Before we start today, another reminder that you have a new daily editor, me, Greg Canavan. You should’ve seen all the details of the changes coming to Harry Dent Daily, on Monday. If you missed it, you can click here to catch up.
In short, our aim is to make it the best daily e-letter in Port Phillip Publishing’s stable. It will be more relevant for you, in that I will be covering the local economy and stocks more often.
As you will see with next week’s coming changes, it will be more ‘Australian’. And you’ll still get Harry Dent’s analysis when he writes.
Let’s take a look at the markets, shall we?
US stocks were smashed again overnight. They hoped for a bounce, and the mythical Santa Claus rally is nowhere in sight.
The Dow Jones index plunged more than 2%, while the NASDAQ, somewhat surprisingly, did better, ‘only’ declining just over 1.5%.
This tells you the fear is spreading. It’s not just tech stocks falling back to more reasonable valuations. Investors are starting to panic. They just want out.
As The Wall Street Journal reports:
‘One possible reason for the jitters: Some traders who stepped in to scoop up shares in late October, hoping for a quick rebound, are now in danger of losing those potential profits and more. That puts the stock market in a tenuous position, several said.
‘“The buy-the-dippers are getting concerned,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus. According to his calculations, as of this morning about 16% of S&P 500 companies are now below their October lows. Those companies range from tech giants to health-care companies to energy firms.
‘“Now it’s just let’s sell everything,” he said.’
One of the most vicious moves of late has occurred in the oil market. Overnight, the price of Brent Crude, the international oil price benchmark, crashed 6.6%. West Texas Intermediate, the US benchmark, plunged 6.9%.
At the start of October, Brent traded at a high of just over US$86 a barrel. It’s now just over US$62 a barrel. That’s a fall of nearly 30%. Actually, it’s not a fall, it’s a crash. That’s a huge move.
The tricky thing with oil is in working out how much of a move relates to economic considerations, and how much relates to geopolitics.
In this case, it looks like both factors are at play. It should be pretty clear by the performance of global stock markets this year that the global economy will slow in 2019. It’s simply a question of how much.
Oil prices were, for most of the year, oblivious to this. But now all of a sudden, it is all investors can think of. We think most of the decline relates to lower demand prospects.
Geopolitics affecting market sentiment
Contributing to the fear is the geopolitical factor. While we don’t think this is a major determinant of prices right now, it’s impacting market psychology and giving investors/speculators a reason to sell.
It also provides a great insight into power of the mainstream media to create and drive a narrative, even if that narrative is a false one.
I’m talking about the recent killing of Saudi ‘journalist’ Jamal Khashoggi, allegedly a hit ordered by Saudi Prince and ruler in waiting Mohammed Bin Salman, better known as MBS.
If you read the establishment media, Khashoggi was a journalist working for the Washington Post (WaPo). He went to the Saudi consulate in Istanbul to obtain a document confirming he had divorced his first wife. He was then told he had to return to the consulate. It was on this second visit that he was killed.
Why was he killed? Well, the establishment media will tell you it was because he was highly critical of MBS, and for that reason MBS ordered a hit on him. A poor defenceless journalist…
After the killing, the media and key deep state players (including disgraced former CIA Director John Brennan) started putting pressure on Trump to cut ties with MBS and Saudi Arabia. It should come as no surprise that the CIA just issued a report stating that MBS ordered the killing. ‘What is Trump going to do about it?’
As you know, the establishment HATES Trump. They will do everything they can to destabilise his presidency. The Washington Post is a key establishment/deep state mouthpiece. Take anything from WaPo with a big grain of salt.
So Khashoggi was a journalist working for the Washington Post, exposing the corruption of MBS, was he?
But wait. Earlier this month, in an opinion piece for the Australian Financial Review, our very own Alexander Downer told us that Khashoggi was a former agent for the Saudi intelligence service with close ties to the Muslim Brotherhood. As Downer wrote:
‘The Muslim Brotherhood is a hard-line Islamist organisation dedicated to the introduction of Sharia and the creation of an Islamic caliphate. These people are no bleeding heart liberals. Indeed, the Muslim Brotherhood has been outlawed as a terrorist organisation in a number of Middle Eastern countries and is part of the Hamas support group. They have been implacably opposed to many of the more liberal reforms of the Saudi Crown Prince, Mohammed bin Salman (MBS).’
Look, I’m not defending or justifying the murder of anyone. But it’s fair to say that playing in these circles comes with great risk.
Also, you may remember that nearly a year ago MBS detained many Saudi princes and ‘elites’ on corruption charges. It was a Saudi ‘swamp draining’ attempt, and he gained some powerful enemies by doing so.
That’s some context for these recent events, context you won’t get in most of the media, which is impacted by a heavy case of ‘Trump Derangement Syndrome.’
For some more detailed analysis on the whole sordid affair, check this out.
The gist is — this is a plot to destabilise the fragile balance of power in the Middle East. The US-Saudi relationship is a strong counter-weight to the influence of Iran as a regional power.
Why would the US establishment want to do that? All to heap more pressure on Trump? It’s a good question.
But our point is not to get bogged down in the complexities of Middle Eastern politics. It’s to point out that the establishment media are not telling you the truth. They have an agenda, and it’s not for you. This is the reality behind Trump’s ‘fake news’ mantra. He knows they’re not telling the truth.
To really ‘see’ what is going on in the world, and in the world of investments, the best thing you can do is tune out of the establishment media’s message. That’s because it’s a message designed to confuse and mislead. It’s certainly not designed to enlighten.
That’s our job here. And while we won’t always get it right, if our aim is to look for the truth, we’ll have a much better chance of ferreting it out than those who are deliberately trying to stuff it away.
Getting back to the markets, things are not looking good for Aussie stocks. The benchmark index — the ASX 200, is set to drop sharply below support today (futures indicate a 65 point drop), which would see the index trade at its lowest point since early 2017.
We’ll have more on that for you tomorrow…
Editor, Harry Dent Daily