Next Leg Down Will Be “More Painful Than The Last” Pento Says: Tech Ticker, Yahoo! Finance

Puzzled by the strength and duration of the stock market rally? Michael Pento, chief economist at Delta Global Advisors, says it all makes perfect sense. “If the Federal Reserve is going to pay you less than 1% to deposit your savings… what are you going to do with that money?” Hence, the rally off the March lows.

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Go for Gold Inflation Is Here and Going to Get “Much Much Worse” Pento Says: Tech Ticker, Yahoo! Finance

* Bernanke says recession ‘very likely over’ – AP * Fed Chief Says Recession Is ‘Very Likely Over’ – NYT.com * Bernanke Sees Recession’s End – WSJ.com

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Stock Market will Crash in Sept. or Oct.

“We are in the middle of systemic shock” and emergency government programs have temporarily kept the global economy on “life support,” he says. “We think governments have little additional room left to continue to postpone the restructuring that’s necessary around the world.”Other causes for concern include: * A pending commercial real estate “meltdown” that will subject the banking system to another round of big losses. * A true accounting for the costs of government bailouts to date, even as state and local governments face a massive crisis of their own. He believes a day of reckoning is coming where foreigners will refuse to fund America’s runaway deficits at today’s very low rates. Enjoy the last days of summer and the Labor Day holiday because there is “abundant cause for concern,” says Charles Ortel, managing director of Newport Value Partners, an independent research firm.A self-described optimist, Ortel nevertheless says the “worst of all worlds” is coming, characterized by falling asset prices and higher taxes, accompanied by a rising cost of core goods and services. Echoing the “stagflation” of the 1970s, he has coined the term “skew-flation” to describe what’s ahead.As to growing consensus the global economy is on the mend, Ortel believes both government “macro” data and corporate “micro” data are painting a much rosier picture vs. actual reality. The real macro story, he says, is there’s too much productive capacity around the world and not enough demand. At the same time, private sector incomes are down while debt levels are up. It’s impossible to say when these issues manifest themselves in the market but Ortel says, yes, investors should beware the ides of September-October.

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Obama’s Spending Spree Budget Numbers “Have All Gone Mad” Analyst Says: Yahoo! Finance

When retail expert and all-around economy watcher Howard Davidowitz appeared on Tech Ticker in February declaring the worst was yet to come for the U.S. economy and that Americans’ standard of living has changed permanently, our comment boards lit up.But surely with the latest rally off the March lows, bearish Davidowitz is more bullish, right? Not a chance. Look at your financial history books.Two of the biggest rallies of more than 40 percent occurred during the Great Depression, says Davidowitz of Davidowitz & Associates,a retail consulting and investment banking firm. “People were sucked in and ultimately were destroyed,” he says. It’s a warning to today’s investors, who are hoping to extend the rally. Don’t get Davidowitz started on the economy or fundamentals. “Barack Obama’s numbers have all gone mad,” Davidowitz says. The Obama administration recently announced the U.S. budget deficit will be $9 trillion during the next decade; $2 trillion higher than the original forecast.And, the proposed price tag for health-care reform? “Minimum $3 trillion,” Davidowitz says. “One trillion? Are you kidding?”Stimulus binges? Roller coaster equity performance over years? Stubborn consumers holding out for sales as deflationary pressures loom over the recovery? Sounds like the U.S. economy is turning Japanese, Davidowitz says.

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