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This Bubble’s Days Are Numbered—–Market Tops Are Sprouting Up Everywhere
This Bubble’s Days Are Numbered—–Market Tops Are Sprouting Up Everywhere
I have an important update regarding how far we could see the market drop in the short days and weeks ahead…
I’ve been warning for months that it looks like this bubble may finally be peaking.
I’ve warned that it’s best to get out of stocks a little early rather than a bit late. That’s because, when bubbles finally break, they burst rapidly – as much as 40% in the first few months. It can make markets very volatile, up and down, hence harder to predict and adjust to. If this is indeed the end, we’ve only taken the first step down a long ladder.
In retrospect, the odds keep going up that we saw a major long-term top on May 19.
The first warning sign was that, as stocks made little progress from late December into May, we saw a series of major tops around the world. And that to me is no small matter.
Dow Transports peaked in late November and are down 20% since.
Dow Utilities peaked in late January and are down 18%.
The German DAX and British FTSE both peaked in April and are down 24% and 19%, respectively.
The Dow and S&P 500 appear to have peaked in late May. The Dow’s down 16% since then.
Then in June came China’s Shanghai Composite index – one of the leading dominoes to fall – and it’s crashed 42%. The Russell 2000 index also peaked in June and is down a little more than 12%.
And finally, our Nasdaq, which peaked in late July, is recently down 21%.
Four of those are undeniably in bear territory. The Shanghai, DAX, Nasdaq and Dow Transports have crossed that 20% threshold that literally defines a bear market. A drop like that only raises the chances that a bubble is finally over. But thus far technical indicators only show that the Shanghai and DAX have peaked for good.
And all of this is just the first warning sign…
…click on the above link to read the rest of the article…
4 Mainstream Media Articles Mocking Gold That Should Make You Think
4 Mainstream Media Articles Mocking Gold That Should Make You Think
For those of you who have been reading my stuff since all the way back to my Wall Street years at Sanford Bernstein, thanks for staying along for the ride. I appreciate your support immensely considering that I essentially no longer write about financial markets at all, and for many of you, that remains your profession and primary area of interest.
There are many reasons why I stopped commenting on markets, but the main reason is that I started to recognize I wasn’t getting it right. In fact, in some cases I was getting it spectacularly wrong. Whenever this happens, I try to isolate the problem and fix it. In this case there was no fix, because much of why I was no longer getting it right was rooted in the fact that my heart, soul and passion had moved onto other things. My interests had expanded, and I started a blog to express myself on myriad other matters I deemed important. Providing relevant market information needs intense focus, and my focus had shifted elsewhere. I recognized that I wasn’t intellectually interested enough in centrally planned markets to provide insightful analysis, and so I stopped.
This doesn’t mean I won’t start up again. When central planners do lose control, I may indeed become far more interested in opining on such matters. Time will tell. In the interim, financial markets do still play an important role in the bigger picture of social, political and economic trends I passionately care about. The stability and increase in financial assets (stocks and bonds) is of huge importance to the propaganda machine, in particular keeping the non-oligarchic, non-politically connected 1% in line and believing the hype (see: The Stock Market: Food Stamps for the 1%).
…click on the above link to read the rest of the article…
The Layoffs Return: Energy Giants Chevron, Saipem To Fire Over 10,000 Workers
The Layoffs Return: Energy Giants Chevron, Saipem To Fire Over 10,000 Workers
In the beginning of 2015 the biggest threat to the economy as a result of the collapse in oil prices, both in the US and worldwide, was the surge in layoffs among highly-paid energy sector job. This was confirmed in April when we showed the Challenger layoffs data for the energy-heavy state of Texas, and the energy sector in general where the 37,811 job cuts in Q1 were some 3,900% higher than a year earlier.
Then in Q2, after the price of oil staged a substantial rebound of about 50% from the year to date lows in the $40’s, energy-related layoffs trickled to a halt as corporations hoped the worst is behind them, and as a result would merely bide their time before redeploying their workforce toward exploration and production.
Alas, this was not meant to be, and as the events of the last month have shown, oil has resumed its downward slide. And, as expected, so have layoffs.
Overnight, US energy major Chevron announced it will cut 1,500 jobs globally “as the company aims to reduce internal costs in multiple operating units and the corporate center.” According to Rigzone, “the San Ramon, Calif.-based energy company will cut 950 positions in Houston, 500 positions in San Ramon and 50 positions internationally.”
Chevron is cutting jobs due to the current market environment and is “focused on increasing efficiency, reducing costs and focusing on work that directly supports business priorities,” Chevron spokesperson Melissa Ritchie said in an email to Rigzone.
Chevron will be cutting 1,500 employee positions across the 24 groups that comprise the corporate center; 270 of the positions are existing vacancies that will not be filled. Additionally, 600 staff augmentation contractor positions will be cut in the corporate center.
…click on the above link to read the rest of the article…
Futures Soar On Hope Central Planners Are Back In Control, China Rollercoaster Ends In The Red
Futures Soar On Hope Central Planners Are Back In Control, China Rollercoaster Ends In The Red
For the first half an hour after China opened, things looked bleak: after opening down 5%, the Shanghai Composite staged a quick relief rally, then tumbled again. And then, just around 10pm Eastern, we saw acoordinated central bank intervention stepping in to give the flailing PBOC a helping hand, driven by the BOJ but also involving NY Fed members, that sent the USDJPY soaring which in turn dragged ES and most risk assets up with it. And while Shanghai did end up closing down -1.7%, with Shenzhen 2.2% lower at the close, the final outcome was far better than what could have been, with the result being that S&P futures have gone back to doing their thing, and have wiped out all of yesterday’s losses in the levitating, zero volume, overnight session which has long become a favorite setting for central banks buying E-Minis.
As Bloomberg’s Richard Breslow comments, the majority of Asian equity indexes finished with losses but on an upbeat note, helping most European markets to start with modest gains that have increased with the morning, thanks to the aforementioned domestic and global mood stabilization. S&P futures have been positive all day other than a brief dip negative at the worst of the day’s China levels. Chinese equities opened quite weak and were down another 5% before the authorities assured the market that speculation they would withdraw from market supportive measures was misguided. This began a rally of over 6% before a mid-afternoon swoon.
…click on the above link to read the rest of the article…
Will Greek “Hope” Offset “Limit Down” Contagion From The “Frozen” China Crash
Will Greek “Hope” Offset “Limit Down” Contagion From The “Frozen” China Crash
Today’s market battle will be between those (central banks) “hoping” that a Greek deal over the weekend is finallyimminent (which on one hand looks possible after a major backpeddling by Tsipras – who may never have wanted to win the Greferendum in the first place – yesterday in Brussels and today during his speech in the Euro Parliament, but on the other will be a nearly impossible sell to Greece as any deal terms will be far harsher than the deal offered by the Troika 2 weeks ago and will have no debt reduction), and those who finally noticed that the Chinese central planners have effectively lost control.
For those who may have missed the overnight fireworks, here are some more indicative Bloomberg headlines about China:
- China’s Stocks Plunge as State Intervention Fails to Stop Rout
- China Freezes Trading in 1,300 Companies as Stock Market Tumbles
- China’s State-Owned Firms Ordered Not to Cut Share Holdings
- China’s Market Rescue Makes Matters Worse as Prices Lose Meaning
- China Ramps Up Policy Response as Panic Grips Stock Market
While pundits have been eager to downplay what is now a historic rout in Chinese risk assets, one that is matched by the depression of 2008 and which has sent the SHCOMP from up 60% for the year 3 weeks ago to barely green losing some 15 Greeces in market cap since mid-June…
… the same pundits to whom neither the oil crash nor a Grexit nor the imminent collapse in Q2 corporate revenues and GAAP EPS, or anything else matters, the reality is that the Chinese stock rout is very clearly starting to have contagion effects on the rest of the economy, crashing commodities such as crude, gold, copper, iron and virtually everything else where China has been a marginal source of demand, but leading to forced selling of anything that is not nailed down.
…click on the above link to read the rest of the article…
Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)
Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)
Carnage…
- *CHINA STOCK PANIC SELLING TO CONTINUE, CENTRAL CHINA ZHANG SAYS
This leave China’s CSI-300 broad stock index futures up just 7% year-to-date…
- *CHINA CSI 500 STOCK-INDEX FUTURES FALL BY MAXIMUM 10% LIMIT
- *CHINA CSI 500 STOCK-INDEX FUTURES FALL BY LIMIT FOR 2ND DAY
- *HKEX DROPS AS MUCH AS 7.3%, MOST SINCE SEPT. 2011
- *SHANGHAI COMPOSITE INDEX EXTENDS DROP TO 7.5%
- *SHANGHAI COMPOSITE HEADS FOR BIGGEST 3-DAY DROP SINCE 1996
Carnage-er…
- *CHINA’S CSI 300 INDEX FALLS 3.4% TO 4,190.3 AT BREAK
- *CHINA’S SHANGHAI COMPOSITE FALLS 3.8% TO 4,035.48 AT BREAK
- *CHINA’S CSI 500 STOCK INDEX FUTURES EXTEND LOSSES TO 5.7%
- *CHINEXT INDEX PLUNGES 7.8% FOR 3-DAY 20% SLIDE
After The People’s Daily proclaimed… “investors were moved to tears” thanks to the PBOC’s actions…
- *FOUNDATIONS FOR A-SHARES ARE `SOLID’: CHINA SECURITIES JOURNAL
- *CHINA STOCK MARKET TO HAVE 30 YEARS `GOLDEN AGE’: SEC. JOURNAL
…click on the above link to read the rest of the article…
The Liquidity Crisis Intensifies: ‘Prepare For A Bear Market In Bonds’
The Liquidity Crisis Intensifies: ‘Prepare For A Bear Market In Bonds’
Are we about to witness trillions of dollars of “paper wealth” vaporize into thin air? During the next financial crisis, a lot of “wealthy” investors are going to be in for a very rude awakening. The truth is that securities are only worth what someone else is willing to pay for them, and that is why liquidity is so important. Back on April 17th, I published an article entitled “The Global Liquidity Squeeze Has Begun“, but it didn’t get nearly as much attention as many of my other articles do. But now that the liquidity crisis is intensifying, hopefully people will start to grasp the implications of what is happening. The 76 trillion dollar global bond bubble is threatening to implode, and if it does, the amount of “paper wealth” that could potentially be lost during the months ahead is almost unimaginable.
For those that do not consider the emerging liquidity crisis to be important, I would suggest that they check out what the financial experts are saying. For instance, the following comes from a recent Bloomberg report…
There are three things that matter in the bond market these days: liquidity, liquidity and liquidity.
How — or whether — investors can trade without having prices move against them has become a major worry as bonds globally tanked in the past few months. As a result, liquidity, or the lack of it, is skewing markets in new and surprising ways.
Things have already gotten so bad that Zero Hedge says that some fund managers “are starting to panic” about the lack of liquidity in the marketplace…
Fund managers who together control trillions in assets are starting to panic in the face of an acute bond market liquidity shortage.
…click on the above link to read the rest of the article…
Oil Extends Decline From 5 1/2-Year Low as Supply Glut Lingers – Bloomberg
Oil Extends Decline From 5 1/2-Year Low as Supply Glut Lingers – Bloomberg.
Oil fell for a third day, extending its decline from the lowest level in five and a half years amid signs a global supply glut that’s driven crude into a bear market may continue this year.
Futures in London dropped as much as 1.3 percent, after sliding 5.1 percent last week. Iraq plans to boost crude exports this month, according to the oil ministry in the second-largest producer of the Organization of Petroleum Exporting Countries. Venezuela President Nicolas Maduro is traveling to Chinato hold talks on financing and energy and will visit other OPEC member nations to develop an oil-pricing strategy.
“Iraq’s crude production is one of the contributors to the glut we’ve been seeing,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “The glut is expected to continue if demand fails to catch up with supplies. Venezuela’s oil industry is in recession amid falling production but if it can attract new investments, it can boost output.”
Any OPEC Solidarity Break Seen by Iran Sending Oil Lower – Bloomberg
Any OPEC Solidarity Break Seen by Iran Sending Oil Lower – Bloomberg.
Any break in OPEC solidarity or a price war will drive crude to below $50 or even $40 a barrel,Iran’s oil ministry head of petroleum market analysis said.
Middle East crude producers Saudi Arabia and Iraq this month increased the discounts used to set the official prices for their main crudes for buyers in Asia to the widest in more than a decade. Sellers want to defend market share as oil tumbled into a bear market amid a global glut exacerbated by the highest U.S. production in three decades. OPEC decided unanimously on Nov. 27 to maintain its output target, prompting a drop in benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
“Any break in OPEC solidarity or price war will lead to an enormous price dive shock” that would push oil to $40 or $50, Mohammad Sadegh Memarian said at a conference in Dubai. The drop to less than $80 is already below market equilibrium, he said.
Crude prices have declined about 40 percent from a June peak amid overproduction and sluggish growth in consumption. Saudi Arabia led OPEC’s decision to maintain rather than cut output last month in Vienna, citing the threat U.S. shale presents to the group’s market share, Iranian Oil Minister Bijan Namdar Zanganeh said on Nov. 28. Financially-strapped OPEC members such as Iran and Venezuela had called for a cut.
…click on the above link to read the rest of the article…
Oil Slumps to Five-Year Low as OPEC Decision Spurs Forecast Cuts – Bloomberg
Oil Slumps to Five-Year Low as OPEC Decision Spurs Forecast Cuts – Bloomberg.
Brent crude slumped to a new five-year low as OPEC’s decision last month to maintain output at a time of oversupply prompted a growing number of banks to cut price forecasts. West Texas Intermediate also slumped.
Futures dropped as much as 2.5 percent in London and 1.9 percent in New York. Morgan Stanley lowered its 2015 estimate by 29 percent in a report on Dec. 5, citing a decision by the Organization of Petroleum Exporting Countries not to lower a 30 million-barrel-a-day output target. Banks including BNP Paribas SA, Credit Suisse Group AG, UBS Group AG and Barclays Plc have also cut since the 12-nation group’s Nov. 27 meeting.
“The major forecasters continue to cut price expectations, especially for the first two quarters of 2015,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. He forecasts Brent may drop as low as $60 a barrel within the next several months, a slump of about 12 percent from current prices.
Oil is trading in a bear market amid signs that U.S. output is expanding even after the decision by OPEC, which is responsible for about 40 percent of global supplies. Explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown, according to data from Baker Hughes Inc.
…click on the above link to read the rest of the article…
