Apr 19

The Global Liquidity Squeeze Has Begun (Economic Collapse, April 17, 2015):

Get ready for another major worldwide credit crunch.  Today, the entire global financial system resembles a colossal spiral of debt.  Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system.  When the system started to fail back in 2008, global authorities responded by pumping this debt spiral back up and getting it to spin even faster than ever.  If you can believe it, the total amount of global debt has risen by $35 trillion since the last crisis.  Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again.  For example, just a few days ago the IMF warned regulators to prepare for a global “liquidity shock“.  And on Friday, Chinese authorities announced a ban on certain types of financing for margin trades on over-the-counter stocks, and we learned that preparations are being made behind the scenes in Europe for a Greek debt default and a Greek exit from the eurozone.  On top of everything else, we just witnessed the biggest spike in credit application rejections ever recorded in the United States.  All of these are signs that credit conditions are tightening, and once a “liquidity squeeze” begins, it can create a lot of fear.

Over the past six months, the Chinese stock market has exploded upward even as the overall Chinese economy has started to slow down.  Investors have been using something called “umbrella trusts” to finance a lot of these stock purchases, and these umbrella trusts have given them the ability to have much more leverage than normal brokerage financing would allow.  This works great as long as stocks go up.  Once they start going down, the losses can be absolutely staggering.

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Apr 18

For your entertainment.

When will the “market” crash?

Directly after Lord Rothschild has given orders to press the sell button.


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- This Technical Signaled The Last Two Market Crashes And It Just Happened (ZeroHedge, April 17, 2015):

So the fundamental case for a 20 year bull run as BMO is calling for and  certainly many other banks seem to be onboard with that is not looking great YTD.  In fact, most perma bulls have shy’d away from even mentioning fundamentals other than to say that generally they aren’t looking great but don’t worry the Fed is still engaged.   And so I feel its a worthwhile exercise to have a look at the technicals.  Thing about the technicals is that you can cherry pick any baseline point to really make any case, good or bad.  But if we take a look at a time period that encompasses several cycles we negate our ability to cherry pick the baseline and we can be much more confident in our overall analysis. Continue reading »

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Apr 17

20150417_EOD

- China’s Bursting Bubble + Grexit Trouble = Dow Rubble (ZeroHedge, April 17, 2015)

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Apr 17

- Chinese Stocks Are Still Crashing (ZeroHedge, April 17, 2015):

While the Chinese are long to bed, futures continue to trade on their exuberant stock market… and it’s going south in a hurry. As we noted earlier, the catalyst appears to be a regulatory decision to increase the number of ‘shortable’ securities (and follow-through from PBOC’s day prior demands of brokers to monitor margin trading). Both of these actions were taken as ‘signals’ that policymakers may be getting nervous about the ebullient wealth creation… Chinese stock futures are now down almost 7% – the 2nd biggest drop in 7 years.

This seemed to sum things up rather well…

Source: Nanex LLC

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Apr 13

Lemmings Look Like A Pack Of Individualists Compared To Wall Street

- LEMMINGS LOOK LIKE A PACK OF INDIVIDUALISTS COMPARED TO WALL STREET (The Burning Platform, April 12, 2015):

Since most of you are too lazy to read Hussman’s brilliant analysis every week, I’ve picked out the key paragraphs from this week’s letter. For the really lazy, I’ve bolded the key sentences. The lemmings on Wall Street are still confident as they march in lockstep towards the cliff.

“A group of lemmings looks like a pack of individualists compared with Wall Street when it gets a concept in its teeth.”- Warren Buffett

I had very vocal concerns about valuation during the tech bubble and the housing bubble, well before they burst. But it was a specific combination: extreme valuation coupled with fresh deterioration in market internals – the same combination we observe presently – that provided us with timely evidence that market conditions had shifted to urgent risk at what in hindsight turned out to be the very beginning of the 2000-2002 and 2007-2009 collapses. Those collapses wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, and June 1995, respectively, despite aggressive Fed easing in both instances. Don’t imagine that the current bubble will avoid a similar completion. Continue reading »

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Apr 11

Thelma

- GE CEO Says Now is a “Perfect Time To Be a Seller” (Dark Bid, April 10, 2015):

If you thought you had market impact problems, then you have never tried to sell $273 billion of loans.

GE Capital’s 2014 loan portfolio was marked at $363 billion. It will take a lot of maneuvering to bring it down to the $90 billion target. With the market at all-time highs and with valuations stretched beyond all conceivable rationality, GE CEO Jeff Immelt said now is a “perfect time to be a seller. People are lining up at the starting line.” Continue reading »

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Apr 11

- Stan Druckenmiller’s “Horrific Sense” Of Deja Vu: “I Know It’s Tempting To Invest, But This Will End Very Badly” (ZeroHedge, April 11, 2015):

“I just have the same horrific sense I had” before, Druckenmiller said to an audience at the Lost Tree Club in North Palm Beach, Florida (according to a transcript obtained by Bloomberg). “Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there.”

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Apr 10

How GE Will Fund The Largest Stock Buyback In History (ZeroHedge, April 10, 2015):

Back in April 2013, Apple shocked the world when in a dramatic U-turn to Steve Jobs beliefs, it announced what was the largest single share repurchase authorization in history” when it boosted its share repurchase authorization to $60 billion from $10 billion. Today, GE did its best to match this number, when it reported that as part of a massive business restructuring, it announced a “new Board authorization of up to $50B buyback.” This is how it will fund it.

- GE Announces One Of Largest Buybacks In History, Will Repuchase $50 Bn In Shares After Selling Most Of GE Capital (ZeroHedge, April 10, 2015):

Moments ago, General Electric showed why April is much more likley to be a rerun of February than January or March when it announceed that it would go ahead and repurchase half of the total record stock buybacks announced in February, or some $50 billion in what may be the largest stock buyback announcement in history! How will GE fund this massive distribution to its shareholders, of which the most concentrated one will once again be the biggest winners? Simple: by dumping the division that nearly caused its insolvency during the financial crisis, the hedge fund known as GE Capital. As part of the just announced mega transaction, GE announced an agreement to sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing.

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Apr 08

“When a country embarks on deficit financing and inflationism (=quantitative easing) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

Quantitative easing = printing money = creating money out of thin air = increasing the money supply = inflation = hidden tax on monetary assets = theft!!!

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
- John Maynard Keynes

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
- Alan Greenspan

Aaaaand Japan has a debt-to-GDP of over 400%!!!

- This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300%


helicopter-shinzo-abeShinzo Abekuroda_0

- Japan Shocked To Find Abenomics Is Destroying Its Middle Class (ZeroHedge, April 8, 2015):

In central planner “mission accomplished” news, the wealth divide in Japan is growing under Abenomics and middle class citizens are at risk of falling into poverty, The Japan Times says. Despite nightly sound bites from Kuroda, Aso, and Abe himself designed to assuage fears that the country’s gargantuan monetary experiment may yet fail to pull Japan out the deflationary doldrums, some people are getting impatient as the number of households on welfare continues to rise as does the number of nonregular workers. This comes on the heels of the rather amusing news that the country’s Labor Ministry had fabricated a year’s worth of data on wage growth (it turns out there was none) and after countless warnings from us that the PM’s policies would end in spactacularly bad fashion (see here, here, and here for instance).

Here’s more: Continue reading »

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Apr 08

- German Factory Orders Tumble By Most In 9 Months, Spanish Bond Yields Turn Negative (ZeroHedge, April 8, 2015):

Bad news is even better news in Europe. “Core” Germany saw its powerhouse economy suffer the biggest drop in Factory Orders since June (-1.3% YoY) missing expectations for the 2nd month in a row – the first consecutive drop since may 2013 (despite German business confidence rising for the 5th month in a row) as apparently devaluing the EU’s currency is not encouraging business. The result… DAX futures surging, bond yields tumbling and Spanish bond yields to 6 months are now negative..

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Apr 08

- European Derivatives Market Breaks… And Futures Surge (ZeroHedge, April 8, 2015):

Because nothing says “liquid and efficient” market like yet another broken market. Just as we saw yesterday afternoon as US equities collapsed into the close, Euronext has broken in the pre-open European markets…

  • *EURONEXT SAYS EXPERIENCING SOME TECHNICAL ISSUES
  • *EURONEXT DERIVATIVES MKT STATUS – SYSTEMS AFFECTED: CCG ISSUE
  • *EURONEXT: CCG NUMBER 10, 11, 12 MAY SEE CONNECTIVITY ISSUE

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and sure enough, DAX stock futures surgeContinue reading »

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Mar 31

Related info:

- Quotes from the Great Depression:

September 1929
“There is no cause to worry. The high tide of prosperity will continue.” — Andrew W. Mellon, Secretary of the Treasury.


traders brokers hands on face stock market collapse

- 2015 Or 1987? Computerized Trading & “A Crash Is Coming” Or Rates Mean “Bull’s Not Over” (ZeroHedge, March 31, 2015):

1987 Or 2015?

“They are not real buyers and sellers… these are computers that drive the markets down extremely fast…”

“A crash is coming…”

“A correction will prompt rate cuts which will ensure The Bull Market is not over…”

*  *  *

It’s never different this time… The Friday night before Black Monday 1987…

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Mar 31

20150331_central

- This Is Your Broken Market On Central Planning (ZeroHedge, March 30, 2015):

At 1036ET, All S&P Sector ETFs, VIX ETFs Halted due to break on NYSE Arca

Update: 10 minutes later (TRADING RESUMED) kinda…

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Pisani: “Sometimes, this just happens folks!”

 

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Mar 30

- An Interview with Felix Zulauf – Financial Markets Are More Distorted than Ever (Acting Man, March 26, 2015):

Risks and Opportunities

Investors started off 2015 with a slow global economy, low oil prices, a strong Dollar, and a deflationary Europe with great uncertainties on the progress of the US economy and the recent launch of Europe’s quantitative easing. The question is, what opportunities lie ahead? This article highlights the main topics covered in an interview between Mr. Frank Suess, CEO and Chairman of BFI Capital Group, with the globally renowned Swiss fund manager, Mr. Felix Zulauf. Mr. Zulauf currently heads Zulauf Asset Management, a Switzerland-based hedge fund and has forty years of experience with global financial markets and asset management. He has been a member of the Barron’s Roundtable for over twenty years.

Felix Zulauf, Swiss fund manager

Felix Zulauf, Swiss fund manager and long-standing member of the Barron’s roundtable

Frank Suess: Felix, first I would like to thank you for taking the time to speak to us. You are a renowned investor and fund manager with a solid track record over the past 40 years. In those 40 years, you’ve encountered many highs and lows in financial markets and business cycles. What do you think about the current cycle we are in?

Felix Zulauf: The current cycle is very unusual, because never before have we seen authorities, central banks in particular, intervening on such a large scale and pumping so much money into global financial markets. Hence, global financial markets are more distorted than ever before and accordingly, the risks are very high. Investing becomes very difficult in such an unprecedented environment, as it can’t be compared to previous situations. Continue reading »

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Mar 29

Kyle-Bass

- Kyle Bass Warns “The Fed Is Backed Into A Corner… Equities Are My Biggest Liquidity Worry” (ZeroHedge, March 28, 2015):

While Kyle Bass is usually the smartest man in the room, among this crowd he is Einstein as he carefuly explains – while sitting politely during status quo interruptions – the real state of the world “the unintended consequence of QE has been to widen the income gap,” what is behind the Potemkin Village of the stock markets, how The Fed is “backed into a corner” of raising rates against their will, and why bond yields (at the long-end) will drop further. Currency wars are net positive, as Greg Ip suggests, and will not end well, as he concludes in one section, “why haven’t all the Yen left Japan already?”

How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don’t think I know any.. QE has been distributive to the rich… but now that the world has started this policy it is unable to end it…

the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn…” Continue reading »

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Mar 28

- The Bottom’s Not In——Why This Market Is Dumber Than A Mule (David Stockman’s Contra Corner, March 26, 2015):

They were trying to put in a bottom—–again! The sell-off earlier this week amounted to the sixth sizeable “dip” since November 20—-so the market’s ingrained reflex was back at work all afternoon, trying to scoop up the “bargains”.

But the roundtrip to the flat-line shown below is not a classic “wall of worry” and its not a “bottom” that’s being put in. This market is dumber than a mule, and the nation’s central bank and its counterparts around the world have made it so.

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Mar 27

- China’s Stock Bubble Leaves BNP Speechless: “What Happens Next Is An Unknown-Unknown” (ZeroHedge, March 26, 2015):

Earlier this month, we identified the reason why Chinese stocks have continued to rise in the face of overwhelming evidence that the country’s economy is decelerating quickly. While the first part of the 8-month run can be plausibly attributed to PSL, the furious buying that began in late November looks to be at least partly attributable to the fact that thanks to tighter regulations on lending outside the traditional banking system, China’s $2 trillion shadow banking complex needed somewhere to put cash to work and that somewhere turns out to be the giant bubble that is the SHCOMP. Here’s more:

Because according to Reuters, it is precisely China’s trust firms, with total assets of $2.2 trillion, and who together with Banker Acceptances comprise the bulk of China’s shadow banking pipeline, and no longer able (or willing) to lend to China’s small companies and individuals due to a spike in regulation, are shifting more cash into frothy capital markets and over-the-counter (OTC) instruments instead of loans.

In other words, instead of using their vast cash hoard of over $2 trillion to re-lend and stimulate China’s economy, China’s unregulated, shadow banking conduits are now directly buying stocks! Continue reading »

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Mar 25

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- Bank Of Japan’s 10 Trillion Equity Portfolio “Not Large” Says Bank Of Japan (ZeroHedge, March 25, 2015):

As we’ve discussed twice this month, the world has now officially given up any pretensions that Japan’s elephantine QE program isn’t underwriting the rally in Japanese stocks. Not only is the Bank of Japan buying ETFs, they’re targeting their purchases to (literally) ensure that stocks can’t fall by stepping in when things look weak at the open. Unfortunately, Kuroda looks set to run up against the extremely inconvenient fact that while, in his lunacy, he can print a theoretically unlimited amount of money, the universe of purchasable ETFs is limited and so eventually, the BoJ will own the entire market. Here’s what we said last week:

As it turns out, the central bank may now run into the same inconvenience in its efforts to control the stock market that it encountered on the way to monopolizing the JGB market: there’s only so much out there to buy. Here’s more from Bloomberg: 

BOJ held 3.85t yen ($32.0b) of ETFs at end-2014 and plans to boost these holdings by 3t yen per year; at this pace, the current market value of 11.5t yen in ETFs would be entirely bought by BOJ by end-2017, data compiled by Bloomberg show.

You read that correctly — the Bank of Japan will own the entire Japanese ETF market within about 30 months. So with all of the JGBs marked for purchase and with all of the ETFs exhausted, there’s only one place to go next: individual stocks. Continue reading »

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Mar 24

- The Biggest Threat To The S&P 500 In The Next Month: “Biggest Buyer Of Stocks In 2015″ Enters Blackout Period (ZeroHedge, March 24, 2015)

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Mar 24

- DAX Is The Most Overbought Since The Peak In 2000 (ZeroHedge, March 24, 2015):

The German DAX stock market index has only been this extended relative to its 200-day moving-average once in history… March 2000 – and that did not end well…

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Thank you Mr. Draghi…

Chart: Bloomberg

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