Jul 23

- The Rot Within, Part I: Our Ponzi Economy (OfTwoMinds, July 21, 2014):

Depending on blowing the next bubble to temporarily prop up the economy is the height of foolhardy shortsightedness. Yet that’s our Status Quo, increasingly dependent on inflating bubbles to evince “economic strength” when the Ponzi paint will soon peel off the rotten wood of the real economy.

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Jul 21

- The Insiders’ Case for a Stock Market Mini-Crash  (Of Two Minds, July 21, 2014):

The trade only works if everyone is lulled into staying on the long side until it’s too late.

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Jul 18

- The Marginal “Benefit” Of A Terminated Microsoft Employee: $1.5 Million (ZeroHedge, July 17, 2014):

Since the advance reports of layoffs at Microsoft started circulating this Sunday, the giant tech company has surged over 8%. This has raised the market cap of the behemoth by almost $28 Billion. Today we get the ‘news’ that Microsoft was laying off a record 18,000 employees (more than tripled the 2009 dump of 5,900 employees).That means – for all activist investors out there looking to raise MSFT share price – a $1.5 million market cap boost for each scalp, which, in other words, is the marginal “value added” of every currently employed Microsoft worker.

20140717_MSFT

 

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Jul 16

- The Final Warning: Individual Investors Piling Into Stocks, Market Leverage Hits All Time Highs (SHFT, July 14, 2014):

The story goes that in the Winter of 1928 Joe Kennedy, father of President John F. Kennedy, went to have his shoes shined. When the shoe shine boy finished he offered Kennedy a tip. “Buy Hindeburg,” he said.

Kennedy promptly sold off all of his stock holdings. Within a year the United States saw a massive stock market crash that wiped out the life savings of millions of Americans and ushered in a decade’s long Great Depression.

When asked why he sold all his stocks Kennedy replied, “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.”

Throughout history there have always been critical warning signs in the midst of financial exuberance that signaled the bursting of the bubble.

According to a report from Bloomberg the warning siren may have just gone off again. Continue reading »

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Jul 13

muppets-kermit-dead

Summary:

Recall that it was Goldman’s David Kostin who in January admitted that “The S&P500 Is Now Overvalued By Almost Any Measure.” It was then when the Goldman chief strategist admitted there was only 3% upside to the bank’s year end target of 1900.  Well, that hasn’t changed. In his latest note Kostin says that “S&P 500 now trades at 16.1x forward 12-month consensus EPS and 16.5x our top-down forecast… the only time S&P 500 traded at a higher multiple than today was during the 1997-2000 Tech bubble when margins were 25% (250 bp) lower than today. S&P 500 also trades at high EV/sales and EV/EBITDA multiples relative to history. The cyclically-adjusted P/E ratio suggests S&P 500 is now 30%-45% overvalued compared with the average since 1928.” And this is where Goldman just goes apeshit full retard: “we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075, reflecting prospective returns of 4% and 6%, respectively.

Wait, what???

- Goldman Admits Market 40% Overvalued, Economy Slowing, So… Time To Boost The S&P Target To 2050 From 1900 (Zerohedge, July 12, 2014):

One has to give it to Goldman Sachs: the bank which until a few years ago just couldn’t lose a penny, is about to report earnings which will, even if they beat Wall Street’s estimate, be an embarrassment to the bank that openly used to run the world until very recently. The reason, aside from the moribund economy, is that trading volumes have plummeted at an unprecedented pace as i) nobody trusts the centrally-planned capital markets any more and ii) valuations are, despite what permbulls can say on TV stations with record low viewership, so ridiculous few if any would actually go long here. Continue reading »

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Jul 12

- Russell 2000 Slumps Into Red For 2014; Gold Best Year-To-Date (ZeroHedge, July 11, 2014):

The Russell 2000 closed down almost 4% from last Thursday’s early close – its worst week in 3 months (and in the red year-to-date). The Nasdaq miraculously scrambled back to unchanged from Payrolls but all major indices closed red for the week. Away from stocks, the USD closed unchanged (with notable CAD weakness and JPY strength). Treasury yields tumbled 13bps on the week – the most in 4 months. Gold and silver rose 1.3% on the week to new 4-month highs (6th green week in a row) as WTI Crude slumped back under $101 (-3.3% on the week). VIX rose around 2 vols back above 12 as “most shorted” stocks plunged over 5% – the biggest weekly drop in 25 months! VIX was slammed lower late-on to give the impression of confidence in stocks into the weekend but credit was notably not buying it at all.

The “most shorted” stock double-top appears to have confirmed… with the worst week in over 2 years!!

20140711_EOD7

Gold is the best performing asset of the year as oil tumbled (and silver overtook stocks)

 

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Jul 11

In other news:

- Cynk sunk: regulators suspend trading in mystery company (Guardian, July 11, 2014):

Financial Industry Regulatory Authority halts trading in tech company with no assets, no revenue and just one employee

- Trading in CYNK Technology halted by SEC (CNBC, July 11, 2014):

Federal regulators on Friday halted trading in CYNK Technology, the mysterious over-the-counter stock that ran from a few cents to over $21 in a month.

Before:

- Pure Madness: Revenueless, Assetless CYNK Soars Over $5 BILLION; Bigger Than GameStop, Cablevision, Jabil Circuit

- Undisputable Bubble Insanity: No Revenue, No Assets Company Up Over $1 Billion (+110%) Today On 57K Shares Traded

- Market Top? Meet The $1 Billion Company With Zero Revenues


CYNK Has Been Halted By The SEC
 Shares in Cynk have skyrocketed since June, but the company has yet to make any profit – or even officially launch.

How The Market Is Like CYNK (Which Was Just Halted) (ZeroHedge, July 11, 2014):

For all the drama and comedy surrounding the epic idiocy in which a bunch of “investors” took the price of non-existent company CYNK from essentially zero to a market cap of over $5 billion in under a week, most people missed the key message here: the stock is a harbinger of what is happening to the entire market. Because while those defending what is clear irrational exuberance, scratch that, irrational idiocy are quick to point out that CYNK’s epic surge took place on less than 0.1% of its outstanding shares, these are the same people to say precisely the opposite about the S&P 500. “Ignore the collapsing volumes sending the stock market to all time high – it’s perfectly normal” is an often repeated refrain by the permabullish crowd. Just not when it involves case studies in market insanity like CYNK apparently.

Perhaps ironically, it was the concurrent most recent crisis in Europe, that involving Portugal’s cryptic Espirito Santo group, whose top-most HoldCo is largely shrouded in secrecy yet which somehow is not a deterrent to the sellside community to issue one after another “all is clear; don’t pull your deposits please” note, that confirmed not only that nobody has any idea what the real situation of European banks is, but how the entire capital market has now become nothing more than one glorified CYNK penny-stock turning into a mid-cap.

Deutsche Bank’s Jim Reid explains: Continue reading »

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Jul 10

jim_cramer

Undisputable Bubble Insanity: No Revenue, No Assets Company Up Over $1 Billion (+110%) Today On 57K Shares Traded (ZeroHedge, July 9, 2014):

Just 2 days ago we highlighted the best example of the exuberance awash the markets currently – CYNK Technology Corp, the social media development company that had a market capitalization in excess of $1 billion, which according to official filings,  had one employee, no website, no revenue, no product, and no assets. Fast forward 2 days – and some 57,000 shares traded (about 0.02% of its total shares outstanding) at around $10 and CYNK now has a market cap approaching $3 billion (and still no revenue, no product, and no assets)… Lord Overstone said it best. “No warning can save people determined to grow suddenly rich.”

 

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Jul 08

And I can only repeat myself …

BTFATH!

child-stacking-blocks

… because what could possibly go wrong?

From the article:

“Welcome to the new normal capital structure, where everything is upside down and nothing makes sense.

Oh, and to all those pointing to the weekly increase in the H.8 statement and screaming “look at the recovery”, our apologies: you are, as usual, wrong.”

I hope you are prepared for what is coming.


Stock Buyback Shocker: Companies Using Secured Bank Loans To Repurchase Stock (ZeroHedge, July 8, 2014):

It took the mainstream media a few months to catch up to the theme first revealed here that in addition to the fading QE (even if supplanted by NIRP in Europe and Turbo QE in Japan), one of the primary driving forces of the market’s outperformance in 2014 was a relentless buyback bid as corporations, lacking better uses for their cash, bought a record amount of their own shares in Q1 (and as will soon be proven) in Q2 attempting to increase the EPS by lowering the S.

It was only logical that it would take the MSM a while to follow up with the logical next connection: one which is so simple we described it back in 2012 when we showed “Where The Levered Corporate “Cash On The Sidelines” Is Truly Going” – namely, an unprecedented scramble to lever up and use the proceeds to buy back stocks, a decision which is great for existing shareholders and horrible for the economy (as it means much less spending on capital investment) for employees (as it means less cash available for wages and thus, for the all important wage inflation) and for the long-term viability of the buying back company (as it levers up the corporate balance sheet without a matching increase in revenues or cash flows, in fact, the opposite).

Which brings us to today, and specifically, an FT article titled “Bankers warn over rising US business lending” in which we read that “US lending to businesses is reaching record levels but banks are privately warning that the activity should not be seen as evidence of an economic recovery.”

And the stunner: Much of the corporate lending is going to fund payouts to shareholders, finance acquisitions and fuel the domestic energy boom, bankers say, rather than to support companies’ organic growth.

Continue reading »

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Jul 08

- Marc Faber: The asset bubble has begun to burst (CNBC, July 8, 2014):

It’s the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again?

For Marc Faber, editor of the Gloom, Boom & Doom Report, the answer is clear. In fact, he says the bubble may already be bursting.

“I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already,” Faber said Tuesday on CNBC’s ‘Futures Now’ as the S&P 500 lost ground for the second-straight session. Continue reading »

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Jul 07

H/t reader M.G.:

“You need to read to the last sentence to get what I have been saying for months. Less than half the world international transactions are now completed in US dollars……..”


US economist Joseph Stiglitz
US economist Joseph Stiglitz

- Stiglitz: I’m ‘very uncomfortable’ with current stock levels (CNBC, July 7, 2014):

Nobel Prize-winning economist Joseph Stiglitz said on Monday he is “very uncomfortable” with current stock market levels, arguing they do not equal a strong economic recovery in the United States.

The Dow breached 17,000 points on Thursday before the U.S. markets closed for the long July Fourth weekend. The jump came after the U.S. government reported the economy created a better-than-expected 288,000 jobs in June and the unemployment rate fell to 6.1 percent.

“The reason the stock market is high, in part, is that interest rates are low, wages are low and the emerging markets are still growing much faster than the U.S. economy, let alone Europe,” Stiglitz said. He pointed to the fact that many U.S.-listed multinationals are increasingly getting a large chunk of their profits from emerging markets. Continue reading »

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Jul 04

Largest Austrian Bank Crashes After “Revealing” 40% Surge In Bad Debt Provisions, Record Loss (ZeroHedge, July 4, 2014):

Update: just as expected, the confidence-preservation brigade is quick on the scene:

  • HUNGARY LOAN-REFUND LAW VIOLATES RULE OF LAW: BANK ASSOCIATION 
  • HUNGARY LOAN-REFUND LAW DAMAGES INVESTOR CONFIDENCE, BANKS SAY

Because clearly marking loans to fair value would crush investor confidence. And clearly investors are dumb enough not to realize that it is precisely by hiding what is beneath the surface, that they have zero confidence in the system.

* * *

Ever since 2012, when we first revealed that the biggest problem plaguing Europe’s financial sector is the $2 trillion+ in bad debt on the books of European banks (not our numbers, the IMF’s), it became clear that the only way Europe can avoid a complete financial meltdown coupled with currency disintegration, is if it can constantly keep rolling over said bad debt (obviously the only way to do that would be to create an epic debt bubble leading managers of other people’s money to do idiotic things like buy Spanish debt at 2.75%). This is why not only the BOJ launched its mega QE in 2013, but why Draghi also kicked in with NIRP a month ago: the logic – do anything and everything to reflate the biggest credit bubble possible as otherwise European banks will have no choice but to face up to their trillions in bad loans. Continue reading »

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Jul 04

BTFATH!!!

child-stacking-blocks


- What Happened The Last 4 Times Stocks Rallied For 23 Quarters? (ZeroHedge, July 3, 2014):

Does this look sustainable to you? Of course, it’s different this time, right?

The S&P 500 is in the 23rd quarter of its recovery – and shows a 196% gain…. the last four moves of similar magnitude ended very badly.

What Happened The Last 4 Times Stocks Rallied For 23 Quarters

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Jun 30

- Argentina Must Pay $539 Million Today – Default Imminent (ZeroHedge, June 30, 2014):

Today is the day that Paul Singer and his Elliot Capital Management team have been waiting for. Thanks to SCOTUS’ decision, as Bloomberg reports, Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle. The decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head as the judge’s decision “closes Argentina’s options to finally force it to negotiate,” and “should now stop using these delay tactics and get serious.” Argentina sees it a different way, the ruling “is merely a sophisticated way of of trying to bring us down to our knees before global usurpers,” according to the economy minister Axel Kicillof.

Amid all this, Argentina’ MERVAL remains near all-time record highs… (as equity hopes of devaluation trump bond fears of default)

20140630_MERVAL

As Bloomberg notes, if non-payment were to occur today, default would not be officially triggered yet (forcing Argentina’s hand to negotiate)… Continue reading »

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Jun 29

- The Delusion Of Perpetual Motion; Bob Shiller Warns “I’m Definitely Concerned” (ZeroHedge, June 29, 2014):

I am definitely concerned. When was [the cyclically adjusted P/E ratio or CAPE] higher than it is now? I can tell you: 1929, 2000 and 2007;” warned Bob Shiller this week, adding that “it’s likely to turn down again, just like it did the last two times.”

As John Hussman explains,

The central thesis among investors at present is that they are “forced” to hold stocks, given the alternative of zero short-term interest rates and long-term interest rates well below the level of recent decades (though yields were regularly at or below current levels prior to the 1960s, which didn’t stop equities from being regularly priced to achieve long-term returns well above 10% annually). The corollary is that investors seem to believe that as long as interest rates are held near zero, stocks will continue to advance at a positive or even average or above-average rate. Continue reading »

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Jun 29

BIS, the central bank of central banks, is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City.  It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws.  Even Wikipedia admits that “it is not accountable to any single national government.

Related info:

- Another Conspiracy ‘Theory’ Becomes Conspiracy ‘Fact’: ‘Cluster Of Central Banks’ Have Secretly Invested $29 TRILLION In The Market

- 40 Central Banks Are Betting This Will Be The Next Reserve Currency


bis-bank-for-international-settlements-basel-switzerland

- BIS Slams “Market Euphoria”, Finds “Puzzling Disconnect” Between Economy And Market (ZeroHedge, June 29, 2014):

“… it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally….  Despite the euphoria in financial markets, investment remains weak. Instead of adding to productive capacity, large firms prefer to buy back shares or engage in mergers and acquisitions.

As history reminds us, there is little appetite for taking the long-term view. Few are ready to curb financial booms that make everyone feel illusively richer.  Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms. Or to address balance sheet problems head-on during a bust when seemingly easier policies are on offer. The temptation to go for shortcuts is simply too strong, even if these shortcuts lead nowhere in the end.

     – Bank of International Settlements, 84th Annual Report

It was a year ago when the general manager of the Bank of International Settlements (the central banks’ central bank), Jamie Caruana warned that the “Monetary Kool-Aid Party Is Over.” Since then central banks have proven their own supervisor wrong in their ability to kick the can, because even as the Fed has commenced tapering its own QE (due to the same bond market liquidity issues we warned about last summer) the ECB has more than offset the Fed’s brief attempt at policy normalization by escalating, for the first time in history, from ZIRP to NIRP. In other words, the Kool-Aid keeps flowing.

Which brings us to the BIS’ just released annual report. There are many reason to read the full report cover to cover, but perhaps the most prominent one is that, once again, the Bank of International Settlements has merely compiled a book report of all Zero Hedge posts not only over the past year, but since our inception.

A quick summary of the report comes from FT: Continue reading »

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Jun 26

- The State Of The Union: A Friendly Reminder Where We Stand Now (ZeroHedge, June 25, 2014):

Spend more than a few minutes watching CNBC (yes all 2,000 of you) and you will be told how great things are, how great things will be, and how (no matter how bad the immediate ‘event’ is) the hockey-stick of future exceptionalism will always be there. In the interests of full disclosure, that is wrong and these four charts show why… a friendly reminder of the state of the union…

20140625_oomph

…But then there is all this wonderful wealth creation… Continue reading »

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Jun 25


Added: June 23, 2014

If the above video does not play watch it here: YouTube

Description:

The lies bankers have disseminated to the four corners of the earth regarding inflation rates and stock markets prevent people from making informed decisions about converting fiat currency into physical gold and silver. Don’t get left behind when gold and silver soar and fiat currencies collapse as the Central Bank currency wars enter their final stage. Continue reading »

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Jun 17

- The Latest From The Iraq War Theater – The Complete Troop Movements (ZeroHedge, June 17, 2014)

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Jun 08

From the article:

“Of course, since neither facts, nor news, nor events, nor anything matters in a centrally-planned market, just BTFATH.”


follow the money

The Mystery Grows: Goldman Finds That Virtually Everyone “Sold In May” (ZeroHedge, June 8, 2014):

The great mystery of the endlessly levitating market continues to confound everyone, even Goldman Sachs. Because while the market soared in May (and has continue to surge in June) contrary to the sell in May mantra, when peeking beneath the market’s covers, Goldman has found that most investor groups did just as they are supposed to do for this time of the year: they sold!

From Goldman’s David Kostin: Continue reading »

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Jun 07

Exactly what I’ve been looking for.

Many thanks to Wolf Richter.

See also:

- Even The Record Stock-Market Bullishness Is Fake (Testosterone Pit, June 6, 2014)


Selling Your European Stocks Before Everyone Sees This Chart? (Testosterone Pit, June 7, 2014):

Flogging savers until their morale improves, that’s how ECB President Mario Draghi is going to fire up the economy in his bailiwick. Among other things, he announced that the ECB would lower key interest rates from nearly nothing to next to nothing and impose negative deposit rates on the reserves that banks stash at the ECB.

The goals beyond destroying savers? Hammering down the euro, but given the efforts by the Fed, the Bank of Japan, and others to hammer down their own currencies, it’s going to be a slog. And motivating over-indebted companies to borrow even more to invest in worthy projects that don’t exist – because if they existed, banks would have already gone after them, awash in liquidity as they are. Continue reading »

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May 30

- 3 WTF Charts (ZeroHedge, May 29, 2014)

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May 30

- WH Speaker Jay Carney Says “Short Russia”; Russia Says “Goodbye Carney” (ZeroHedge, May 30, 2014):

Having failed dismally in his global macro forecasts, the White House’ press secretary Jay Carney is stepping down…

  • *OBAMA SAYS SPOKESMAN JAY CARNEY STEPPING DOWN
  • *OBAMA SAYS JOSH EARNEST TO BECOME PRESS SECRETARY

Perhaps it is time for him to take a role on Wall Street? His accuracy makes him a shoe-in.

carney-russia-stocks

 

 

 

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May 28

- What Happened The Last Time Bonds & Stocks Were So Disconnected? (ZeroHedge, May 28, 2014)

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May 27

Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter (ZeroHedge, May 27, 2014):

With the Fed having tapered its liquidity injections into the stock market from $85 billion to “only” $45 billion per month, retail investors getting burned by the recent high beta and momentum stock flame out and “greatly unrotating” into the renewed safety of bonds, not to mention a churning market that until last week was unchanged for the year, and hedge funds ever shorter into this latest ramp, many are asking themselves: who is buying?

Here is the answer. Continue reading »

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May 23

- Tick, Tick, Tick (ZeroHedge, May 23, 2014):

Just a matter of time…

20140522_tick

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May 20

- Thai Stocks Tumble As Army Censors Media To “Avoid Provoking Unrest” (ZeroHedge, May 19, 2014):

Despite proclamations that markets would open ‘normally’, Thai SET50 (stock market) futures are indicated to open -4.2% – its biggest drop since January’s collapse. Thai CDS are modestly wider (+5 to 130bps) but early Bhat weakness has been rescued back by a mysterious bidder (rumored to be the central bank by several traders). The last 2 times martial law was invoked – in an entirely non-coupy-coup-like manner – general market weakness was less than we  have seen so far. Of course, the army has decided that in the interests of avoiding the “provocation of unrest and triggering fear” it will “ban the broadcast and distribution of news.” Nothing like a military-coup, that is not a coup, with total media censorship to encourage capital flows and maintain peace in the nation.

 

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May 15

- European Bonds Tumble Most In 15 Months, Stocks Slammed (ZeroHedge, May 15, 2014):

The one-way street in European peripheral bond yields/spreads… is over. Today saw Italian, Spanish, and Portuguese bond spreads smashed higher by the most in over 15 months. European stock markets all tumbled too with the FTSE-100 down over 3.5% and Portugal down 2.8%. Greece’s retroactive tax idea (quickly denied) drove Greek stocks into the red for the year and slammed the new GGB issue lower. Europe’s credit markets cratered wider and Europe’s VIX burst back over 17.

 

 

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May 11

- The DJIA Stock Market Index Is A Hoax (The Burning Platform, March 29, 2014):

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a hoax.

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May 09

- Whole Foods Market (WFM) stock plunges 20% after Natural News reveals ‘big lie’ on toxic heavy metals (Natural News May 7, 2014)

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