NEW YORK, April 22 (Reuters) – While U.S. financial markets debate the timing of interest rate cuts, one tail-risk hedge fund is warning that investors should make the most of recent economic optimism while it lasts, as a shift to lower rates will signal a dramatic market crash.

“This is a case of be careful what you wish for,” said Mark Spitznagel, chief investment officer and founder of Universa, a $16 billion hedge fund specializing in risk mitigation against “black swan” events – unpredictable and high-impact drivers of market volatility.

Spitznagel’s view is not widely held. The much-anticipated shift to a less restrictive monetary policy by the Federal Reserve has helped buoy stocks and bonds in recent months, although signs of stubborn inflation have eroded expectations for how deeply the central bank will be able to cut interest rates in 2024.

Spitznagel argues that such a shift would likely take place only when economic conditions deteriorate, creating a challenging environment for markets.

“People think it’s a good thing the Federal Reserve is dovish, and they’re going to cut interest rates … but they’re going to cut interest rates when it’s clear the economy is turning into a recession, and they will be cutting interest rates in a panicked fashion when this market is crashing,” Spitznagel said in an interview with Reuters.

Funds such as Universa often use credit default swaps, stock options and other derivatives to profit from severe market dislocations. Generally they are cheap bets for a big, long-shot payoff that otherwise are a drag on the portfolio, much like monthly insurance policy payments.

…click on the above link to read the rest of the article…

Poland’s central bank predicts double-digit inflation until 2024

November 22, 2022

Poland’s central bank predicts double-digit inflation until 2024

(Natural News) The National Bank of Poland (NBP) has predicted that the Central European nation will be saddled with high inflation for the next two years.

According to the NBP, yearly inflation will hit 14.5 percent in 2022 and drop to 13.1 percent in 2023. Single-digit rates will only begin by 2024, when the country’s inflation is projected to decrease to 5.9 percent. The central bank’s inflation target of 2.5 percent is only expected to be accomplished in 2025.

Figures from Statistics Poland (GUS) showed that inflation in the country hit 17.2 percent in September, and increased to 17.9 percent in October.

The NBP also forecast a 0.7 percent growth in Poland’s gross domestic product (GDP) for 2022. Meanwhile, the GUS predicts a 1.4 percent GDP growth in 2023 and a flat two percent GDP growth in 2024.

Amid all these projections, economic activity in Poland is about to weaken because of the heightened uncertainty, a tightening of financing settings and the economy’s adjustment to higher commodity costs, according to the European Commission’s latest economic forecast.

“The Polish economy continued its upward trajectory in the first half of 2022, although a marked drop in inventories and investment led to a contraction in real GDP in the second quarter. Data on the real economy suggest that growth was at full steam in the third quarter, with industrial output and retail sales expanding at a solid pace. As a result, despite a deterioration in confidence indicators, the second half of the year is expected to see a relatively good performance, leaving annual real GDP growth in 2022 at a projected 4.0 percent,” the European Commission (EC) report said.

Increase in inflation due to rise in food and energy prices

As stated by the NBP’s November report on inflation, the present increase can be largely attributed to the rise in food and energy prices brought by the war in Ukraine and the enormous increase in money printing by global central banks during the Wuhan coronavirus (COVID-19) pandemic…

…click on the above link to read the rest…

The Biggest Crash In History Is Coming? Kiyosaki Says So.

May 13, 2022

The Biggest Crash In History Is Coming? Kiyosaki Says So.

Robert Kiyosaki recently tweeted, “The best time to prepare for a crash is before the crash. The biggest crash in world history is coming. The good news is the best time to get rich is during a crash. The bad news is the next crash will be a long one.”

Is Kiyosaki just being hyperbolic, or should investors prepare for the worst?

Importantly, I received Kiyosaki’s comment in an email that I could find out more by just clicking on the link to get a “free” report.

I can save you time, and future spam emails, by telling you that Kiyosaki will be correct.

Eventually.

However, the problem, as always, is “timing.”

As discussed previously, going to cash too early can be as detrimental to your financial outcome as the crash itself.

Over the past decade, I have met with numerous individuals who “went to cash” in 2008 before the crash. They felt confident in their actions at the time. However, that “confidence” gave way to “confirmation bias” after the market bottomed in 2009. They remained convinced the “bear market” was not yet over, and sought out confirming information.

As a consequence, they remained in cash. The cost of “sitting out” on a market advance is evident.

As the market turned from “bearish” to “bullish,” many individuals remained in cash worrying they had missed the opportunity to get in. Even when there were decent pullbacks, the “fear of being wrong” outweighed the necessity of getting capital invested.

Biggest Crash, The Biggest Crash In History Is Coming? Kiyosaki Says So.

The email I received noted:

“If such a disaster could be in the making, your assets are at risk and this requires your immediate attention! And if you believe that now isn’t the time to protect yourself and your family, when will it be?”

Let’s start with that last sentence.

…click on the above link to read the rest of the article…

The Great Crash of 2022 – What happens next? Go read the Book!

May 6, 2022

The Great Crash of 2022 – What happens next? Go read the Book!

Yesterday’s market meltdown was heralded as a “capitulation trade”, but who knows? What we do know is there an awful lot to worry about, and the conditions for the BIG ONE have been building for decades. Time to re-read The Great Crash, 1929.

“That which does not kill us, makes us stronger….”

This Morning – Yesterday’s market meltdown was heralded as a “capitulation trade”, but who knows? What we do know is there an awful lot to worry about, and the conditions for the BIG ONE have been building for decades. Time to re-read The Great Crash, 1929.

There is nothing like a 6.30 am swim against the tide on cold, grey morning in muddy near-freezing water to remind you of why we spend so much money on mattresses and warm snuggly duvets. Of course, a swim should have been a wonderful moment to contemplate what the papers are calling the “Capitulation Trade” – as stocks posted their worst day in a couple of years and bonds tumbled…. But… Keeping up my momentum against the building down-tide was my primary concern.

Does that mean I missed the opportunity to liquidate my entire account before the end of everything – which might be later this afternoon? Oh dear…

On Wednesday, the market welcomed Jay Powell’s 50 bp hike with a relief rally. Yesterday it puked and reversed all its recent gains. What changed? Who knows, but was yesterday really the beginning of the big and negative something we’ve all been waiting for?

Maybe, maybe not. Who knows? Who can tell? If I knew I wouldn’t be swimming in dirty cold rivers to stay fit, nor would I be writing about it each morning!

…click on the above link to read the rest of the article…

Most People Have No Idea How Much Stocks are Likely to Crash

February 24, 2022

Most People Have No Idea How Much Stocks are Likely to Crash

Let’s discuss value investor Jeremy Grantham’s thesis on “super bubbles” and his target for the S&P 500.

S&P 500 chart courtesy of StockCharts.Com, annotations by Mish with thanks to Jeremy Grantham.

Fourth Super Bubble

For almost a half-century, value-investing icon Jeremy Grantham has been calling market bubbles. Now, he says U.S. stocks are in a “super bubble,” only the fourth in history, and poised to collapse.

Please do yourself a big favor and play the above interview in entirety.

It’s not a fluff interview. Bloomberg’s Erik Schatzker grills Jeremy Grantham right from the get go about Grantham’s view a year ago.

Q&A Snips

Schatzker: At the risk of putting words in your mouth, you are as certain [now] as you were then, if not more?

Grantham: I would say clearly more. I did freely admit, not in our conversation, but elsewhere, that I wasn’t quite as certain about this bubble a year ago as I had been about the tech bubble of 2000 or as I had been in Japan or as I had been in the housing bubble of 2007. I used to think in terms of near certainties. This time I felt highly likely bit perhaps not nearly certain. Today I feel it is just about nearly certain.

Grantham discusses “crazy behavior” , noting that even in 1929 you had some magnificent rallies.

Schatzker: If you are right and stocks are in a multi-sigma deviation from the statistical trend, tell me what happens. The S&P 500 peaked at almost 4800 points. What is the bottom?

Grantham: The trend line, being slightly generous, is 2500. And most of the great bubbles, the super bubbles go below trend and stay there for quite a while…

…click on the above link to read the rest of the article…

Ten Events That Could Trigger a Stock Market Crash in 2022

January 7, 2022

Ten Events That Could Trigger a Stock Market Crash in 2022

Surprises aren’t surprises if you’re prepared

A man at the NYSE looks up at the ticker tape. — Image credit

It is unlikely that the American stock market will crash in 2022.

Consumer spending is ramping back up, inflation is soaring, credit’s cheap and easy, and politicians are so desperate to keep this hot potato from dropping on their watch that they’ll go to nearly any length to avoid a crash.

That said, there’s no excuse not to be vigilant and extremely wary in these economically absurd times.

We can only be certain about one thing: Uncertainty.

With that in mind, let’s look at ten of the most likely surprises that could crash the stock market despite all attempts to keep the house of cards rising ever higher.

1. No more free money

The Biden administration has signaled its intention to stop printing as many stimulus trillions this year as they did last year. This is a good thing for the economy, but passive market extractors don’t like it one bit.

If the Dems fully shut down the printing press, it could trigger a market crash. But they won’t. They’ll slow it down for a bit, watch the markets totter, then fire it back up again and say, “Well hey, we tried.”

Can you blame them? Wouldn’t you print free money if you owned the money printer and could use it to get yourself re-elected?

2. Snowpocalypse

All that is necessary to extinguish the human race is for winter to blow a little colder, a little longer.

No, I’m not talking about a Day After Tomorrow situation.

More of a Texas energy fiasco, which left 4.5 million without power and water, cost tens of billions, left thousands with crippling debt, and saw more than 200 people (including a baby) freeze to death.

…click on the above link to read the rest of the article…

Look Out Below: Why a Rug-Pull Flash Crash Makes Perfect Sense

November 13, 2021

Look Out Below: Why a Rug-Pull Flash Crash Makes Perfect Sense

It makes perfect financial sense to crash the market and no sense to reward the retail options marks by pushing it higher.

An extraordinary opportunity to scoop up mega-millions in profits has arisen, and grabbing all this free money makes perfect financial sense. Now the question is: will those who have the means to grab the dough have the guts to do so?

Here’s the opportunity: retail punters have gone wild for call options, churning $2.6 trillion in mostly short-term calls–bets on gains now, not later. This expansion of retail options exposure is unprecedented not just in its volume but in its concentration in short-term bets (options that expire in a few days) and in mega-cap tech companies that are commanding rich premiums for options.

Goldman Stunned By The Record $2.6 Trillion In Option Notional Traded Last Friday

The options market is like every other market only more so. The price of an option–a bet that a stock, ETF or index will go up or down before the option expires–is sensitive to the volatility of the underlying equity, the demand of other punters for options and the premium being demanded for time: the farther out the expiration date, the higher the cost of the option.

Recall that anyone with 100 shares of the underlying equity can write/originate an option. Each option controls 100 shares, so a call option that is listed at $1 costs the buyer of the call $100.

This is very sweet leverage if the market goes your way. You get all the gains of the 100 shares for a cost considerably less than buying the 100 shares outright. No wonder retail punters are going crazy for this cheap leverage to maximize gains in “can’t lose” trades.

…click on the above link to read the rest of the article…

“We’re Near The Very End”: Lawrence Lepard On Bitcoin, Gold & The Coming Crash

November 4, 2021

“We’re Near The Very End”: Lawrence Lepard On Bitcoin, Gold & The Coming Crash

Submitted by QTR’s Fringe Finance

This is part 1 of an exclusive Fringe Finance interview with fund manager Lawrence Lepard, where we discuss the state of the economy, gold, bitcoin, catastrophic outcomes for the market, the supply chain in the country and more.

Larry manages the EMA GARP Fund, a Boston based investment management firm. Their strategy is focused on providing “Monetary Debasement Insurance”. He has 38 years experience and an MBA from Harvard Business School. On Twitter he is @LawrenceLepard.

Q: Hi, Larry. Thanks for joining me today. I wrote earlier this week about why I thought the NASDAQ could be primed for a crash. Let’s get right into it off the bat: what do you think could be the most likely catalyst for a market crash right now?

A: Very hard to say, think of it as like an avalanche. What snowflake is going to be the last one before it breaks free?

The market is insanely overvalued, but until now has proven that what is insane can become more insane. So you can’t short it. Frankly all price signals are broken and we could be in a “crack up boom”.

I do see signs of weakness (Evergrande, yield curve heading toward inversion, Fed reducing QE won’t help). Personally I think we are near the end and close to a crash, but I have thought that for some time and have obviously been wrong.

Inflation coming in hot and being persistent is probably the most likely catalyst. Inflation will reduce profit margins and will make the current multiples look even more insane. Catalyst: psychology changes. Technically upward momentum has slowed. I think we are very near the end.

What do you think could be the LEAST noticed cause for a crash?

…click on the above link to read the rest of the article…

Why We Could Be Staring Down The Barrel of A Catastrophic NASDAQ Crash And Not Even Know It

November 2, 2021

Why We Could Be Staring Down The Barrel of A Catastrophic NASDAQ Crash And Not Even Know It

Covid. Gamma. Options. Is it any wonder we haven’t noticed that we are teetering on the edge just yet?

It would certainly take a special confluence of factors for us to be staring down the barrel of a an unprecedented crash in tech stocks without noticing it’s coming. But I’m starting to entertain the idea that that is exactly where we are, we may not know how much pain we are truly in for – and we might not fathom how quickly it could come on and surprise us.

For a little while now my friend on Twitter @rosemontseneca has been quietly pontificating that we are living 1999 all over again, we just don’t notice it yet. I’m starting to seriously agree with him and I have been thinking to myself over the past week: “Why aren’t other people making this comparison yet? Stocks are extremely overvalued. What’s ‘different this time’?”

Indeed, I believe the next crash is going to come as a breakneck-style surprise. If I had a chance to publish this piece before Halloween, I was going to make the analogy of somebody sneaking in the back door of the house and waiting around the corner in the kitchen to hack us to death when we went to make our “stoned-in-our-underwear at 2AM” bologna sandwich. But instead I wound up going with the gun analogy for the title because I was too lazy to get this article out in the month of October.

Halloween Kills' Review: A Nostalgic Mix Tape Of Previous Michael Myers Sequels — “Bologna sandwich, anyone?” / Photo: Halloween Kills

But analogies aside, the point is still the same: the next big market plunge could be any day now, and will likely be led by tech. Let me explain my reasoning.

…click on the above link to read the rest of the article…

Neil Howe On The Fourth Turning: How Bad Will It Get, How Long Will It Last & What Comes Next? (PT1)

October 18, 2021

Neil Howe On The Fourth Turning: How Bad Will It Get, How Long Will It Last & What Comes Next? (PT1)

They say history rhymes.

That civilizations and societies tend to follow cycles — boom/bust, feast/famine, war/peace, cultural experimentation/a retrenchment to the “old ways”.

Neil Howe, the author of the best-selling book The Fourth Turning, lays out his prediction that today’s society has entered the “bust” part of our current cycle — where the status quo falls apart — often chaotically — to be replaced by a new, hopefully better, order.

Howe explains why the weight of history strongly suggests we are headed into a decade-plus period of economic and social disruption that will transform our political, economic, financial and social systems.

Volatility will reign. Crushing inflation looks likely. We may see a stock market crash and widespread job losses. Perhaps even war.

But as with all preceding fourth turnings, Howe predicts we’ll come of it ok. Yes, with some bruises; but likely also with some net improvements for society.

What should we expect from this period of disruption? Are there steps we can take to improve our odds of persevering?

Neil provides very detailed answers in this interview…

The Market Crash Nobody Thinks Is Possible Is Coming

September 30, 2021

The Market Crash Nobody Thinks Is Possible Is Coming

The banquet of consequences is being served, and risk-off crashes are, like revenge, best served cold.

The ideal setup for a crash is a consensus that a crash is impossible–in other words, just like the present: sure, there are carefully measured murmurings about a “correction” but nobody with anything to lose in the way of public credibility is calling for an honest-to-goodness crash, a real crash, not a wimpy, limp-wristed dip that will immediately be bought.

What I’m calling for is a rip your face off, weeping bitter tears over the grave of the speculative wealth that you thought was forever crash. All those buying the dip because the Fed will never let the market go down will be crushed like scurrying cockroaches and all those trying to rotate into the next hot sector or asset class will also be crushed like scurrying cockroaches because when the Everything Bubble pops, well, everything pops. There is no shelter in a risk-off cascade.

The crash is coming as a result of multiple mutually reinforcing dynamics, the first being that no “serious person” believes a crash is possible, much less imminent. In no particular order, here are a raft of other causally consequential triggers of a cascading market crash:

1. As I noted in my call for the top, Is Anyone Willing to Call the Top of the Everything Bubble? (September 6, 2021), there is no history to support the widespread confidence that the extremes of over-valuation, leverage, euphoria and speculation last forever, or even much longer than the lifespan of a cockroach. We’re well past that benchmark into unprecedented insanity. So what happens next: squish.

Just for the record, the Dow topped out on August 13, the S&P 500 topped out on September 2 and the Nasdaq topped out the day after my call, September 7. (Close enough for gummit work…)

2. The credibility of the Federal Reserve is in the dumpster, which just caught fire. As I explained in The Fed Is Fatally Corrupt– And So Is the Rest of America’s Status Quo (September 10, 2021), the Fed is corrupt on multiple levels–thoroughly, completely corrupt, and so are all its minions, proxies, apparatchiks, toadies, apologists and lackeys.

…click on the above link to read the rest of the article…

The Threat Board is Looking Busy

September 29, 2021

The Threat Board is Looking Busy

Markets are never as bad as you fear, but never as good as you hope. The Threat Board has seldom looked so complex: we can try to predict outcomes, but its notoriously difficult. The list of potential ignition points seems to be expanding exponentially: Energy Prices, Oil, Inflation, Stagflation, Supply Chains, Recession, China, Politics, Consumer Sentiment, Business Confidence, Property Markets, Liquidity, Bond Yields, Stock Prices.. you name it and someone is worrying about it.

Dear Reader

How would you like the Morning Porridge delivered Fresh and Warm to your email each morning? We’re offering to do just that through October. All you need to do is be signed up for the Bronze Service on the website and send an email requesting “Free October” to billblain@morningporridge.com.

Bronze Subscription is free. You can browse the website. There will be a time delay on new posts and articles.

Silver Subscription is £10 per month. You get the Porridge delivered fresh and warm to your email each day plus full website access.

Gold Subscription is a discounted group rate for companies.

Blain’s Morning Porridge – 28^th September 2021: The Threat Board is Looking Busy

“Many people have speculated that if we knew exactly why the bowl of petunias had thought that we would know a lot more about the nature of the Universe than we do now.”

This morning – Markets are never as bad as you fear, but never as good as you hope. The Threat Board has seldom looked so complex: we can try to predict outcomes, but its notoriously difficult. The list of potential ignition points seems to be expanding exponentially: Energy Prices, Oil, Inflation, Stagflation, Supply Chains, Recession, China, Politics, Consumer Sentiment, Business Confidence, Property Markets, Liquidity, Bond Yields, Stock Prices.. you name it and someone is worrying about it.

Relax. Calm. Breathe Deep.

…click on the above link to read the rest of the article…

Seven Possible Causes of the Next Financial Crisis

September 14, 2021

Seven Possible Causes of the Next Financial Crisis

The great financial historian, Charles Kindleberger, pointed out in the 1970s that over several centuries, history showed there was a financial crisis about once every ten years. His observation still holds. In every decade since his classic Manias, Panics and Crashes of 1978, such crises have indeed continued to erupt in their turn, in the 1980s, 1990s, 2000s, 2010s, and again in 2020. What could cause the next crisis in this long, recurring series? I suggest seven possibilities:

1. What Nobody Sees Coming

A notable headline from 2017 was “Yellen: I Don’t See a Financial Crisis Coming in Our Lifetimes.” The then-head of the Federal Reserve was right that she didn’t see it coming; nonetheless, well within her and our lifetimes, a new financial crisis arrived in 2020, from unexpected causes.

It has been well said that “The riskiest stuff is what you don’t see coming.” Especially risky is what you don’t think is possible, but happens anyway.

About the Global Financial Crisis of 2007-09, a former Vice Chairman of the Federal Reserve candidly observed: “Not only didn’t we see it coming,” but in the midst of it, “had trouble understanding what was happening.” Similarly, “Central banks and regulators failed to see the bust coming, just as they failed to anticipate its potential magnitude,” as another top central banking expert wrote.

The next financial crisis could be the same—we may take another blindside hit for a big financial sack.

In his memoir of the 2007-09 crisis, former Secretary of the Treasury Henry Paulson wrote, “We had no choice but to fly by the seat of our pants, making it up as we went along.” If the next financial crisis is again triggered by what we don’t see coming, the government reactions will once again be flying by the seat of their pants, making it up as they go along.

…click on the above link to read the rest of the article…

Tag Archives: market crash

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

July 6, 2024 Readings

Post navigation

Latest Posts