Somehow the stock market is expecting growth to re-accelerate after a disappointing 2.0% GDP growth in Q2. The only sign of such growth in the stock market is central banks lowering rates and expanding their balance sheets again.

Q3 just came in at 1.9%, just below the 2.0% last quarter. And that covers over the bigger decline in consumer spending down from 3.03% in Q2 to 1.93% in Q3. Business investment continues to trickle down as did last quarter.

Don’t be Fooled by Stock Buybacks

As David Stockman and I both noted at our October IES conference, the tax cuts did not contribute to a higher rate of capital investment: only more stock buybacks. Nonresidential fixed investment surged briefly to 8.8% in Q1 2018, but has been falling ever since and was down 3% in Q3 2019. Companies don’t need more capacity after the greatest debt bubble and over expansion in history. They just keep putting their excess cash and/or cheap borrowing into buying back their overvalued stock, which will make them look like the dumbest money in history at this bubble.

And more important, a good leading index of corporate earnings is the ISM. That has been declining since Q2 2018 and suggest earnings that have been falling since Q3 2018 will continue to decline ahead and potentially go negative .

What’s in Store for Stocks?

So, how are stocks going to break up and out to major new highs? Looks unlikely unless we get stronger signs of stimulus from the Fed, or a more substantial trade agreement with the Chinese.

If we don’t see a break up in the coming weeks, then a sharper breakdown like late 2018 is the more likely course . That could wake up the Fed and get a balls-out stimulus program that will ignite a final, failing rally…

As the truth is that you can only overstimulate, an already overstimulated economy so long before no one needs a bigger house or factory or car – or another refinance!

New Update on the Markets!

Harry Dent shares details on his latest prediction for the markets and the new dangers that lie just ahead for Americans:   “This is no longer a question of ‘if,’ but simply a… Read More>>
Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.