On Tuesday junk bonds continued to crash, the price of oil briefly dipped below 28 dollars a barrel, Deutsche Bank was forced to deny that it is on the verge of collapse, but the biggest news was what happened in Japan. The Nikkei was down a staggering 918 points, but that stock crash made very few headlines in the western world. If the Dow had crashed 918 points today, that would have been the largest single day point crash in all of U.S. history. So what just happened in Japan is a really big deal. The Nikkei is now down 23.1 percent from the peak of the market, and that places it solidly in bear market territory. Overall, a total of 16.5 trillion dollars of global stock market wealth has been wiped out since the middle of 2015. As I stated yesterday, this is what a global financial crisis looks like.
Just as we saw during the last financial crisis, the big banks are playing a starring role, and this is definitely true in Japan. Right now, Japanese banking stocks are absolutely imploding, and this is what drove much of the panic last night. The following numbers come from Wolf Richter… Continue reading »
There is so much chaos going on that I don’t even know where to start. For a very long time I have been warning my readers that a major banking collapse was coming to Europe, and now it is finally unfolding. Let’s start with Deutsche Bank. The stock of the most important bank in the “strongest economy in Europe” plunged another 8 percent on Monday, and it is now hovering just above the all-time record low that was set during the last financial crisis. Overall, the stock price is now down a staggering 36 percent since 2016 began, and Deutsche Bank credit default swaps are going parabolic. Of course my readers were alerted to major problems at Deutsche Bank all the way back in September, and now the endgame is playing out. In addition to Deutsche Bank, the list of other “too big to fail” banks in Europe that appear to be in very serious trouble includes Commerzbank, Credit Suisse, HSBC and BNP Paribas. Just about every major bank in Italy could fall on that list as well, and Greek bank stocks lost close to a quarter of their value on Monday alone. Financial Armageddon has come to Europe, and the entire planet is going to feel the pain. Continue reading »
Back in the 1970’s as recession gripped the world for a decade, stocks stagnated and commodities crashed, investor Jim Rogers made a fortune. His understanding of markets, capital flows and timing is legendary.
As crisis struck in late 2008, he did it again, often recommending gold and silver to those looking for wealth preservation strategies – move that would have paid of multi-fold when precious metals hit all time highs in 2011. He warned that the crash would lead to massive job losses, dependence on government bailouts, and unprecedented central bank printing on a global scale.
Now, Rogers says that investors around the world are realizing that the jig is up. Stocks are over bloated and central banks will have little choice but to take action again. But this time, says Rogers in his latest interview with CrushTheStreet.com, there will be no stopping it and people all over the world are going to feel the pain, including in China and the United States.
We’re all going to suffer… I can think of very few places that won’t suffer. But most people are going to suffer the next time around.
Central banks will panic. They will do whatever they can to save the markets. Continue reading »
Do you remember how much stocks went down when the first dot-com bubble burst? Well, it is happening again, and tech stocks are already down more than half a trillion dollars since the middle of 2015. On Friday, the tech-heavy Nasdaq dropped to its lowest level in more than 15 months, and it has now fallen more than 16 percent from the peak of the market. But of course some of the biggest names have fallen much more than that. Netflix is down 37 percent, Yahoo is down 39 percent, LinkedIn is down 60 percent, and Twitter is down more than 70 percent. If you go back through my previous articles, you will find that I specifically warned about Twitter again and again. Irrational financial bubbles like this always burst eventually, and many investors that got in at the very top are now losing extraordinary amounts of money.
BTFD? Deutsche Bank stock crashed over 11% today (the most since July 2009) to its lowest since January 2009 record lows. We have detailed at length why this is a major systemic problem and we wonder how anyone can view this chart and not question their full faith in central planners engineering of the ‘recovery’. Nothing is fixed and it’s starting to become very obvious!
Does this look like a buying opportunity? At EUR13.465 today, DB is within pennies of the all-time record lows of EUR13.385…
Former Reagan White House Budget Director David Stockman says retail investors are going to take, yet, another very big hit. Stockman explains,
“The retail investor waded in again. The sheep lined up and, unfortunately, are heading for the slaughter one more time. I think it is very hard to see how this Baby Boom generation, with 10,000 of them retiring a day, can afford one more devastating crash in their stock holdings. That is, unfortunately, what we are heading for. That’s why I say it’s dangerous. When the bubble breaks, it will spill and flow throughout the Main Street economy.”
Stockman warns the next crash will be bigger than any other in history. Stockman, the best-selling author of “The Great Deformation,” says, Continue reading »
It should surprise nobody that when it comes to perpetuating the global central bank “put”, China – which is at daily danger of having its house of trillions in non-performing loan card collapse at any moment – has perfected moral hazard better than any western central banker. However, even the staunchest cynics will be stunned by the latest development out of the Shanghai government where starting next month, venture capital firms which invested in high-tech startups since the beginning of 2015 can apply for government compensation if their investment loses money. Continue reading »
It has been another volatile, illiquid, whipsawed session, driven by the only two things that have mattered so far in 2016, China and oil…. and stop-hunting algos of course.
A quick look at the former first reveals that after sliding gradually all session, Chinese stocks puked in the last hour of trading with the China’s Shanghai Composite Index plunging 6.4% to 2,750, the most since the first week of January, and falling to the lowest level since December 2014. The composite has now plunged 22% in 2016 alone and is the world’s worst-performing primary equity index this year.
Ever since 2009, when we first showed how broken the capital markets are first at the micro level, thanks to the pervasive spread of parasitic, frontrunning algos, and then at the macro, as a result of constant, artificial central bank intervention and levitation, we have advised readers that the best option is to simply avoid rigged, manipulated markets altogether. Now, 7 years later, the world’s richest people agree.
Remember when we warned virtually every single day for the past 7 years that constant central bank and HFTs manipulation will lead to a market so broken nobody will have any faith in price discovery or asset valuation until everything collapses and is rebuilt from scratch? Well, we are delighted to announce that this is now conventional wisdom, and as a result every so-called “prominent investor” is now resistant to putting on fresh positions and expected asset prices to head downward, according to the WSJ. Continue reading »
There’s been no shortage of commentary from market heavyweights this week thanks to the World Economic Forum in Davos, but for anyone who hasn’t yet gotten their fill of billionaire talking heads, George Soros gave a sweeping interview to Bloomberg TV on Thursday, touching on everything from China to Fed policy to Vladimir Putin to Europe’s worsening refugee crisis. The most important point – for markets anyway – came when Soros revealed that he is short the S&P, and long TSYs.
While the economic implosion progresses this year, there will be considerable misdirection and disinformation as to the true nature of what is taking place. As I have outlined in the past, the masses were so ill informed by the mainstream media during the Great Depression that most people had no idea they were actually in the midst of an “official” depression until years after it began. The chorus of economic journalists of the day made sure to argue consistently that recovery was “right around the corner.” Our current depression has been no different, but something is about to change. Continue reading »
The Italian financial meltdown that we have been waiting for has finally arrived. For quite a long time I have been warning my readers to watch Italy, and now people are starting to understand why. Italian banking stocks continued their collapse for a fifth consecutive day on Wednesday, and nervous Italians are beginning to quietly pull large amounts of money out of the banks. In particular, Monte dei Paschi is a complete and utter basket case at this point. A staggering one-third of their loans are “non-performing”, and the stock price has fallen a staggering 57 percent since 2016 began. Monte dei Paschi is going to need a major bailout, and the same thing could be said about almost all of the largest Italian banks. But where is the money going to come from? Continue reading »
It’s official – global stocks have entered a bear market. On Wednesday, we learned that the MSCI All-Country World Index has fallen a total of more than 20 percent from the peak of the market. So that means that roughly one-fifth of all the stock market wealth in the entire world has already been wiped out. How much more is it going to take before everyone will finally admit that we have a major financial crisis on our hands? 30 percent? 40 percent? This new round of chaos began last night in Asia. Japanese stocks were down more than 600 points and Hong Kong was down more than 700 points. The nightmare continued to roll on when Europe opened, and European stocks ended up down about 3.2 percent when the markets over there finally closed. In the U.S., it looked like it was going to be a truly historic day for a while there. At one point the Dow had fallen 566 points, but a curious rebound resulted in a loss of only 249 points for the day. Continue reading »
CNBC’s Andrew Ross Sorkin and Becky Quick, donning their finest goose down bubble coats to remind viewers they’re reporting live from scenic Davos, generously took some time out of their busy schedules to chat with Ray Dalio on Wednesday and unsurprisingly, the “zen master” again predicted the Fed will reverse course and embark on more QE.
Dalio begins by noting that the Fed’s move to inflate financial assets by pumping money into the system means there’s an “asymmetric risk on the downside.”
The rationale is simple: the trillions in fungible, excess cash the Fed unleashed in the wake of the crisis has driven asset prices into bubble territory and at this juncture, there’s essentially nowhere to go but down. Continue reading »
History repeats, if you’re just willing to listen. The “Dead-Cat-Bubble” is dead as global stocks enter a bear market (down 20% from May 2015 highs) and US equities catch down to the rest of the world.
- *MSCI’S ALL-COUNTRY WORLD INDEX EXTENDS DROP TO 20% FROM RECORD
It would appear the business cycle trumps central planning after all:
“It’s difficult to see the fall stopping today,” warned one Japanese equity strategist and rightly so as Japan’s broad TOPIX idnex just entered a bear markets (down 20% from the August 2015 highs). With the Nikkei well below 17,000, Kuroda is due to speak at the Diet today as Japanese corporate bond risk surges to 20-month highs.
TOPIX enters Bear Market
And now the Nikkei:
- *JAPAN’S NIKKEI 225 EXTENDS DECLINE FROM JUNE HIGH TO 20%
And Japanese corporate bond risk is surging – up 3.5bps to 87bps – the highest in 20 months… Continue reading »
Forget for a moment that U.S. stock markets have seen their worst start to a new year since the Great Depression or that some $2.5 trillion in wealth has been evaporated in less than two weeks.
CNN says it’s hardly the time to panic:
Time to panic? Hardly.
There are plenty of reasons to relax, especially if you are a U.S investor. Here are the top two:
1. America’s economy is still in good shape.
2. Staying in stocks pays off. Since World War II, investors who remained in stocks for at least 15 years made money Continue reading »
Who could have seen this coming? Week after the CEO ordered his mega-yacht and 6 months after Jim Cramer said “it was going higher,” GoPro has just slashed Q4 revenue guidance by 15% (from $510.9mm to $435mm) and has addtionally decided to layoff 7% of the workforce. For now, GPRO is halted… but Ambarella is not (and is collapsing 6% after hours) leaving them down 65-80% since Cramer said “buy buy buy.”
H/t reader squodgy:
“Here is a schedule of all the main world Stock Market Index Graphs which shows very clearly that something catastrophic is about to happen.”
One of the most reliable truisms of stock markets worldwide is that History Is Prologue…and that Market Cycles are immutable…where only time and magnitude change. During the past 20 years Wall Street has enjoyed three Bull Markets…and the first two were followed by devastating Bear Markets. Specifically, US stocks fell -37% in the 2000-2002 bear market, while the DOW stocks index plummeted -54% in the 2007-2008 debacle.
And it is imperative to take note the current US Bull Market is one of the longest secular uptrend periods in history of rising stock prices. Consequently, as history is testament an eventual and inevitable Bear Market will soon follow. What is probably unique this time is the fact that major stock markets worldwide appear to be moving in lethal concert with the US in developing Bear Market trends of declining stocks. Consequently, our forecast of evolving global Bear Markets will be demonstrated by the price charts of the 20 major stock indices in the world (the vertical white lines pinpoint where each bear market began per the Technical Indicators shown). These major markets are: