Aug 02

Venezuela Increasingly Looks Like A War Zone (ZeroHedge, Aug 1, 2015):

Over the years, we have repeatedly poked fun at the transformation of Venezuela into a “socialist utopia” – an economy in a state of terminal collapse, where the destruction of the currency (one black market Bolivar is now worth 107 times less than the official currency’s exchange rate) and the resulting hyperinflation is only matched be barren wasteland that local stores have transformed into now that conventional supply chains are irreparably broken.

Just this past Wednesday we showed a clip of what is currently taking place inside Venezuela supermarkets, noting that “the hyperinflationary collapse in Venezuela is reaching its terminal phase. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the following disturbing clip shows what is rapidly becoming major social unrest in the Maduro’s socialist paradise… and perhaps more importantly, Venezuela shows us what the end game for every fiat money system looks like (and perhaps Janet and her colleagues should remember that).”

Continue reading »

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Aug 01

This Coal Mine Valued At $630 Million In 2011 Just Sold For One Dollar (ZeroHedge, Aug 1, 2015):

To get a sense of the complete devastation in the world of commodities, consider the curious case of Australia’s Isaac Plans coking coal mine, which was valued at $630 million in 2011. It sold on Thursday for $1.  it gets worse: based on data from Citi Research, 90% of all M&A that miners did since 2007 has been written off. The commodity bubble has officially burst – feel free to thank China.

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Aug 01

Red-Flag

11 Red Flag Events That Just Happened As We Enter The Pivotal Month Of August 2015 (Economic Collapse, Aug 1, 2015):

Are you ready for what is coming in August?  All over America, economic, political and social tensions are building, and the next 30 days could turn out to be pivotal.  In July, we saw things start to turn.  As you will read about below, a major six year trendline for the S&P 500 was finally broken this month, Chinese stocks crashed, commodities crashed, and debt problems started erupting all over the planet.  I fully expect that this next month (August) will be a month of transition as we enter an extremely chaotic time in the fall and winter. 

Things are unfolding in textbook fashion for another major global financial crisis in the months ahead, and yet most people refuse to see what is happening.  In their blind optimism, they want to believe that things will somehow be different this time.  Well, the coming months will definitely reveal who was right and who was wrong.

The following are 11 red flag events that just happened as we enter the pivotal month of August 2015… Continue reading »

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Jul 31

Italy

Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising “Recession Exit May Be Unsustainable” (ZeroHedge, July 31, 2015):

While the overall unemployment rate for the Eurozone also unchanged at 11.1%, it was renewed concern about what is going on in Italy, where unemployment rose from 12.5% to 12.7%, while Italy’s youth unemployment rate, which surprisingly jumped by nearly 2% to 44.2%, a record level.  As Bloomberg put it, “Italy’s jobless rate unexpectedly rose in June as businesses continue to dismiss workers amid concerns that the country’s exit from recession may not be sustainable.”

 

 

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Jul 30

South-America-Public-Domain-460x460

The South American Financial Crisis Of 2015 (Economic Collapse, July 29, 2015):

Most nations in South America are either already experiencing an economic recession or are right on the verge of one.  In general, South American economies are very heavily dependent on exports, and right now they are being absolutely shredded by the twin blades of a commodity price collapse and a skyrocketing U.S. dollar.  During the boom times in South America, governments and businesses loaded up on tremendous amounts of debt.  Since much of that debt was denominated in U.S. dollars, South American borrowers are now finding that it takes much more of their own local currencies to service and pay back those debts.  At the same time, there is much less demand for commodities being produced by South American nations in the international marketplace.  As a result, South America is heading into a full-blown financial crisis which will cause years of pain for the entire continent. Continue reading »

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Jul 30

Hussman-Chart1

An Expert That Correctly Called The Last Two Stock Market Crashes Is Now Predicting Another One (Economic Collapse, July 28, 2015):

What I am about to share with you is quite stunning.  A well-respected financial expert that correctly predicted the last two stock market crashes is now warning that we are right on the verge of the next one.  John Hussman is a former professor of economics and international finance at the University of Michigan, and the information in his latest weekly market comment is staggering.  Since 1970, there have only been a handful of times when a combination of market signals that Hussman uses have indicated that a major market peak has been reached.  In 1972, 2000 and 2007 each of those peaks was followed by a dramatic stock market crash.  Now, for the first time since the last financial crisis, all four of those signals appeared once again during the week of July 17th.  If Hussman’s analysis is correct, this could very well mean that the next great stock market crash in the United States is imminent.

It was an excellent article by Jim Quinn of the Burning Platform that first alerted me to Hussman’s latest warning.  If you don’t follow Quinn’s work already, you should, because it is excellent.

When someone is repeatedly correct about the financial markets, we should all start paying attention.  Back in late 2007, Hussman warned us about what was coming in 2008, but most people did not listen.

Now he is sounding the alarm again.  According to Hussman, when there is a confluence of four key market indicators, that tells us that the market has peaked and is in danger of crashing.  The following comes from Newsmax

He cited the metric among the indicators that foreshadowed declines after peaks in 1972, 2000 and 2007:

*Less than 27 percent of investment advisers polled by Investors Intelligence who say they are bearish.

*Valuations measured by the Shiller price-to-earnings ratio are greater than 18 times.

*Less than 60 percent of S&P 500 stocks above their 200-day moving averages.

*Record high on a weekly closing basis.

The most recent warning was the week ended July 17, 2015,” Hussman said. “It’s often said that they don’t ring a bell at the top, and that’s true in many cycles. But it’s interesting that the same ‘ding’ has been heard at the most extreme peaks among them.”

It is quite rare for the market to set a new record high on a weekly closing basis and have more than 40 percent of stocks below their 200-day moving averages at the same time.  That is why a confluence of all these factors is fairly uncommon.  Hussman elaborated on this in his recent report

The remaining signals (record high on a weekly closing basis, fewer than 27% bears, Shiller P/E greater than 18, fewer than 60% of S&P 500 stocks above their 200-day average), are shown below. What’s interesting about these warnings is how closely they identified the precise market peak of each cycle. Internal divergences have to be fairly extensive for the S&P 500 to register a fresh overvalued, overbullish new high with more than 40% of its component stocks already falling – it’s evidently a rare indication of a last hurrah. The 1972 warning occurred on November 17, 1972, only 7 weeks and less than 4% from the final high before the market lost half its value. The 2000 warning occurred the week of March 24, 2000, marking the exact weekly high of that bull run. The 2007 instance spanned two consecutive weekly closing highs: October 5 and October 12. The final daily high of the S&P 500 was October 9 – right in between. The most recent warning was the week ended July 17, 2015.

The following is the chart that immediately followed the paragraph in his report that you just read…

Hussman-Chart1

When I first took a look at that chart I could hardly believe it.

It appears that Hussman’s signals are able to indicate major stock market crashes with stunning precision.

And considering the fact that we just hit a new “ding” for the first time since the last financial crisis, what Hussman is saying is more than just a little bit ominous.

According to Hussman this is not just a recent phenomenon either.  Even though advisory sentiment figures were not available back in 1929, he believes that his indicators would have given a signal that a market crash was imminent in August of that year as well

Though advisory sentiment figures aren’t available prior to the mid-1960’s, imputed data suggest that additional instances likely include the two consecutive weeks of August 19, 1929 and August 26, 1929. We can infer unfavorable market internals in that instance because we know that cumulative NYSE breadth was declining for months before the 1929 high. The week of the exact market peak would also be included except that stocks closed down that week after registering a final high on September 3, 1929. Another likely instance, based on imputed sentiment data, is the week of November 10, 1961, which was immediately followed by a market swoon into June 1962.

Of course the past is the past, and what has happened in the past will not necessarily happen in the future.

So is Hussman wrong this time?  With all of the other things that are happening in the financial world right now, I certainly would not bet against him.

Other financial professionals are concerned that a market crash could be imminent as well.  The following comes from a piece authored by Andrew Adams

More than 13% of stocks on the New York Stock Exchange are at 52-week lows, which is about 6 standard deviations above the average over the last three years (1.62%) and an extreme only seen one other time during said period (last October when the S&P 500 was percentage points away from a 10% correction).

This dichotomy has created what I believe to be the biggest question about the stock market right now – have we already experienced a stealth correction in the majority of stocks that will soon come to an end or will the market leaders finally succumb to the weight of the laggards and join in on the sell-off? The answer to this could end up being worth at least $2.2 trillion, which is how much money would essentially be wiped out of the stock market if we finally get the much-discussed 10% correction in the overall market (the total U.S. stock market capitalization was $22.5 trillion as of June 30, according to the Center for Research in Security Prices).

Sometimes, a picture is worth more than a thousand words.  I could share many more quotes from the “experts” about why they are concerned about a potential stock market collapse, but instead I want to share with you a “bonus chart” that Zero Hedge posted on Tuesday

Bonus-Chart-Zero-Hedge

Do you understand what that is saying?

In 2007 and 2008, junk bonds started crashing well before stocks did.

Now, we are witnessing a similar divergence.  If a similar pattern holds up this time, stocks have a long, long way to fall.

Like Hussman and so many others, I believe that a stock market crash and a new financial crisis are imminent.

The month of August is usually a slow month in the financial world, so hopefully we can get through it without too much chaos.  But once we roll into the months of September and October we will officially be in “the danger zone”.

Keep an eye on China, keep an eye on Europe, and keep listening for serious trouble at “too big to fail” banks all over the planet.

The next several months are going to be extremely significant, and we all need to be getting ready while we still can.

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Jul 30

“93 million: the number of people who don’t work, and don’t want work.

To put some context around that last number, it is 30% of the entire U.S. population.”


Why Do So Many Working Age Americans Choose Not To Enter The Workforce? (ZeroHedge, July 30, 2015):

Via ConvergEx’s Nick Colas,

Today we look at a unique dataset – Gallup’s annual poll of job satisfaction – to see what it can tell us about secular trends in employment, consumer confidence and spending.  This annual survey of +1,000 people active in the U.S. workforce goes back to the late 1980s, so it is a useful lens with which to consider issues like labor force participation rates that have shifted unexpectedly over the period. Continue reading »

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Jul 29

Meanwhile In Venezuela… The Socialist Paradise Has Arrived (ZeroHedge, July 29, 2015):

As we recently warned, the hyperinflationary collapse in Venezuala is reaching its terminal phase. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the following disturbing clip shows what is rapidly becoming major social unrest in the Maduro’s socialist paradise… and perhaps more importantly, Venezuela shows us what the end game for every fiat money system looks like (and perhaps Janet and her colleagues should remember that).

As we previously concluded, and seemingly confirmed by the above video,

Venezuela’s hyperinflation is reaching its final stages. It is probably already far too late for the government to stop the complete collapse of its currency. The bolivar is in the process of transforming from a medium of exchange to tinder for wood-stoves. Venezuelans who had the presence of mind to convert their savings into gold or foreign currency in good time are likely to survive the conflagration intact. Continue reading »

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Jul 29

Barter

– Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation (ZeroHedge, July 29, 2015):

Months ago, when Alexis Tsipras, Yanis Varoufakis, and their Syriza compatriots had just swept to power behind an ambitious anti-austerity platform and bold promises about a brighter future for the beleaguered Greek state, we warned that Greece was one or two vacuous threats away from being “digitally bombed back to barter status.”

Subsequently, the Greek economy began to deteriorate in the face of increasingly fraught negotiations between Athens and creditors, with Brussels blaming the economic slide on Syriza’s unwillingness to implement reforms, while analysts and commentators noted that relentless deposit flight and the weakened state of the Greek banking sector was contributing to a liquidity crisis and severe credit contraction.

As of May, 60 businesses were closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.  Continue reading »

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Jul 28

greece

Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70%  (ZeroHedge, July 28, 2015):

Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors.

At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.

Since then, things have deteriorated further and indeed, with the imposition of capital controls, businesses found that supplier credit was difficult to come by, leading to the very real possibility that Greece would soon face a shortage of imported goods, something many Greeks clearly anticipated in the wake of the referendum call as evidenced by the lines at gas stations and empty shelves at grocery stores.

As a reminder, here’s what WSJ said earlier this monthContinue reading »

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Jul 28

Wall Street Still Didn’t Get The Memo—–China’s Done, Tops In! (David Stockamn’s Contra Cormner, July 28, 2015):

Bubblevision’s Scott Wapner nearly split a neck vessel today denouncing the US stock market sell-off. It was completely unwarranted, he thundered, because China don’t have nothin’ to do with anything.

The collapse of red capitalism in China is exporting gale force deflation to the global economy, meaning that the already evident rollover of world trade is just beginning its descent.

So S&P profits are not immune, not by a longshot. One of these days, perhaps soon, even Scott Wapner will get the memo.

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Jul 28

homeownership rate Q2 2015

US Middle Class Stays Dead: Homeownership Drops To 48 Year Low; Median Asking Rent Soars To All Time High (ZeroHedge, July 28, 2015):

Three months ago, just as the last Census Homeownership and residential vacancy report hit, Gallup released its latest survey which confirmed just how dead the American Dream has become for tens if not hundreds of millions of Americans.

According to the poll, the number of Americans who did not currently own a home and say they do not think they will buy a home in “the foreseeable future,” had risen by one third to 41%, vs. “only” 31% two years ago. Non-homeowners’ expectations of buying a house in the next year or five years were unchanged, suggesting little change in the short-term housing market.

As Gallup wryly puts it, “what may have been a longer-term goal for many may now not be a goal at all, and this could have an effect on the longer-term housing market.”

gallup housing

Earlier today, the US Census released its latest homeownership data, which confirmed that for what is left of America’s middle class, owning a home has become virtually impossible, with the homeownership rate plunging from the lowest level since 1986, or 63.7%, to just 63.4% the lowest reading since the first quarter of 1967. Continue reading »

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Jul 28

TIME THE CRASH


When Will We Ever Learn? (STA Wealth Management, July 27, 2015):

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Jul 27


Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down (ZeroHedge, July 27, 2015):

This was not supposed to happen.

After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!

20150726_china6

The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg’s Richard Breslow: “fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day.” Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling. Continue reading »

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Jul 27

20150727_EOD

“Uncontained” Shanghai Shafting Slams Global Stocks & Commodities Silly (ZeroHedge, July 27, 2015)

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Jul 27

witch hunt

What Loss Of Control Looks Like: Chinese Regulator Urges Traders To Rat Out “Malicious Sellers” (ZeroHedge, July 27, 2015):

After pledging a whopping 10% of China’s GDP, or just about $1 trillion, to its various (at last check over 40) discrete measures to prop up its collapsing market, among which such threats as arresting shorters of stock and “malicious sellers”, China has finally reverted to what the communist regime does best to preserve “order” – implement witch hunts in which the population rats out any criminals who dare to go against the protocols of the communist party. In this case, the targets are “malicious sellers” with the regulator adding that those found guilty of shorting will be “dealt with severely.”

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Jul 27

The Complete Guide To China’s CNY 4 Trillion Margin Doomsday Machine (ZeroHedge, July 27, 2015):

On the heels of a veritable bloodbath in Chinese equities overnight which saw the SHCOMP slide a harrowing 8.5%, the entire world is now beginning to take a hard look at the notion that dramatic bouts of selling pressure are aggravated and perhaps triggered by an unwind in the multiple backdoor margin lending channels that allowed investors to skirt official restrictions on leverage and helped to drive the market’s world-beating rally. Here is the complete guide to China’s CNY4 trillion shadow margin edifice.

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Jul 27

Flashback:

Coming Derivatives Crisis Designed To Destroy The Entire Global Financial System: $600 TRILLION To $1.5 QUADRILLION Worldwide Derivatives Market – World GDP At Around $65 Trillion

Blythe-Masters-Jamie-Dimon

JPMorgan Employee Who Invented Credit Default Swaps is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade


time-bomb
The total notional derivatives value is about $1.5 quadrillion – about 20% more than in 2008. (Image credit: icmu.nyc.gr)

$1.5 Quadrillion Time Bomb (The Real Agenda News, July 26, 2015):

When investing becomes gambling, bad endings follow. The next credit crunch could make 2008-09 look mild by comparison. Bank of International Settlements(BIS) data show around $700 trillion in global derivatives.

Along with credit default swaps and other exotic instruments, the total notional derivatives value is about $1.5 quadrillion – about 20% more than in 2008, beyond what anyone can conceive, let alone control if unexpected turmoil strikes.

The late Bob Chapman predicted it. So does Paul Craig Roberts. It could “destroy Western civilization,” he believes. Financial deregulation turned Wall Street into a casino with no rules except unrestrained making money. Catastrophic failure awaits. It’s just a matter of time. Continue reading »

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Jul 27

“… could that statistic be distorted to the downside?”

What a ‘brilliant’ question.

Welcome to the recovery …

Americans Not In The Labor Force Soar By 640,000 To Record 93.6 MILLION; Participation Rate Drops To 1977 Levels

… but aside from that everything is awesome.


Took ‘Em Long Enough (ZeroHedge, July 26, 2015):

Barron’s just now, some 4+ years after Zero Hedge first called it out, presented with no further comment:

Capture

ZH Note:  From “fringe bloggers” in August 2011

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Jul 23

11 Economic Crashes That Are Happening RIGHT NOW

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now? (Economic Collapse, July 23, 2015):

If we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time.  This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.  On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months.  When global economic activity slows down, demand for raw materials sinks and prices drop.  So important global commodities such as copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber are all considered to be key “leading indicators” that can tell us a lot about where things are heading next.  And what they are telling us right now is that we are rapidly approaching a global economic meltdown.

If the global economy was actually healthy and expanding, the demand for commodities would be increasing and that would tend to drive prices up.  But instead, prices continue to go down. Continue reading »

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