And wow, has it. Stocks tanked all over the globe. China’s main stock index, down almost 7%, setting off circuit breakers. Hong Kong, down more than 3%. South Korea, down 5.75%.
And that’s just Asia. The carnage is racking up in Europe as well, where Germany’s DAX was hit with a 4.4% kick in the pants. In the U.S., the Dow tumbled more than 400 points at the open but cut its losses in the end, falling “only” 276 points.
What’s the cause? Why the carnage? It’s simple:
FIRST, global stock markets have been splintered, limping along in a mirage based on a few high-flying stocks, for months now. True for Asia. Europe. And the United Sates.
|Tensions are rising between Iran and its Middle East rivals.|
So when you have markets that are not being supported by the troops, so to speak, it’s just a matter of time before those markets implode.
SECOND, the still-strong U.S. dollar is making DEFLATION worse on virtually every continent. That’s because when global economies weaken and investors start to run for cover, the dollar strengthens by default.
Case in point: Even China’s yuan has been sliding against the dollar, despite Beijing attempting to haul its slide by recently shuttering foreign exchange operations at three major Chinese banks.
THIRD, the war cycles I have been warning you about! Just consider the weekend’s events of an escalating war of words between (a) Saudi Arabia/Bahrain and (b) Iran.
As you may know …
The Saudis and Bahrain just ended formal diplomatic relations with Iran because … their embassies were attacked yesterday, due to the Saudi’s beheading of a leading Saudi Shia cleric.
So the fear now is a Saudi-Iran war, along with regional Shia-Sunni violence!
Is it any wonder gold is starting to lift its head, up over $17 today, right on cue with my forecast? Hardly!
Is it any wonder oil is starting to rally, right on cue with my forecast that it would bottom TODAY, Jan. 4? Hardly!
Today’s action shows again why it’s a dangerous world. You can still invest profitably, but you need to get the best advice and to look at all corners of the globe for the signs of the war cycles that will determine which way the markets go.
(Editor’s note: See information on Larry’s Supercycle Trader service below.)
Mike Larson will return tomorrow and will read over your comments and respond to as many as possible.
Lyft Inc. just got a boost in its battle with Uber Technologies Inc. in the ride-sharing segment of the new economy. General Motors (GM) said it will invest $500 million in Lyft. The investment is part of a $1 billion financing round for Lyft, and is the biggest deal by an automaker in the ride-hailing industry.
Have you taken advantage of such services for your transport needs? Was it a pleasurable experience? Let us know below.
Reality TV star and business mogul Donald Trump has released his first paid television ads in the run-up to Republican presidential primary voting. “I am very proud of this ad, I don’t know if I need it, but I don’t want to take any chances because if I win we are going to make America great again,” Trump said in a statement. Although designed as a paid announcement, the advertisement received heavy free coverage on the national newscasts.
Speaking of Republican presidential candidates, Mitt Romney, who ran in 2012, said concerns about Jeb Bush’s electability was one of the key reasons he thought about running again this time before he decided against a year ago. “A Bush-versus-Clinton head-to-head would be too easy for the Democrats,” he told the Washington Post in an interview. Romney added that he’s still being encouraged to run again but said he won’t do it.
Do you have a comment about the market activity today – stocks, the dollar, gold, other commodities? Just another bump in the road or an indication of a big selloff in the works? Add your comments below.
The Money and Markets team
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