Spot the dead cat bounce on the Dow!

The Dow closed up 10 per cent last week and might go higher this week before this dead cat bounce comes to a stop. That is the way of bear markets. They plunge. They rebound a little. And then off they go down again.

The one per cent loss on the gold price surely says it all. If investors had suddenly come to the conclusion that the stock market plunge was over then they would abandon gold and buy stocks. Instead they keep gold and buy a few stocks.

Actually they should be buying gold stocks for the best performance. That was the experience of the 1930s as John Hathaway the Tocqueville gold analyst told the Dubai Hedge Funds World conference last week.

Global trade stalls

But I prefer first-hand knowledge and yesterday I counted the empty cargo ships in Piraeus outside Athens in Greece with a shipping managing director. We counted 20 vessels but he assured me ten times that number were laid up in the Far East.

You can feel this Greater Recession wherever you go in the world. It is totally unlike anything previously experienced. In the early 90s you could go to Asia. In the Asian Financial Crash you could go to London or New York. Where can you hide today?

The spark for last week’s rally was also ludicrous. How could anyone take much notice of a discredited banker from a thrice-bailed out bank? It would not be the first time he had been speaking nonsense, even if sincerely meant, or not as the case might be.

CNBC again

But ra-ra TV loves a rally, something to make optimistic statements about and a change from the gloom. Unfortunately the reality of all those ships in harbour is not going away.

Global trade has collapsed over the past few months, and the Humpty Dumpty metaphor comes to mind. This has not happened on this scale since the 1930s and the idea that stock markets might truly be on the turn is so ludicrous as to be absurd.

But this is the way it works in markets, and how even more money will be lost