. The illusions held throughout waves A and B tend to evaporate and fear takes over. "C" waves are persistent and broad"(Frost and Prechter, 1978). The "C" wave that this excerpt is speaking of is in force in risk asset prices across the board, and should be textbook in its characteristics.
Important Message
Although we are facing the biggest financial collapse in U.S. history, and the global economy is heading into depression, the most important takeaway is that nobody has to be hurt financially. It is VERY important to stay liquid in cash, OUTSIDE of the banking system. There will be runs on the banks, and it is absolutely imperative to get safe and take proactive measures BEFORE this occurs. For those that do, the positive in all of this is at the ultimate bear market low and bottom of the depression, there will be tremendous opportunity in asset prices across the board.
