Home » Posts tagged 'market crash' (Page 2)

Tag Archives: market crash

Reagan White House Budget Director and best-selling author David Stockman says, “This is not the time to be invested in the markets . . . . A reset is just a pleasant name or a clinical name for a crash of epic proportions, which we will have because the markets are so inflated. There are trillions of dollars that are at risk. To put a dimension on this thing or a way of sizing this, is we have a $60 trillion bubble on the balance sheets of 130 million people in American society, but especially in the top 5% to 10% that own a huge share of the assets. . . . I have no thought about how big the correction will be, but if it were just back to the norm . . . it would be a $60 trillion correction, and that is a pretty big hole in the bucket. If $60 trillion disappears (out of the U.S. economy), it changes everything. It turns the financial system and economic reality upside down.”

How did things get so perilous in the economy? Stockman says look no further than Washington D.C. and the Fed. Stockman explains, “When central banks start to inflate like crazy, you first inflate financial assets. It eventually works its way into goods and services, and that’s where we are now. You get the second stage of inflation as well. There has never been a small group of government officials, unelected at that, who have done more damage, more wanton harm to the economy and to the lives of ordinary people than (Fed Head) Powell and his merry band of mad money printers. This is really an outrage. I say these people are damn near criminally incompetent given what they say about the world, which is totally wrong, given what they’re doing, this massive money printing, which is totally unjustified. . .”

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

Crisis, Crash, Collapse

July 5, 2021

Crisis, Crash, Collapse

We have a fine-sounding word for running with the herd: momentum. When the herd is running, those who buy what the herd is buying and sell what the herd is selling are trading momentum, which sounds so much more professional and high-brow than the noisy, dusty image of large mammals (and their trading machines) mindlessly running with the herd.

We also have a fine-sounding phrase for anticipating where the herd is running: front-running. So when the herd is running into stocks, those who buy stocks just ahead of the herd are front-running the market.

When the Federal Reserve announces that it’s going to make billionaires even wealthier with some new financial spew, those betting that stocks will never go down because the Fed has our back are front-running the Fed.

There are two remarkable assumptions at the heart of momentum and front-running: The momentum herd and those front-running the herd base their behavior on the assumption that there will always be other rich people who will sell all the shares they want to buy at today’s prices before the run-up to new highs.

Front-running and the Greater Fool Theory

Since only rich people own stocks, we know that those selling stocks are selling to other rich people and those buying stocks are buying from other rich people. So the assumption of those front-running the market is that there is a large enough sub-herd of rich people who for whatever reason aren’t smart enough to front-run the herd, and who will foolishly sell their stocks just before they double in value.

The second assumption is that there will also be a large enough sub-herd of rich people who will buy all the shares they want to sell at the top, just before the bubble pops and the value of the newly purchased shares falls in half.

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

Cornered Fed Weighs Dilemma: Market Crash or Runaway Inflation?

July 3, 2021

Cornered Fed Weighs Dilemma: Market Crash or Runaway Inflation?

Image via Science Photo Library

The U.S. economy is at a fork in the road.

One route leads to the return of market fundamentals and sane stock valuations, at the cost of a historic market correction.

The other route leads to runaway hyperinflation that eats up the debt almost as fast as it devours the dollar’s buying power. That would likely cause the dollar to lose its hegemony as global reserve currency and bring about a simultaneous market collapse.

Here’s where we are, and where we might be going…

How did we get here?

For the most part, through Fed interventions that suppressed interest rates for the last 13 years, creating artificial demand for U.S. IOUs in the form of bonds, and generally maintaining an “easy money” policy. (And let’s not forget the hundreds of millions of stimulus checks, unemployment extensions, fraud-riddled Payroll Protection Program and the other boondoggles associated with the pandemic lockdown.)

Now, all this works great. For a while. The Fed came out of the Great Recession with $2 trillion on its balance sheet. Today, over a decade later, its balance sheet sits at $8 trillion. And climbing.

Let’s reiterate: This works great. For a while.

Junk-rated companies are able to borrow massive amounts of money (and spend it all on bitcoin, sure, why not?) at absurdly low rates, only 3% over the “safe rate” offered by Treasurys. Everyone who owns stocks made money, at least on paper. We’ve already watched stock valuations climb into the stratosphere as lockdown-addled day-traders took their stimmies to the Robinhood casino to play with the /WallStreetBets and AMC apes. We’ve seen home values skyrocket (15% annually in April 2021 and currently about 30% higher than the peak of the housing bubble).

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

A Market Crash AND High Inflation?

February 15, 2021

A Market Crash AND High Inflation?

Financial researcher Jesse Felder warns of twin dangers ahead

Imagine for a moment that the price of all your investments — your stocks, your retirement portfolio, your house — suddenly drop in half this year. Now imagine that on top of that inflation suddenly picks up, making your cost of living skyrocket.

That would be pretty awful, right?

Well, this might not be just some theoretical thought exercise.

Highly respected financial researcher Jesse Felder warns us that these twin dangers of a market crash and higher inflation actually could indeed happen in the near future.

For many months now we’ve been sharing the mounting abundance of data points revealing that today’s markets are historically unprecedented levels of over-valuation. To our list, Jesse adds record margin debt levels, which have NEVER been higher compared to GDP than they are now:

Margin Debt to GDP chart

Margin debt is a measure of how speculative the investing environment is: the more margin debt outstanding, the more speculative the time. So we are now living in the most speculative moment EVER.

Like many of our recent past guest experts like Grant Williams, Jim Rogers, Steen Jakobsen and Jim Bianco, Jesse foresees high inflation as the biggest existential threat to markets and the economy going forward. That by itself would puncture the euphoria supporting today’s asset prices.

So, ugly as it is to contemplate, we may be dealing with declining markets and rising inflation as 2021 progresses.

Which is why now, more than ever, is the time to partner with a financial advisor who understands the nature of the risks and opportunities in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

[ Watch & Download This Video on Vimeo ]

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

The Stock Market, Fatally Wounded by the Truth, Will Stumble and Crash

January 31, 2021

The Stock Market, Fatally Wounded by the Truth, Will Stumble and Crash

It didn’t have to be this way, but this is the reality we must now face: truth is fatal to fraud, and our entire financial-political system is a fraud.

The stock market has just been punctured by the thin blades of truth. It is fatally wounded but nobody dares notice. The wounds are barely visible, but the internal damage is mortal. The stock market is already stumbling and will soon crash.

The banquet’s participants ignore the faltering market because the rules are we never reveal the truth, or acknowledge it, or discuss it, no matter how obvious, because truth is fatal to fraud. So the stock market’s vital signs are in freefall but the conversation remains upbeat and light: stimulus, rapid growth in the second half, etc., all the patter of a carefully constructed illusion that fraud is forever as long as the truth never comes out.

Alas, the truth has emerged from the shadows, despite the silence of the insiders and the financial media. Here are the truths that have emerged like karmic genies:

1. The stock market is nothing but one giant fraud. The entire market is corrupt and rigged from the ground up. The fraud is systemic, designed into every tendril of the market. It was a useful deception to blame it all on “bad players,” but now the truth has been revealed: the market is nothing but a rigged game enriching insiders.

2. The Fed is a fraud. All the Federal Reserve has accomplished in 13 years of goosing the stock market is unprecedented wealth and income inequality as the fraud of the Fed has boosted the fraud of the market, which has fatally undermined America’s social and economic orders. Please read this short paragraph and let it sink in. Monopoly Versus Democracy (Foreign Affairs):

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

UNIDOS HACIA EL FUTURO

September 13, 2020

UNIDOS HACIA EL FUTURO

“The markets are the product of 1999 & 2007 hooking up for a one night stand.”
Tweet by Danielle DiMartino Booth (@DiMartinoBooth), 25^th August 2020.

“In the middle of the journey of our life, I came to / Myself in a dark wood, for the straight way was lost.”
Dante, Inferno.

“Zoom is now worth more than IBM.”
“I don’t know if that says more about Zoom or IBM.”
Tweets by Morgan Housel (@morganhousel), 31^st August 2020.

By the mid 1970s, film director William Friedkin was on a roll. 1971’s The French Connection bagged him an Oscar and widespread critical acclaim; 1973’s The Exorcist became the highest grossing Warner Bros film of all time. How did Friedkin follow up on all this monstrous success ? He decided to adapt Georges Arnaud’s novel The Wages of Fear (Le Salaire de la peur), in which down-on-their-luck truck drivers in Latin America attempt to ferry nitroglycerine across a treacherous mountain range in order to extinguish an oil well fire. The resultant 1977 release was called Sorcerer. It sank more or less with all hands.

Which is a shame, because Sorcerer – or Wages of Fear as it was somewhat unimaginatively titled in the UK (see poster below) – has moments that are pure cinema. The sequence where Roy Scheider and Francisco Rabal pilot their ramshackle truck over a threadbare rope bridge across a river in flood is one of the most extraordinary in film history (and very Werner Herzog). All of which vindicates screenwriter William Goldman’s assessment that in the movie business, nobody knows anything.

Source: https://www.originalfilmart.com/products/sorcerer-quad

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

Blain’s Morning Porridge – June 29 2020: What if it’s just begun?

June 29, 2020

Blain’s Morning Porridge – June 29 2020: What if it’s just begun?

What if the real pain is still to come?

“That about sums it up for me..”

There is an amusing piece on the FTs’ Alphaville listing 20 things investors should look for when trying to work out who will be the next Wirecard. You don’t need to be a financial genius to work out which company they might be talking about… It’s a basic wake-up call. In periods of economic darkness, its all-to-easy to be persuaded as to the efficacy of snake oil. If something over-promises, makes lots of noise while underdelivering, and is basically a personality cult – then it’s long-term unlikely to be a particularly successful investment.

Back in the real world…

We are nearly half-way through 2020. Although we’ve been shocked, surprised and buffeted by the Virus, and buoyed by the swift and effective intervention of Governments to support companies and mitigate job losses while Central Banks have calmed markets with the opium of QE Infinity, I can’t help wonder if the real earthquake is yet to come.

I am still bullish about long-term recovery as we adapt to the virus and it spurs a new tech development age. But I can’t help feeling deeply uneasy about current markets and the resilience of global financial systems.

This crisis is unlike anything I’ve experienced before. Normally a market crash is explosive event – it occurs when something in the financial sphere breaks; like confidence in housing and financial systems in 2007, or valuations in the Dot.Com crash, or faith in credit constructs like during the European Sovereign Debt crisis in the 2010s. In each of case of financial mayhem I’ve experienced since the Great Perp Crash of 1986, the initial shock and horror gradually lessens as the market discounts the shock, shrugs it off, and carries on.

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

992 Billion Reasons Why The Fed Needs Another Market Crash In The Next Few Weeks

May 13, 2020

992 Billion Reasons Why The Fed Needs Another Market Crash In The Next Few Weeks

Speaking in a video conference organized by the Peterson Institute, turbo money printer Jerome Powell today reassured the market that negative rates are not something the Fed – which expanded its balance sheet by $2.6 trillion in the past two months – is contemplating now. Of course, that will change after the next market crash or if economic shutdowns return, but for now the Fed’s message to traders was clear: don’t push forward fed fund rates negative, which also catalyzed today’s sharp market drop as a key source of potential forced easing was removed.

However, with Powell taking negative rates off the table (for now), it means the Fed has another problem on its hands, one which was first laid out by Deutsche Bank’s credit strategist Stuart Sparks, who in a recent note said that “for all the measures taken by the Fed and fiscal authorities to counter the COVID19 shock, policy remains too tight.” And, as Sparks adds, if the Fed opts to avoid negative policy rates – which appears to be the case – “further easing must be provided by the size and composition of the Fed’s balance sheet”, meaning more QE.

How much more QE? Well, with short-dated market real yields positive, Deutsche Bank estimates that r*, or the neutral rate of interest, has fallen to around -1%, “suggesting additional accommodation required for policy to be “easy” could be more than 100 bp in terms of “policy rate equivalent.“

Previously the Fed had estimated that $100 billion in QE has approximately the same short term impact on growth as 3 bps of rate cuts. This equivalence means that in order to provide a 1% of “rate equivalent” easing, the Fed would need to grow the balance sheet by roughly $3.3 trillion.

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

The Insanity Continues: Futures Crash Limit Down, S&P Indicated 6% Lower

March 18, 2020

The Insanity Continues: Futures Crash Limit Down, S&P Indicated 6% Lower

After surging 6% yesterday, with the Dow briefly rising more than 1,000 point, traders once again got a reminder of what record high VIX means when overnight futures crashed again – despite the Fed’s launch of two Lehman-era crisis facilities, the PDCF and the CPFF – and plunged by the -5% limit down, with the SPY ETF currently hinting at a -6% open.

Putting the latest market move in context… well, see for yourself:

March 12: Limit Down
March 13: Limit Up
March 16: Limit Down
March 17: Limit Up
March 18: limit Down

Copper, Oil and S&P 500 E-Mini Futures Offer Dynamic Signals

“A rise of 1,000 points in Dow is something you see only during a financial crisis. It is not a good sign,” said Tomoaki Shishido, senior fixed income strategist at Nomura Securities. “A rise of 100 points would be much better for the economy.”

“Another remarkable day in what is clearly fin-de-regime,” Rabobank’s global strategist Michael Every wrote. “Things have already irrevocably changed and whipsaw market action reflects that this is the case. The only issue is how much further they change from here, and hence where markets settle.”

With the market rejecting both the Trump admin’s latest $1.3TN fiscal stimulus proposal and the Fed’s panicked attempts to restore stability, there was no place to hide and European stocks (which at least were not halted) plunged alongside US futures: the Euro Stoxx 50 plunged -5.2%, Dax -4.6%, FTSE 100 -5.1% with industrial-goods and construction companies leading the decline and telecoms the only sector in the green. The Stoxx Europe 600 Index fell 4.6% as of 10:30am in London, reaching a new session low, as miners, constructors and industrial stocks drop more than 6%.

Asian stocks also plunged, led by energy and finance, after ending flat in the last session. Most markets in the region were down, with Australia’s S&P/ASX 200 dropping 6.4% and South Korea’s Kospi Index falling 4.9%, while Thailand’s SET gained 0.2%.

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

“Just Close The Whole Thing Up”: CNBC Anchors Melt Down, Beg For Market Closures On Twitter

March 16, 2020

“Just Close The Whole Thing Up”: CNBC Anchors Melt Down, Beg For Market Closures On Twitter

Few are dealing with the economic and market turmoil with more chaos and less class and resolve than the expert “buy and hold” class over at CNBC, who shockingly never said one word of warning to their retail viewers when the market was doing nothing but going straight up for more than a decade, and instead were dragging mom and pop investors into massively overvalued stocks urging them to buy at all time highs, and who are now melting down before our eyes at the first sight of a substantial market pullback.

Their solution: own the shorts by shutting down the market entirely. Because if one can’t BTFD, is it even a market?

As recently as Friday, when the Dow Jones posted a 2000 point gain on the back of a short squeeze that nearly doubled the indexes gains in the last 15 minutes of the day, there was no talk about markets being defective or needing to close. That was, of course, until the Fed’s $700 billion “quarantative easing” bazooka bailout of markets fizzled spectacularly on Sunday nights and futures promptly went limit down. When it appeared that this plan was failing, some of the industry’s finest began to panic visibly.

Prior to the Fed news, Halftime Report’s Scott Wapner had already called for blanket censorship of Twitter…

Then, after the Fed bazooka failed to calm markets, it sent the popular talking heads into a typing panic, as Wapner started tweeting wildly, criticizing NFL players for signing contracts, prodding the NYSE to “close the floor” and then begging for them to “close the whole thing up” so the market could “start again later”. Perhaps because when things don’t go your way, you can always beg for a reset in some imaginary world where the Fed still runs everything.

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

China Bans Selling, Plans Massive Liquidity Injection To Prevent Market Crash

February 2, 2020

China Bans Selling, Plans Massive Liquidity Injection To Prevent Market Crash

Judging by the collapse in Chinese futures and the Offshore Yuan over the past week, China’s key cash equity index – The Shanghai Composite – is set to plunge around 6-8% as the market re-opens for the first time since Lunar New Year (and the coronavorus chaos).

China stock futures have tumbled…

And Offshore Yuan is fighting at the 7.00/USD level…

Which of course will not do for the nation has to maintain the appearance of a minor flesh-wound than a catastrophic coronary. And so, as Bloomberg reports, China unveiled a raft of measures over the weekend to aid companies hit by the coronavirus outbreak and also shore up financial markets.

Quarantative easing?

The People’s Bank of China announced that the total injection announced was 1.2 trillion yuan, the largest single-day addition of its kind in data going back to 2004.

The money will be supplied using reverse repurchase agreements to ensure liquidity is “reasonably ample” during the outbreak, according to the PBOC.

The new measures follow the announcement last week that China’s biggest banks will lower interest rates for firms in Hubei, the center of the outbreak.

However, as Tommy Xie, an economist at Oversea-Chinese Banking Corp notes, the net effect of this admittedly huge liquidity injection is much lower as there are more than 1 trillion yuan of short-term funds scheduled to mature on Monday.

“The amount of the net injection isn’t huge. The PBOC may want to retain some flexibility, which means it can add more liquidity in the rest of the week if the sentiment is too bad.”

Finally, we wonder if even this additional liquidity injection will be big enough as judging by Dr.Copper, the Chinese economy is about to be hit by the biggest shock in recent history…

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

World’s Ultra-Rich Preparing For Market Crash, UBS Warns

November 12, 2019

World’s Ultra-Rich Preparing For Market Crash, UBS Warns

A synchronized global slowdown, with no end in sight, has spooked some of the wealthiest investors around the world, according to a new survey from UBS Wealth Management, seen by Bloomberg. UBS polled wealthy investors, who are preparing for a significant stock market correction by the end of next year.

In the survey of more than 3,400 high net wealth respondents, 25% said they’ve sold risk assets, such as equities, commodities, and high-yield bonds, and have transitioned into cash. The synchronized global slowdown, coupled with a US-China trade war, were some of the greatest concerns of respondents.

“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” said Paula Polito, client strategy officer at UBS GWM, in a statement. “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

About 80% of the respondents expect volatility to increase through 2020, and 55% believe a market plunge could occur before Q4 2020.

Worse, 60% of respondents expected to raise cash levels in the coming quarters (i.e., sell stocks).

Most respondents said the added caution is due to a possible blowoff top in global equity markets. About 70% of respondents are optimistic through 2030.

“The challenge is that they seem to want to respond” to short-term uncertainty “by really shortening their time horizons and shifting to assets like cash that are safe,” said Michael Crook, a managing director on the investment strategy team. Though with many of these people investing on a time horizon across decades and for future generations, that “seems like a mismatch.”

And while most respondents said they’re preparing for market turbulence in the short term, many should rethink their US outlook for the next decade. Teddy Vallee, CIO of Pervalle Global, shows that the “US is dead money for the next 10 yrs.”

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

Crashing The Financial System For Fun And Profit

November 7, 2019

Crashing The Financial System For Fun And Profit

Huge Fortunes Can Be Made In Falling Markets

It would be wise to remember we are in uncharted waters and this market could reverse on a dime. The stories flowing out of companies such as WeWork that are burning through cash screams danger ahead! This means we should not discount the idea that those in charge might reach a tipping point where they crash the financial system for fun and profit. While this may seem outlandish the possibility is real. This doesn’t mean that every rich guy and gal would sign on to this plan, just enough to push things over the edge. When things have gone too far in one direction history shows that a correction always takes place. It could be argued we have reached that point and true price discovery has been lost.

A huge amount of money can be made during a market crash for those properly positioned. As long as the Fed and the big banks survive those who control these institutions couldn’t care less about how the 99.5% at the bottom fair. In fact, the Dodd-Frank Act which is over 2,300 pages allows this under Title II what is viewed by many as a “bank bail-in”. This is done by imposing the losses of insolvent financial companies on their common and preferred stockholders, debt holders, and other unsecured creditors including depositors.

The whole event of a “bank bail-in” can be viewed as another way to disguise a massive default and it can happen here in America. An example of just how delusional we have become as to the fragility of our financial system is that many people have taken comfort in the efforts to control the banking sector through the Dodd-Frank act following the 2008 crisis.

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

Getting Ready For The Stock Market Crash…

October 2, 2019

Getting Ready For The Stock Market Crash…

It is something of a tradition amongst market commentators to make bold stock market calls because they gain you notoriety if you get it right. Over here at AiC, I don’t particularly care what people think. I’m here to make money—that’s it. Therefore, I’ve refrained from big market calls—particularly as I have no real edge in guessing where an index of a few hundred companies will be trading at a certain date in the future. This doesn’t mean that I don’t recognize economic and share-price cycles and manage my portfolio accordingly.

Over the past few years, I have been increasingly concerned about the massive structural imbalances in the world, along with excess debt and asinine monetary policy leading to an epic equity market bubble. Remember, your investment returns are directly correlated to the price you pay, not your analytical ability and I refuse to play in the greater-fool theory of finance. With that in mind, I have consistently managed my portfolio with a rather reduced overall exposure profile. Despite holding plenty of cash, I have certainly not been a perma-bear—those guys tend to complain a lot but make no money. Rather, I’ve continued to find opportunities to do smart things in esoteric sectors of the market, leading me to consistently trounce the US equity markets over the past few years. Yet, the whole time, I have been quick to sell companies that appreciated to 80% of fair value, I have been un-willing to take on risk and have passed on many perfectly good investments as I preferred to miss something than increase my market exposure.

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

Preparing For A Financial Apocalypse: Insiders Are Selling “$600 Million Of Stock Per Day In August”

August 27, 2019

Preparing For A Financial Apocalypse: Insiders Are Selling “$600 Million Of Stock Per Day In August”

In the U.S., corporate insiders have been selling stocks at an average rate of 600 million dollars per day during the month of August. This kind of wild selling indicates that there is a tremendous amount of fear among corporate insiders right now, and such selling would only make sense if a stock market crash is imminent. And without a doubt, we have already seen volatility return to Wall Street in a major way as our trade war with China has dramatically escalated. Many Americans are hoping that things will start to calm down and that our trade conflict with China can be resolved calmly, because if things take a bad turn many analysts are warning that we could soon be facing the worst financial crisis since 2008. Here is one example…

Remember the brutal sell-off last year when stocks suffered their worst December since the Great Depression? Something worse than that could happen in days, a Nomura analyst said.
Macro and quant strategist Masanari Takada turned heads earlier this month with his bold call for a “Lehman-like” plunge. He’s sticking with this prediction as market sentiment shows no signs of improving, leading him to believe a monster sell-off could arrive this week.

With chilling forecasts like that being thrown around on a regular basis these days, it is understandable that corporate insiders would be tempted to get out of the market, and right now they are racing for the exits at a pace that is absolutely breathtaking. The following comes from CNN…

Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

…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

Post navigation

Latest Posts