Stock Crash

Give This Stock Market Bubble A Round Of Applause – The S&P 500 And The Nasdaq Just Hit Brand New Record Highs

Stocks just closed at a brand new all-time record high, ‘Avengers: Endgame’ is coming to theaters, and a 24-year-old man from Wisconsin just won the 768 million dollar Powerball jackpot. If those are the top headlines today, then everything must be good in ‘Murica at the moment, right? Of course that is not true at all, but as far as the stock market is concerned we must give credit where credit is due. Our financial engineers have created the largest stock market bubble in all of U.S. history, and we should all be hoping that it lasts for as long as possible. Because once this financial bubble is destroyed, the aftermath is going to be truly horrible for the entire country.

Up to this point in the year, the stock market is off to the best start that we have seen since 1987.

Of course we all remember what happened toward the end of 1987.

But for now everything is rainbows and unicorns on Wall Street. The following comes from Fox Business…

The benchmark S&P 500 index is up 17%, its best start to a year since 1987, while the Nasdaq has gained 22%, its best start since 1991. The Dow Jones Industrial Average remains about half a percentage point from its record last October.

Tuesday’s move to a record high for the benchmark S&P 500 index and the Nasdaq index comes less than six months after a sharp decline in late December, which led the S&P 500 to its worst annual performance since 2008.

Last December, stocks were plunging dramatically, and it looked like a brand new financial crisis was potentially beginning.

But stocks pulled out of their nosedive, and most investors are feeling really happy for the moment.

If we could just freeze this moment in time somehow, we would be in pretty good shape. Unfortunately, time inevitably rolls on, and many believe that there is a lot of pain ahead for investors.

Of course there are other “experts” that believe the best is yet to come. For instance, Kevin Barry just told CNBC that the stock market turmoil that we witnessed late last year “actually prevented a recession”…

“These market levels are justified,” said Kevin Barry, chief investment officer at Captrust Advisors. “The fourth-quarter sell-off actually prevented a recession because policymakers responded extremely quickly. Both President Xi and President Trump cooled off the rhetoric and Fed Chairman Jerome Powell came out and reversed course.”

I have read that paragraph over and over, and I still can’t believe that someone actually had the gall to say such a thing.

According to Barry, the coming recession has been postponed indefinitely and everybody can start partying like its 1999 all over again!

If only life were so simple.

Look, the reality is that even Fox Business is admitting that stock buybacks are one of the major factors driving this latest rally…

However, the rally this year has been despite outflows from equity funds, according to Bank of America data, suggesting some of the gains have been driven by corporate buybacks of stocks.

Our largest corporations are going hundreds of billions of dollars in debt to pump up their own stock prices. It is a Ponzi scheme of epic proportions, and when things start to go bad there is going to be a race to bankruptcy court.

But for the moment the Ponzi scheme continues, and a lot of people are becoming exceedingly wealthy as a result.

For average Americans, it is absolutely imperative to remember that the stock market is not the economy. Yes, the stock market has been soaring, but the U.S. economy has not had a full year of 3 percent growth since the middle of the Bush administration. This has been the longest stretch of sub-three percent economic growth in our history by a very wide margin, and now all of the numbers are telling us that economic activity is slowing down once again.

Instead of partying, most people should be using this time to prepare for what is ahead, but we know that is simply not going to happen.

And when the end of this bubble finally comes, it is likely to come very quickly. As I always stress to my regular readers, markets tend to go down a whole lot faster than they go up, and that is especially true during times of crisis.

In 2008, enormous amounts of money were lost in the blink of an eye. The following comes from an outstanding article by Bob Henderson entitled “What I Learned From Losing $200 Million”…

The day after Lehman fell I lost $20 million, and the day after that $30 million—enough in two days to wipe out all the profits I’d made the previous year. (And that had been a pretty good year.)

But worse was that I felt trapped. My models showed I was destined to lose far more money in the coming weeks, no matter what I did. All roads seemed to lead to an unavoidable abyss. I could practically feel that hot hole breathing under my desk. I actually got dizzy, and lost my ability to think. When my boss stopped by to warn me that Goldman Sachs and Morgan Stanley looked likely to fall next, he seemed almost amused when he told me that I looked green.

I stumbled home early that day, mentally incapacitated for the first time in my career.

Someday we will see similar things happen again, but we should all want that day to be put off for as long as possible.

For the moment, happy times are here again on Wall Street, and we should enjoy them while we still can.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Investors Brace For Impact As The Cancer That Is Ravaging “The Real Economy” Starts To Spread

2019 sure has been a weird year so far. On Wall Street, everything has been coming up roses for investors up to this point. Stock prices have risen more than 10 percent year-to-date, and the horrible crashes of late last year are quickly fading from memory. Meanwhile, the real economy is literally falling to pieces right in front of our eyes. Debt delinquencies are at unprecedented levels, bankruptcies are soaring, retail stores are closing at a record pace, this is the worst economy for farmers since the early 1980s, exports are plummeting and a brand new real estate crisis has now begun. Economic cancer is rapidly spreading throughout our country, and the U.S. economy is deteriorating at the fastest pace that we have seen since the last recession. So how long will it be before Wall Street catches up with economic reality?

The retail industry is being hit particularly hard. At the end of last week, major retailers announced 465 store closings in a single 48 hour period…

The ‘retail apocalypse’ is alive and well this week with major chains such as Gap, JCPenney, Victoria’s Secret and Foot Locker all announcing massive closures, totalling the death of more than 465 stores over the last 48 hours.

And those closings already bring the grand total for 2019 to “a whopping 4,309 store closures”…

That builds on recent store closure announcements by Gymboree, Payless ShoeSource, Charlotte Russe and Ann Taylor parent company Ascena Retail, to name a few. A whopping 4,309 store closures were announced by retailers just in the first two months of this year, Coresight Research said in a research note on Friday. That’s well ahead of the number of announcements the market research firm was tracking this same time a year ago, it said.

The term “retail apocalypse” is being thrown around so frequently these days that it has almost lost its meaning, but the worst is yet to come.

Meanwhile, layoffs are starting to come fast and furious now. For example, I was recently made aware of major job cuts that just happened in North Carolina…

Duke Energy Corp. eliminated 1,900 positions in its latest round of job reductions, largely through voluntary buyouts but with some involuntary layoffs included.

For the first time since the last recession, I think that it is time to start visiting sites like Daily Job Cuts on a regular basis once again. Millions of Americans lost their jobs in 2008 and 2009, and a lot of you can still remember how painful that was.

In the middle of the country, the big news is “the farm apocalypse”. Last week, we learned that farm debt has now jumped 30 percent since 2013…

“Farm debt has been rising more rapidly over the last five years, increasing by 30% since 2013 – up from $315 billion to $409 billion, according to USDA data, and up from $385 billion in just the last year – to levels seen in the 1980s,” Perdue said in his testimony to the House Agriculture Committee.

As a result of this giant mountain of debt, a ton of small and mid-size farms are going under. As I noted the other day, farm debt delinquencies have now reached the highest level that we have witnessed in 9 years.

I really, really don’t understand the people that are telling us that everything is going to be okay.

Everything is not okay, and things are getting worse with each passing day. ISM’s manufacturing survey just hit the lowest level in 26 months, and for a whole bunch more extremely ominous economic numbers please see my previous article entitled “18 Really Big Numbers That Show That The U.S. Economy Is Starting To Fall Apart Very Rapidly”.

Of course it isn’t just the U.S. that is hurting. Up north, Canada is literally teetering on the brink of recession…

The Canadian government shocked the professional financial and economic media with their latest fourth quarter GDP release showing the economy has essentially come to a grinding halt at 0.1% growth.

And over in Europe, things are arguably even worse. Germany is supposed to have the strongest economy in the entire region, but they are also right on the brink of recession…

The country’s economy just escaped entering recession territory last month, with GDP growing at just zero percent following a 0.4 percent contraction in the previous three-month period. But Germany could be just weeks away from a recession-threatening double whammy as a potential no-deal Brexit and Donald Trump’s warning to hike car tariffs by up to 25 percent could send the economy tumbling. Chancellor Angela Merkel’s ministers have entered into a frantic plan to avert an economic catastrophe which could end Europe’s biggest economy’s golden growth for a decade.

This is a global economic slowdown, and many believe that it will be even worse than what we experienced in 2008.

But as I have previously warned, we aren’t just heading toward an economic storm. Everything that can be shaken will be shaken, and that includes our governmental institutions.

On Sunday, we learned that the House Judiciary Committee is opening an investigation into obstruction of justice by President Trump. The following comes from Reuters…

The House Judiciary Committee will seek documents from more than 60 people and organizations as it begins investigations into possible obstruction of justice and abuse of power by President Donald Trump, the panel’s chairman said on Sunday.

Committee Chairman Jerrold Nadler told ABC’s “This Week” the panel wanted documents from the Department of Justice, the president’s son Donald Trump Jr. and Trump Organization chief financial officer Allen Weisselberg, among others.

This is going to be a year of great governmental shaking. And no matter which side emerges victorious from the legal struggles and from the election of 2020, the truth is that our governmental institutions will never be the same again.

From 2016 through 2018, America experienced a time of relative peace and prosperity, and a lot of people out there were convinced that this bubble of unsustainable false prosperity could continue indefinitely.

Now it is becoming very clear what is ahead of us, and a lot of people are starting to freak out.

18 Really Big Numbers That Show That The U.S. Economy Is Starting To Fall Apart Very Rapidly

Virtually every piece of hard economic data is telling us that the U.S. economy is slowing down dramatically. Many of the pundits have been warning that we could officially enter recession territory later this year or next year, but these numbers seem to indicate that it could happen a whole lot sooner than that. But the stock market has been surging over the last two months, and at this point stocks are off to their best start to a year since 1987, and as long as stock prices are rising a lot of people are simply not going to pay much attention to the economic alarm bells that are ringing. But everyone should be paying attention, because things are really starting to get bad out there. The following are 18 really big numbers that show that the U.S. economy is starting to fall apart very rapidly…

#1 Farm loan delinquencies just hit the highest level that we have seen in 9 years.

#2 We just learned that U.S. exports declined by 4 billion dollars during the month of December.

#3 J.C. Penney just announced that they will be closing another 24 stores.

#4 Victoria’s Secret has just announced plans to close 53 stores.

#5 On Thursday, Gap announced that it will be closing 230 stores over the next two years.

#6 Payless ShoeSource has declared bankruptcy and is closing all 2,100 stores.

#7 Tesla is also closing all of their physical sales locations and will now only sell vehicles online.

#8 PepsiCo has started laying off workers and has committed to “millions of dollars in severance pay”.

#9 The Baltic Dry Index has dropped to the lowest level in more than two years.

#10 This is the worst slump for core U.S. factory orders in three years.

#11 We just witnessed the largest decline in the Philly Fed Business Index in more than 7 years.

#12 In January, sales of existing homes fell 8.9 percent from a year earlier. That was the third month in a row that we have seen a decline of at least 8 percent. This is an absolutely catastrophic trend for the real estate industry.

#13 U.S. housing starts were down 11.2 percent in December compared to the previous month.

#14 Compared to a year earlier, home sales in southern California were down 17 percent in January.

#15 In December, home sales in Sacramento County fell a whopping 22.5 percent compared to a year earlier.

#16 Pending home sales in the United States have now fallen on a year over year basis for 13 months in a row.

#17 More than 166 billion dollars in student loan debt is now “seriously delinquent”. That is an all-time record.

#18 More than 7 million Americans are behind on their auto loan payments. That is also a new all-time record, and it is far higher than anything that we witnessed during the last recession.

It appears that “the recovery” has finally come to an end. After seeing all of those numbers, there is no way that anyone can possibly claim that economic conditions are “getting better”.

And even though the official government numbers are highly manipulated, we never even had one “boom year” throughout the entire “recovery”.

The final numbers for 2018 are now in, and last year was the 13th year in a row when U.S. GDP growth was below 3 percent.

The last time we had a “boom year” when economic growth was above 3 percent was all the way back in 2005. That was in the middle of the Bush administration.

We have never seen a bad streak like this before in modern American history. The following comes from CNS News…

But prior to the current 13-year period when real GDP has failed to grow by 3.0 percent in any year, there has been no stretch (in the years since 1930) when the United States went as long as five straight years with real GDP failing to grow by at least 3 percent.

Even though the Federal Reserve pumped trillions of dollars into the financial system over the last decade, and even though we added nearly 12 trillion dollars to the national debt, the best that the authorities have been able to do is to stabilize the system for a while. Now it is starting to sputter once again, and many believe that the next crisis will be far worse than the last one.

By contrast, the Great Depression of the 1930s featured some really bad years, but following those bad years the U.S. experienced a tremendous economic boom…

By contrast, after the stock market crash in 1929, the United States saw four years of negative annual GDP—1930 (-8.5), 1931 (-6.4), 1932 (-12.9) and 1933 (-1.2). But then in the nine full years from 1934 through 1942, real GDP grew by an average of 9.75 percent.

We should have had some boom years too, but we didn’t, and now things are going to get bad again.

The Democrats are going to blame the Republicans and the Republicans are going to blame the Democrats, but all of that arguing isn’t going to solve anything.

What is coming next has been a central focus of my work for a very long time. The last recession was very painful, but it did not fundamentally alter life in America.

This next crisis will.

The “Everything Bubble” is bursting, the “Perfect Storm” is coming, and all of our lives will never be the same again.

But that doesn’t mean that there isn’t hope. In fact, once things really start getting crazy hope is going to be one of the major themes in my work because people are really going to need it.

There will be great challenges, and life will be very different, but that doesn’t mean that life is over.

America is about to experience the consequences of decades of exceedingly foolish decisions, and the pain will be extreme. But difficult times also offer an opportunity for dramatic change, and that is something that we will need to embrace.

The “Stock Market Crash Of 2018” Is Rapidly Transforming Into “The Financial Crisis Of 2019”

Stock markets are crashing all over the world, we are seeing extremely violent “flash crashes” in the forex marketplace, economic conditions are slowing down all over the globe, and fear is causing many investors to become extremely trigger happy. The stock market crash of 2018 wiped out approximately 12 trillion dollars in global stock market wealth, but things were supposed to calm down once we got into 2019. But clearly that is not happening. After Apple announced that their sales during the first quarter are going to be much, much lower than previously anticipated, Apple’s stock price started shooting down like a rocket and by the end of the session on Wednesday the company had lost 75 billion dollars in market capitalization. Meanwhile, “flash crashes” caused some of the most violent swings that we have ever seen in the foreign exchange markets…

It took seven minutes for the yen to surge through levels that have held through almost a decade.

In those wild minutes from about 9:30 a.m. Sydney, the yen jumped almost 8 percent against the Australian dollar to its strongest since 2009, and surged 10 percent versus the Turkish lira. The Japanese currency rose at least 1 percent versus all its Group-of-10 peers, bursting through the 72 per Aussie level that has held through a trade war, a stock rout, Italy’s budget dispute and Federal Reserve rate hikes.

This is the kind of chaos that we only see during a financial crisis.

Investors are also being rattled by the fact that China just experienced its first factory activity contraction in over two years…

The People’s Bank of China said on Wednesday evening it had relaxed its conditions on targeted reserve requirement cuts to benefit more small firms.

The move came after China reported its first factory activity contraction in over two years in December. A long-term Chinese slowdown would cause global havoc.

But of course the biggest news of the day was what happened to Apple. The Dow Jones Industrial Average was down 660 points on Wednesday, and the huge hit that Apple took was the biggest reason for that decline.

Including the 75 billion dollars that was just wiped out, the value of Apple has now fallen by 452 billion dollars since October 3rd…

In only three months, Apple has lost $452 billion in market capitalization, including tens of billions on Thursday as the tech giant’s stock sank further.

Apple shares have fallen by 39.1 percent since Oct. 3, when the stock hit a 52-week high of $233.47 a share. With its market cap down to about $674 billion, those losses are larger than individual value of 496 members of the S&P 500 — including Facebook and J.P. Morgan.

Ironically, the truth is that Apple is actually one of the strongest companies on Wall Street financially. It is just that the company was priced well beyond perfection, and so any hint of bad news was likely to cause a decline of this magnitude.

The amount of paper wealth that stock market investors have just lost is absolutely staggering. To put this in the proper perspective, here are some more facts about the money that Apple investors have lost that come from CNBC…

more than double the size of Wells Fargo
more than three times the size of McDonald’s
more than five times the size of Costco
more than 10 times the size of Raytheon

At this point U.S. financial markets are hypersensitive to any piece of bad news, and the fact that Apple sales are way down in China is definitely bad news.

One analyst said that this was “Apple’s darkest day in the iPhone era” and he expressed his opinion that “the magnitude of the miss with China demand …was jaw-dropping.”

Of course Apple is far from alone. Economic activity is slowing down substantially all over the planet, and on Wednesday we learned that U.S. factory activity just declined by the most since the last recession…

Beyond Apple, investors were also rattled by the biggest one-month decline in US factory activity since the Great Recession. The closely-watched ISM manufacturing index tumbled to a two-year low, providing further evidence of slowing growth and pain from the US-China trade war.

In addition, both of Bloomberg’s economic surprise indexes have “turned negative for the first time since Trump was elected”.

The hits just keep on coming, and it is becoming quite clear that this is going to be a very tough year.

As this crisis continues to escalate, keep an eye on our big financial institutions. Italy’s tenth largest bank just imploded, and it is likely that we will see more financial dominoes start to topple as the losses mount.

Over the past decade, there have been other times when Wall Street has been rattled, but those episodes only lasted for a few weeks at the most.

It has now been three months, and this new crisis shows no signs of abating any time soon.

What that means is that we are in a heap of trouble. Because once this giant financial avalanche fully gets going, it is going to be impossible to stop.

For the moment, I think that this current wave of panic selling is subsiding and that Friday will be better for investors. Of course the markets are so jittery at this point that a single piece of bad news could instantly send them tumbling once again. But barring any bad news, hopefully things will be calmer on Friday.

There will be good days and there will be bad days in 2019.

There will be ups and there will be downs.

But it has become exceedingly clear that the downturn that so many have been anticipating has finally arrived, and the financial crisis of 2019 looks like it is going to be a doozy.

A Surprise Announcement Has Just Unleashed Another Wave Of Panic On Wall Street

Well, that sure didn’t take long. Many had been hoping that 2019 would be a calmer year for Wall Street, but so far that has not materialized. In fact, a surprise announcement by Apple has just sparked another wave of panic selling on Wall Street. In a letter to shareholders, Apple CEO Tim Cook admitted that first quarter revenue is going to be way, way below expectations. That immediately set off “flash crashes” all over the globe as investors reacted to this unexpected news. According to Cook, the primary reason for the coming “revenue shortfall” is a slowing economy in China…

Apple said it sees first-quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet. Apple blamed most of the revenue shortfall for struggling business in China. But the company also said that upgrades by customers in other countries were “not as strong as we thought they would be.”

Once this letter was released, many investors rushed to dump as much Apple stock as they could, and trading in the stock was temporarily halted…

After being halted temporarily, Apple shares resumed trading at 4:50 p.m. ET, quickly falling over 8 percent to $145.12. The plunging shares wiped out more than $50 billion in the company’s market value, according to Bloomberg data. Apple, which was trading around $146 in after-hours trading is now down more than 37 percent from its Oct. 3 high and has fallen mightily since becoming the first U.S. company to reach a $1 trillion market cap in August.

And many investors generally assume that pretty much any bad news for Apple is bad news for the tech sector as a whole, and so just about every big tech stock was being pummeled in the aftermath of this surprise announcement. The following numbers come from Business Insider…

Amazon (AMZN) down 3%
Microsoft (MSFT) down 2%
Facebook (FB) down 1.5%
Alphabet (GOOG) down nearly 1%
Intel (INTC) down 2%
Advanced Micro Devices down nearly 3%
NVIDIA down nearly 2.5%
Qualcomm down 2%
Alibaba down 1.7%

As I warned just yesterday, it looks like 2019 is going to be a very, very challenging year.

At this point the mood of the nation has turned downright gloomy. Economic activity is slowing down all around the globe, the current government shutdown looks like it could last for a very long time, the endless investigations in Washington threaten to derail the Trump presidency, our trade war with China is becoming more painful with each passing week, and even many former optimists are openly admitting that the outlook for Wall Street looks very grim. For example, just check out what venture capitalist Fred Wilson is saying…

Like many of his peers in the Valley, legendary New York VC Fred Wilson – the founder of Union Square Ventures – is typically a dewy eyed optimist (just take a look at Union Ventures’ many flailing crypto investments). But in a surprising twist, a list of Wilson’s market calls for 2019 is so gloomy, it reads as if it were ghostwritten by SocGen’s Albert Edwards.

According to Wilson, the S&P 500 will visit 2,000 (a roughly 500 point – 25% – drop from current levels) some time during 2019 as the bottom falls out of the global economy. President Trump will agree to resign after being impeached by the House following the publication of the Mueller report. And the slate of highly anticipated tech IPOs (Uber, Lyft, Airbnb etc.) will fall flat. In other words, 2019 will be a “doozy”, as Wilson describes it.

The new session of Congress begins at noon on Thursday, and Nancy Pelosi will once again be the Speaker of the House. If something suddenly happened to President Trump and Vice-President Pence, she would become the president of the United States.

I don’t know about you, but just the thought of that chills me to the bone.

Now that the Democrats control the House, they are going to investigate the living daylights out of Trump, and it is likely to be a very, very tough year for him.

Many on the left are entirely convinced that Trump will be out of the White House by the end of 2019. Perhaps they will be successful in that mission, but instead of fixing things that would just unleash a whole lot more chaos.

As this year rolls along, the bickering and fighting in Washington is going to continue to intensify, but meanwhile very little is going to get done. With the Democrats in control of the House, the Republicans in control of the Senate, and Trump in control of the White House we have a recipe for gridlock that is pretty much unprecedented in modern American history.

What that means is that if things go really, really bad, we shouldn’t really expect any solutions to come out of Washington. We desperately need real change, but the voters just keep on sending the same old faces back to D.C. and they just keep on pushing the same old tired policies.

It is funny how I often drift into talking about politics, but the truth is that economics and politics are inseparable. And it is undeniable that what is going on in D.C. is going to have a dramatic impact on the U.S. economy throughout 2019.

As I write this, the numbers coming from Wall Street just keep getting worse and worse. It looks like it is going to be a really tough day, and without a doubt it looks like it is going to be a really tough year.

2019: It Is Going To Be Much Worse Than You Think…

The beginning of a new year is supposed to be all about hope, right? And I would certainly like to tell you that 2019 is going to be America’s best year ever and that everybody is going to receive a double portion of blessing, prosperity and happiness, but that simply would not be true. Unfortunately, the truth is that the elements for a “perfect storm” are rapidly coming together and 2019 is going to be an exceedingly challenging year. Of course 2018 wasn’t exactly a wonderful year either. I really like how Dave Barry made this point in his most recent article…

We can summarize 2018 in two words:

It boofed.

We’re not 100 percent sure what “boofing” is, despite the fact that this very issue was discussed in a hearing of the United States Senate Judiciary Committee. All we know for certain about boofing is that it is distasteful and stupid.

As was 2018.

But as bad as 2018 was, the year that has just started threatens to greatly surpass it.

Let’s start by talking about politics. According to Axios, Donald Trump is currently the subject of 17 different investigations.

Yes, you read that correctly.

We have never seen anything like this in American history. Even during the Nixon era there was some measure of restraint, but at this point they are trying to come up with any angle that they possibly can to get rid of Donald Trump.

And the left truly believes that this is the year that they are going to get rid of him. In fact, the Hill just published an article containing 30 predictions for 2019, and these were the top three…

Donald J. Trump’s presidency will not survive 2019;
The downward trajectory of every aspect of his tenure indicates we are headed for a spectacular political crash-and-burn — and fairly soon;
His increasingly erratic and angry behavior, his self-imposed isolation, his inability and refusal to listen to smart advisers that he hired, all are leading him to a precipice;

For a moment, let’s assume that the left is successful and they get rid of Trump. Will everything go back to normal?

No, Mike Pence will become president and they will immediately start investigating him. And then if a Democrat wins in 2020, revenge-seeking Republicans will investigate the living daylights out of whoever enters the White House.

Personally, I can’t understand why so many Democrats are lining up to run for president. Are they absolutely insane? After what has been done to Trump, his family, Brett Kavanaugh and countless others, why would anyone want to subject themselves to such endless public torture?

We are rapidly getting to the point where America will be ungovernable. No matter who is in power, there is going to be anger, strife, discord and resentment. Tens of millions of Americans hated Barack Obama and did not consider him to be their president, and now tens of millions of Americans hate Donald Trump and do not consider him to be their president. Our political institutions are breaking down, and faith in the system is at an all-time low.

But at least economic conditions have been relatively stable, and this has done much to pacify most Americans in recent years.

Unfortunately, economic conditions are really starting to slow down, and big corporations are beginning to announce large scale layoffs. Just like we saw during the last recession, eventually there will be millions of Americans that lose their jobs, and mortgage defaults will spike dramatically once again.

And just like in 2008, the stock market is starting to plunge in a major way.

2018 was the worst year for the stock market in a decade, we just witnessed the worst month of December for Wall Street since the Great Depression, and at this point approximately 12 trillion dollars of global stock market wealth has been wiped out.

And the really bad news is that things are likely to get even worse in 2019.

History has shown that tough economic conditions make military conflict more likely, and the world continues to teeter on the brink of war.

In the Middle East, Turkish tanks have been lining up along the Syrian border in anticipation of a possible invasion, and Syrian forces have been massing to defend against a potential attack. Elsewhere, Hezbollah and Hamas seem to be in a race to see who can start a war with Israel first. If war does break out, Israel may find themselves fighting both of them simultaneously.

As for the United States, our relationships with both Russia and China are rapidly deteriorating. The Russians continue to prepare for a coming military conflict with the United States, and the Pentagon is officially freaked out by the new hypersonic missiles that the Russians have just developed. Meanwhile, the trade war with China continues to escalate and one Chinese general just suggested that the Chinese military should not be afraid to “sink two U.S. aircraft carriers”.

And let us not forget Iran, North Korea and the potential for a Russian invasion of Ukraine.

Sadly, I have a feeling that there is going to be a whole lot less “peace on Earth” by this time next year.

On top of everything else, the crust of our planet appears to be getting increasingly unstable and climate conditions are changing at a very rapid pace. Dozens of volcanoes are currently erupting, and one expert is warning that about 100 others could be on the brink of erupting. Massive earthquakes have been striking along the Ring of Fire with increasing regularity, and major storms just keep getting larger and more intense.

We could keep going if you like. I haven’t even mentioned the potential for a global pandemic, the impending collapse of the European Union, civil unrest, terrorism, the death of our oceans or the horrible drought in the western half of the country.

Yes, people desperately need hope, but giving them false hope by telling them that everything is going to be just wonderful in 2019 is not a good thing.

Our world is in turmoil, and it is going to get even worse in 2019. So put on your seatbelts and get ready, because it is going to be a bumpy ride.

2018 Was The Worst Year For The Stock Market Since The Financial Crisis Of 2008

Now that the year is finally over, we can officially say that 2018 was the worst year for stocks in an entire decade. Not since the last financial crisis have we had a year like this, and many believe that 2019 will be even worse. And of course the truth is that stocks are still tremendously overvalued. Stock valuation ratios always return to their long-term averages eventually, and if the Dow Jones Industrial Average plunged another 8,000 points from the current level that would begin to get us into that neighborhood. Unfortunately, the system is so highly leveraged that it will not be able to handle a price decline of that magnitude. The relatively modest drops that we have seen already have caused a tremendous amount of chaos on Wall Street, and a full-blown meltdown would quickly result in a nightmare scenario potentially even worse than what we experienced in 2008.

For investors that had become accustomed to large gains year after year, 2018 was a brutal wake up call. The following comes from Fox Business…

2018 may be remembered as the year the Grinch stole your retirement or stock investment account.

December was the worst month for the Dow Jones Industrial Average and the S&P 500 since 1931, as tracked by our partners at Dow Jones Market Data Group. The S&P 500, the broadest measure of stocks, lost 9 percent and the Dow over 8.5 percent.

For the year, stocks turned in the worst performance since 2008.

According to the bulls, this wasn’t supposed to happen. In the middle of the year, they were projecting that a “booming” U.S. economy would continue to drive stock prices higher, but instead we just witnessed the worst three month stretch for stocks since the 4th quarter of 2008, and the month of December was the most painful of all…

December was a particularly dreadful month: The S&P 500 was down 9% and the Dow was down 8.7% — the worst December since 1931. In one seven-day stretch, the Dow fell by 350 points or more six times. This year’s Christmas Eve was the worst ever for the index.

The S&P 500 was up or down more than 1% nine times in December alone, compared to eight times in all of 2017. It moved that much 64 times during the year.

Not even in 2008 did we have a December like this. This was the second worst December for the Dow Jones Industrial Average ever, and you know that things are getting bad when you have to go all the way back to the Great Depression of the 1930s to find a time when stock prices were deteriorating more rapidly.

The amount of stock market wealth that has already been wiped out is absolutely staggering. For example, Facebook CEO Mark Zuckerberg’s net worth plummeted by 20 billion dollars in 2018…

American billionaires saw the biggest loss this year, collectively dropping $76 billion, largely because of December’s market rout. Mark Zuckerberg saw the sharpest drop in 2018 as Facebook Inc. veered from crisis to crisis. His net worth fell nearly $20 billion, leaving the 34-year-old with a $53 billion fortune.

And this was not just a U.S. phenomenon. Virtually every major stock market around the world was hit extremely hard, and a total of nearly 12 trillion dollars in global stock market wealth was wiped out over the course of the year.

The only time when more stock market wealth was wiped out in a single year was in 2008.

Are you starting to understand the magnitude of the crisis that has now erupted?

Of course the mainstream media continues to insist that this is just a temporary thing, and that markets will begin surging again soon as investors start scooping up stocks at “bargain prices”. For example, just check out this excerpt from a CNBC article that was posted on Monday…

John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said these declines are “setting the stage for upward surprises in 2019.”

“With what we believe to be almost all but the kitchen sink priced into current valuations, we see opportunity for multiples to return to levels seen at the end of the third quarter … with multiple expansions resulting in a global equity rebound in the coming year,” Stoltzfus wrote in a note.

It sure would be nice if the optimists are correct. Even for those that are relatively poor, the truth is that we live very comfortably in the United States today. The vast majority of us really have nothing to complain about, because we are enjoying a standard of living that is substantially higher than almost everyone else in the world.

Of course we don’t actually deserve this standard of living, but most Americans don’t want to hear that. We consume far more than we produce, and only by going into increasingly absurd amounts of debt are we able to keep the game going.

It is easy to say that this bubble will inevitably burst, but it will be a very sad day when it does.

Those that gleefully look forward to the coming collapse of our financial system do not really understand what we will be facing. It won’t be like 2008 when the authorities were able to patch things together and fairly rapidly restore our standard of living. When this thing finally shatters, nobody is going to be able to put the pieces back together like they were before ever again.

This is a very dark time. As I have stressed repeatedly, the elements for a “perfect storm” have been rapidly coming together, and 2019 is going to look a whole lot different than 2018 did.

This Is Exactly The Kind Of Behavior That You Would Expect During A Stock Market Implosion…

If a doctor tells you that his patient’s condition is swinging up and down wildly, is that a good sign or a bad sign? Of course the answer to that question is quite obvious. And if a doctor tells you that his patient’s condition is “stable”, is that a good sign or a bad sign? Just like in the medical world, instability is not something that is a desirable thing on Wall Street, and right now we are witnessing extreme volatility on an almost daily basis. On Thursday, the Dow was already down several hundred points when I went out to do some grocery shopping with my wife, and at the low point of the day it had fallen 611 points. But then a “miracle happened” and the Dow ended the day with an increase of 260 points. As I detailed yesterday, this is precisely the sort of behavior that you would expect during a chaotic bear market.

As Fox Business has noted, bear market rallies are typically “sharp, quick and usually short”. I figured that the momentum from Wednesday would carry over into the early portion of Thursday, so I was surprised when the Dow was down by so much as we neared the middle of the day. But then around 2 PM we witnessed an extraordinary market surge…

The Dow Jones Industrial Average posted a 865-point swing in less than two hours. The blue-chip index had been down in mid-afternoon more than 500 points to cut the previous session’s gains in half, before bargain hunters and short covering turned a big decline into a modest gain.

An 865 point swing in less than two hours is not “normal”.

In fact, it is about as far from “normal” as you can get.

Let’s talk about short covering for a moment. During huge market downturns, speculators often try to make a lot of money very rapidly by shorting stocks. But if momentum suddenly shifts, those short sellers can be caught with their pants down and the consequences can be quite dramatic. The following comes from Marketwatch…

Indeed, market veterans warn that massive, one-day rallies are often more characteristic of downturns, occurring as selloffs lead to significantly oversold technical conditions that leave markets ripe for short covering only to give way to renewed selling once the frenzy of forced buying is exhausted. Investors who short a stock are essentially betting that its price will fall by first borrowing the shares, but those traders can be forced to buy shares back if prices suddenly swing higher, which, in turn, can amplify price swings.

In addition, it appears that on Thursday there was more of the “forced pension rebalancing” that Zero Hedge has been talking about…

It certainly has the smell of a massive pension reallocation as the moment stocks started to surge, bonds were dumped…

No stock market crash in U.S. history has ever gone in a straight line. There are always huge ups and downs during every market crash, and this market crash is no exception.

Ultimately, there is no way that you can possibly interpret the behavior of the market in recent days as “healthy”…

Here’s the problem: as we discussed last night, since 1990, every comparable reversal – with a few exceptions – came during the 2008-2009 bear market. According to Bloomberg data, in eight previous bear markets the S&P 500 experienced rallies of greater than 2.5% more than 120 times as the benchmark plunged from peak to trough. From the collapse of Lehman to the financial crisis bottom in March 2009, the S&P 500 rallied more than 4 percent on 13 different occasions.

“This is not the kind of price action you see in normal bull markets,” said Robert Baird equity sales trader Michael Antonelli. “This is just a face ripping short cover rally. I am 100 percent not saying we are in a situation like 2008 now, but look at October 10, 2008 to October 13, 2008: the market rose nearly 12 percent in one day. October 27 to October 28, 2008, it rose 11 percent.”

Meanwhile, it appears that one of America’s most iconic retailers is about to go down in flames.

For years I have been warning that Sears was eventually “going to zero”, and if a last ditch rescue attempt does not materialize by the end of the day on Friday, Sears will be liquidated…

The employer of more than 68,000 filed for bankruptcy in October. Its last shot at survival is a $4.6 billion proposal put forward by its chairman, Eddie Lampert, to buy the company out of bankruptcy through his hedge fund, ESL Investments. ESL is the only party offering to buy Sears as a whole, people familiar with the situation tell CNBC. Without that bid or another like it, liquidators will break the company up into pieces.

But as Lampert stares down a deadline of Dec. 28 to submit his offer, he is quickly running out of time. As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, the people familiar said.

The inevitable demise of Sears could be seen from a mile away, and the same thing can be said about the country as a whole.

Our debt-fueled standard of living has been propped up by the biggest debt binge in the history of the world, and Wall Street has been transformed into the largest casino on the entire planet.

The entire U.S. economic system has become one huge Ponzi scheme, and all Ponzi schemes ultimately collapse.

Right now, we are in the early stages of a game that is going to take some time to fully play out. The pessimism that has gripped Wall Street is starting to spread throughout the general population, and many experts were stunned to learn that consumer confidence just declined for a second month in a row…

The confidence Americans feel in the economy fell for the second month in a row and touched the lowest level since last summer, perhaps a sign that worries about the 9 1/2-year U.S. expansion have spread from Wall Street to Main Street.

The consumer confidence index dropped to 128.1 this month from a revised 136.4 in November, the Conference Board said Thursday. Economists polled by MarketWatch had forecast a 133.3 reading.

If you have been a regular visitor to my websites, then nothing that will happen over the next few months should be a surprise to you.

The inevitable consequences for decades of exceedingly foolish decisions are starting to roll in, and the bursting of “The Bubble To End All Bubbles” is going to be beyond excruciating.

U.S. Stocks Just Had Their Best Day Ever – And Here Is Why That Is A REALLY Bad Sign…

The Dow Jones Industrial Average just posted its biggest single day point gain ever. On Wednesday, the Dow shot up 1,086 points, which shattered the old record by a staggering 150 points. It truly was a remarkable day, and this is the sort of “Santa Claus rally” that investors had been hoping for. Many are convinced that this rally is an indication that the crisis of the last three months is over, but as you will see below, this sort of extreme volatility is actually a really bad sign. But for the moment, the mainstream media is pushing the narrative that everything is once again peachy keen in the financial world. Just consider the following quote from CNN…

“Investors went bargain shopping the day after Christmas, where stocks just got too cheap relative to earnings, future earnings, any reasonable assessment of earnings,” said Chris Rupkey, managing director of MUFG. “The coast is clear, back up the truck, investors are saying enough already, the world is not ending.”

The coast is clear?

Really?

Do you think that they were saying the same thing on October 13th, 2008? On that day, the Dow Jones Industrial Average rose 936 points, and at the time it was the biggest daily point increase that Wall Street had ever seen by a very wide margin.

Of course that was right in the middle of the last financial crisis, and stocks just kept on tumbling after that massive rally.

But then on October 28th, 2008 the Dow Jones Industrial Average rose 889 points. Up until Wednesday, that was the second biggest daily point increase in U.S. history.

Was the crisis over then?

No way. Subsequently, the Dow kept on falling until it eventually bottomed out in early 2009.

As I have explained many times before, there is going to be extreme volatility that goes both ways during any crisis on Wall Street.

When markets are calm, stock prices generally tend to go up. And when markets get really choppy, the overall trend tends to be in a downward direction.

14 out of the 20 biggest daily point gains in the history of the Dow Jones Industrial Average happened either this year or during the financial crisis of 2008 and 2009.

During the great bull market that we witnessed during the intervening time period, stocks rarely shot up dramatically on any particular day. Instead, it was more of a slow and steady rise, and that is what investors should really be wishing for.

On the flip side, 15 out of the 20 biggest point declines in the history of the Dow Jones Industrial Average happened either this year or during the last financial crisis.

So it goes both ways. Extreme volatility is a clear indication that a crisis has arrived, and that means that what we witnessed on Wednesday should be very troubling for all of us.

And even with Wednesday’s dramatic gains, it is important to note that the stock market is still on pace for its worst December since 1931.

So don’t get too excited yet.

And you won’t hear this from the mainstream media, but the primary reason why stocks shot up so much on Wednesday was because of forced pension rebalancing. The following comes from Zero Hedge…

For those who missed our Friday post on the topic, Wells explained where this massive rebalancing comes from: the huge, end-of-quarter buy order was precipitated by the jarring divergence between equity and bond performances both in Q4 and the month of December. The stocks in the bank’s pro forma pension asset blend had suffered a 14% loss this quarter, including about an 8.5% drop in December. Contrast this with a roughly +1.6% quarterly total return for the domestic aggregate bond index. The gap between equity and bond performance in pension portfolios would have been even larger had IG credit OAS not widened nearly 40 bps in Q4.

As a result of this need for massive quarter-end rebalancing, corporate pensions would need to boost their equity portfolios by as much as $64 billion into year-end. Getting a bit more granular, Wells analyst Boris Rjavinski wrote that domestic stocks – both large cap and small cap – may need disproportionately large boosts of $35 billion and $21 billion, respectively, compared to “only” $9 billion for global developed equities (see table below). This is driven by large performance gaps within equity markets: U.S. stocks have trailed global and EM equities in Q4 and December after outperforming the ROW for quarters on end.

So the truth is that we may see more big stock rallies in the waning days of 2018 as tens of billions of dollars of corporate pension money shifts from bonds to stocks.

But if you think that this crisis is “over”, you are going to be in for quite a shock in 2019.

Meanwhile, global economic activity continues to deteriorate…

A global economy that until recently was humming has broken down, a sharp contrast to the picture just a year ago when the world was experiencing its best growth since 2010 and seemed poised to do even better.

Already, builders in the United States are erecting fewer single-family homes. German factories are sputtering, and in China, retail sales are growing at their slowest pace in 15 years.

In the final analysis, nothing that happened on Wednesday changed the long-term outlook one bit.

What we witnessed was simply a great deal of forced pension rebalancing, and that is only going to be a very short-term phenomenon.

Hopefully things will calm down as we approach the new year, but I wouldn’t count on it. Extreme volatility appears to be here to stay, and that is definitely not good news for the markets.

“The Worst Is Yet To Come Next Year”

When talking heads on mainstream news networks are using phrases such as “the worst is yet to come next year”, that is a clear indication that a new financial crisis has arrived. And that is an extremely bold statement to make considering that this is already the worst quarter for the stock market in 10 years, this is the worst December for stock prices since 1931, and we just experienced the worst Christmas Eve that Wall Street has ever seen. So when Mark Jolley made the following statement during a recent guest appearance on CNBC, it definitely raised some eyebrows…

“I would love to be more optimistic but i just don’t see too many positives out there. I think the worst is yet to come next year, we’re still in the first half of a global equity bear market with more to come next year,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Squawk Box.”

At this point last year, nobody on Wall Street was talking like this.

In fact, nobody was talking like this even four or five months ago.

But after three extremely painful months the outlook has completely changed, and a lot of market participants are really starting to freak out.

And this is not just happening in the United States. The truth is that most most markets around the world started to fall well before U.S. markets did, and at this point almost all of the big global indexes are in a bear market…

Bear markets — typically defined as 20 percent or more off a recent peak — are threatening investors worldwide. In the U.S., the Nasdaq Composite closed in a bear market on Friday and the S&P 500 entered one on Monday. Globally, Germany’s DAX, China’s Shanghai Composite and Japan’s Nikkei have also entered bear market levels.

This is the first global bear market that we have seen in a decade, and if central banks are going to try to stop the bleeding they will need to move very quickly.

But the Federal Reserve has already indicated that they do not plan to intervene. In fact, they just told everyone that they plan to keep raising interest rates.

That is completely insane, but since they aren’t accountable to us they can literally do whatever they want.

So if the central banks don’t step in, who is going to come riding to the rescue?

Individual national governments could try to stimulate economic activity by spending more money, but most of them are already drowning in debt.

Just look at the mess that the U.S. government has created. Since the beginning of the last financial crisis, we have been adding more than a trillion dollars a year to the national debt. And over the last 12 months our debt problems have actually accelerated. Between December 25th, 2017 and December 25th, 2018 we added almost 1.4 trillion dollars to the national debt. The following comes from CNS News…

The federal government has added another $1,370,760,684,441.54 to the debt since last December 25, according to numbers published by the U.S. Treasury.

On Dec. 25, 2017, the federal debt was 20,492,874,492,282.58, according to the Treasury.

According to the latest numbers published by the Treasury, which show where the debt stood on Dec. 20, 2018, the federal debt was $21,863,635,176,724.12.

So the reality of the matter is that there is simply no room for more “stimulus spending”, because we have already been spending money like drunken sailors that think that they are likely to die tomorrow.

Right now the government is shut down as President Trump and Chuck Schumer square off over 5 billion dollars in border wall funding. But nobody on Capitol Hill is even talking much about the 1.37 trillion dollars that we just added to the national debt, and that is really what everybody should be focusing on.

We are literally committing national suicide. No matter what happens with border wall funding, the U.S. will continue to steamroll toward financial oblivion unless something is done about this horrific debt that we are accumulating.

As I wrap up this article, I would like to share something that Austin Murphy wrote that really struck a chord with me. Over the course of a 33 year career in journalism, Murphy interviewed five presidents and wrote thousands of articles for Sports Illustrated. But now he is delivering packages for Amazon…

Let’s face it, when you’re a college-educated 57-year-old slinging parcels for a living, something in your life has not gone according to plan. That said, my moments of chagrin are far outnumbered by the upsides of the job, which include windfall connections with grateful strangers. There’s a certain novelty, after decades at a legacy media company—Time Inc.—in playing for the team that’s winning big, that’s not considered a dinosaur, even if that team is paying me $17 an hour (plus OT!). It’s been healthy for me, a fair-haired Anglo-Saxon with a Roman numeral in my name (John Austin Murphy III), to be a minority in my workplace, and in some of the neighborhoods where I deliver. As Amazon reaches maximum ubiquity in our lives (“Alexa, play Led Zeppelin”), as online shopping turns malls into mausoleums, it’s been illuminating to see exactly how a package makes the final leg of its journey.

Like Murphy, America’s future is going to be far less bright than its past if we don’t get things turned around, and right now there is absolutely no indication that this is going to happen.

Our national problems are multiplying, the conditions for a perfect storm are rapidly coming together, and pessimism is quickly growing all across America.

Mark Jolley believes that “the worst is yet to come next year”, and in the end he may turn out to be exactly correct.

The Worst Christmas Eve For The Stock Market EVER – The Dow Has Now Fallen More Than 5000 Points From The Peak

This is definitely not the gift that investors wanted for Christmas. On Monday, the Dow Jones Industrial Average plunged 653 points as panic swept through Wall Street like wildfire. That represented a 2.9 percent daily decline, and that made it the worst Christmas Eve for the Dow ever recorded. Incredibly, the previous record had lasted for exactly 100 years. Normally the day before Christmas is a very, very quiet day on Wall Street, but right now there are no “normal” days for the financial markets. If you go back to early October, the Dow Jones Industrial Average hit an all-time record high of 26,951.81, and on Monday the Dow closed at just 21,792.20. That means that the Dow has now plummeted more than 5,000 points in less than three months, and that is a major milestone.

The S&P 500 also crossed a major milestone on Monday when it entered bear market territory…

The term on Wall Street is synonymous with serious, long-lasting declines in stock markets. In numeric terms, a bear market is a 20 percent or more drop from a recent peak.

The S&P 500 hit that milestone on Monday, dropping 20 percent from its 52-week high. Markets have stumbled through what is usually one of their best months of the year, with indexes on track for their worst December performances since the Great Depression in 1931.

What this means is that the longest bull market in all of U.S. history is officially dead.

And there is still about a week left in the month. If things continue to unravel, this could ultimately turn out to be the worst December that the stock market has ever experienced.

Now that a bear market has begun, it is likely to stick around for a while. Just consider these numbers…

Since World War II, bear markets on average have fallen 30.4 percent and have lasted 13 months, according to analysis at Goldman Sachs and CNBC. When that milestone has been hit, it took stocks an average of 21.9 months to recover.

Of course all of the “experts” consulted by the mainstream media are going to assume that there will eventually be a recovery.

But could it be possible that this is the beginning of the “big crash” from which we will never recover?

Without a doubt, the elements for a perfect storm have been coming together for a long time. We are witnessing great political shaking, our relationships with both Russia and China are rapidly deteriorating, a trade war has begun, social decay is spreading through our society like cancer, and the crust of our planet is becoming increasingly unstable. Now we can add economic and financial instability to the mix, and a scenario is emerging that is eerily similar to what I have been warning about for a very long time.

Even before the markets crashed on Monday, U.S. Treasury Secretary Steven Mnuchin had scheduled an emergency call with the “Plunge Protection Team”. The following comes from Reuters…

The Treasury said Mnuchin will convene a call on Monday with the president’s Working Group on Financial Markets, which includes Washington’s main stewards of the U.S. financial system and is sometimes referred to as the “Plunge Protection Team.”

The group, which was also convened in 2009 during the latter stage of the financial crisis, includes officials from the Federal Reserve as well as the Securities and Exchange Commission.

But instead of calming the markets, many were concerned that this would actually accelerate the panic on Wall Street…

“Panic feeds panic, and this looks like panic in the administration,” said Diane Swonk, chief economist at Grant Thornton. “Suggesting you might know something that no one else is worried about creates more unease.”

And without a doubt, what we witnessed on Monday was sheer panic.

Consumer lending has already been tightening up over the past couple of months, and the chaos on Wall Street is almost certainly going to cause financial institutions to become even tighter with their money.

As credit conditions tighten, economic activity will slow down, and that will make the coming recession even more inevitable.

There is one more key data point that I would like to share with you all today. Since 1960, there have only been 13 years when the stock market has declined for the year. As Joe Zidle has noted, most of the time those declines occur “before or during a recession”…

“I think there’s a massive gap between sentiment and fundamentals” for the market, Blackstone investment strategist Joe Zidle said on CNBC’s “Squawk Box.”

“If the market closes down for the year, which looks likely … it will only be the 13th time that we’ve seen a full year decline since 1960,” Zidle said. Of those 13 full year declines in the past 58 years, seven occurred before or during a recession.

Now that the Dow Jones Industrial Average has fallen more than 5000 points, I think that we can safely say that this is a stock market crash.

But how bad will this stock market crash ultimately turn out to be?

If the Federal Reserve had rushed in with emergency measures at the first signs of trouble, they probably could have stabilized things. But the longer they wait, the harder it is going to be to stop the process that has been set in motion.

The Bubble of All Bubbles is starting to burst, and unless we see dramatic central bank intervention soon it is likely that an unprecedented financial nightmare is ahead.

I hope that you are able to rest and relax with family and friends this time of the year, because it looks like what is ahead in 2019 is going to be extremely painful.

This Was The Worst Week For The Stock Market Since The Financial Crisis Of 2008

Just when you thought that things couldn’t get any worse, they did. During normal times, a Friday before Christmas is an extremely boring trading session, but these are not normal times. On Friday, the Dow Jones Industrial Average was down another 414 points, and that brought the total drop for the week to 1,655 points. The marketplace has been completely gripped by panic, and CNN’s Fear & Greed index has just registered the highest “fear rating” that we have ever seen. I keep saying that we have not witnessed anything like this since the last financial crisis, and the numbers clearly back that assessment up. In fact, this was the largest weekly percentage drop for the Dow since October 2008…

The Dow just suffered its deepest weekly plunge since 2008 and the Nasdaq is officially in a bear market.

The miserable performance reflects deepening fears on Wall Street of an economic slowdown and overly-aggressive Federal Reserve.

Apprehension about a looming government shutdown and anxiety over higher interest rates were two of the major factors that pushed stocks down on Friday.

Normally trading volume is very, very light in the days leading up to Christmas, so what we just witnessed was extremely unusual. Trading volume on Friday was “really heavy” with “more than 12 billion shares” changing hands…

In a bad sign on Friday, volume was really heavy. More than 12 billion shares changed hands on U.S. exchanges on Friday, the biggest volume in at least two years.

When I have warned about a “rush for the exits” in the past, this is the kind of thing that I am talking about.

Many investors were panic-selling on Friday because they wanted to be out of the market before things closed down for the holidays, and stock prices just kept getting hammered lower and lower.

For the week, the carnage was absolutely colossal. The following is how CNBC summarized what happened…

The Dow lost 6.8 percent and 1,655 points on the week. It was its worst percentage drop since October 2008.
The Nasdaq lost 8.3 percent on the week and is now 22 percent below its record reached in August, a bear market.
The S&P 500 lost 7 percent for the week and is now down 17.8 percent from its record.
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 12 percent each this month.
Both the Dow and the S&P 500 are now in the red for 2018 by at least 9 percent.

It should also be noted that the number of stocks hitting 52-week lows right now is at historically high levels. The following comes from Zero Hedge…

Since 1984, there were only eight days when a bigger proportion of shares did so, according to Sundial Capital Research. Two of them were in 1987 — during the famous Black Monday crash, when the Dow Jones Industrial Average lost 23 percent in one day, and then again during the following session. The rest were in the aftermath of the collapse of Lehman Brothers in October and November 2008.

And it isn’t just stocks that are getting hammered. In fact, at this point 93 percent of all asset classes are down for the year.

As so many have already said, 2018 is a year when literally nothing is working.

A similar thing is happening over in Europe, where stocks are on pace for their worst year since 2008. We are watching a truly global meltdown take place, and trillions upon trillions of dollars of paper wealth is being washed away.

Of course not everybody has lost money. Those that sold before this stock market crash started made out like bandits, and it is very interesting to note that over the past couple of months “the smart money” has been getting out of stocks at a pace that we have never seen before.

So what happens next?

For now, there will be a pause. The stock market will be closed for the weekend, then it will open for half a day on Monday, and then it will be closed for Christmas on Tuesday.

Hopefully this “cooling off period” will help things to be much calmer by the time the markets open on Wednesday.

But even if things do calm down during the holidays, the truth is that this crisis is far from over.

The largest financial bubble in U.S. history is starting to burst, and a great deal of pain is ahead.

Worst Market Crash In A Decade: The Dow Has Fallen More Than 4000 Points As Stocks Rapidly Approach “The Capitulation Phase”

We have not seen anything like this since the financial crisis of 2008. On Thursday the Dow Jones Industrial Average lost another 464 points, and over the last five trading sessions it has lost a total of more than 1,700 points. CNN’s Fear & Greed index has swung all the way over to “extreme fear”, and there has only been one December in all of U.S. history that was worse for the stock market than this one. But back at the very beginning of October, most of the experts never would have imagined that the year would end this way. According to CNBC, the Dow Jones Industrial Average hit an all-time record high of 26,951.81 in early October, and investors were feeling really good about things at that point. But on Thursday the index closed at just 22,859.60, and that means that the Dow has lost more than 4,000 points in less than three months.

All of the major trend lines have been shattered and all of the key support levels have been breached. When analysts look at stock charts these days, all they are seeing is sell signal after sell signal. One investment strategist told CNN that stocks are “quickly approaching the capitulation phase”…

“Equity markets are quickly approaching the capitulation phase after having broken below critical support,” Sam Stovall, chief investment strategist at CFRA Research, told CNN Business.

According to Google, “capitulation” means “the action of surrendering or ceasing to resist an opponent or demand.” In this case, the bulls are on the verge of surrendering to the bears, and if that happens we could see a tremendous amount of chaos break loose on Wall Street.

And the damage that has already been done has been extraordinary. At this point firms listed on the S&P 500 have seen 2.39 trillion dollars in market cap wiped out, and a grand total of 16.7 trillion dollars in stock market wealth has been wiped out globally.

Many are pointing the blame for what is happening at the Federal Reserve. Here is just one example…

“We, too, were very vocal in recommending heavily that the Fed not hike yesterday,” said Julian Emanuel, chief equity strategist at BTIG.

“This is all about the speed of things,” Emanuel added. “The problem with ignoring the consequences of the balance sheet reduction really tells you that the Fed is not paying attention to that fact that financial markets correct much more rapidly on the downside than they do in bull markets to the upside.”

Even though the U.S. economy is slowing down substantially, and even though financial markets have already been crumbling, the Federal Reserve raised interest rates anyway.

And they knew that the financial markets would respond very negatively, so nothing that has happened the last couple of days is any sort of a surprise.

Of course it isn’t just stocks that are plunging. Junk bonds just had their worst day since the Brexit vote, and that is an extremely ominous sign. The following comes from Zero Hedge…

High yield bond prices are collapsing, but it is clear that liquidity has evaporated as traders have sent high yield bond ETFs (more liquid) dramatically below its fair-value as they seek hedges ahead of their liquidation needs.

Today is HYG’s worst day since Brexit, with price crashing to lowest since April 2016…

As I have discussed before, the collapse of junk bonds was an early sign that stocks were going to totally crash in 2008, and now we see a very similar pattern playing out in 2018.

One of the signature moments from the crisis of 2008 was Jim Cramer’s famous rant about the Federal Reserve on CNBC, and he referenced that rant during remarks that he made on Thursday…

For CNBC’s Jim Cramer , the worst part about the Federal Reserve’s latest interest rate hike is that the central bank’s chief, Jerome Powell, seemed to ignore what Cramer regards as “serious” weakness in the U.S. economy.

“I have a better read on the economy than the Fed and I know they’re not going to listen to me,” the “Mad Money” host said Thursday as the Dow Jones Industrial Average fell to a 14-month low . “I feel powerless, just like 2007 , when I ranted that the Fed needed to start easing aggressively in order to stave off a financial catastrophe.”

Does Jim Cramer really believe that he has a better grasp on how the U.S. economy is performing than the Federal Reserve does?

That is quite a bold statement, but based on what the Fed has been doing lately it is tempting to think that they are utterly clueless at this point.

But of course they aren’t clueless. They know exactly what they are doing, and it isn’t about helping the American people.

Meanwhile, just like we saw in 2008, the mainstream media is trying to assure everybody that they should keep their money in the stock market. In fact, CNN posted an article earlier today that encouraged people to put more money in because this latest downturn is a “buying opportunity”…

“The market’s behaving like a two-year-old,” said David Kelly, chief global strategist at JPMorgan Funds. “The Federal Reserve is doing its job — and it’s doing it patiently and cautiously.”

Kelly said the recent market slide could present an entry point, especially for investors who previously felt stocks were too expensive.

You can believe that if you want, but there is a reason why corporate insiders were selling stocks at the fastest pace in 10 years just before the market started to crash.

This ridiculously absurd stock market bubble was not going to last forever, and now it is imploding at a speed that is absolutely breathtaking.

Hopefully things will stabilize a bit as we roll through the holidays, but there is no guarantee that will happen.

Stocks Are On Pace For Their Worst December Since The Great Depression – The Dow Is Now Down Over 3,300 Points From The Peak

U.S. stocks have not fallen this dramatically during the month of December since the Great Depression of the 1930s. On Monday, the Dow Jones Industrial Average lost another 507 points, and it is now down more than 1,000 points from Thursday’s close. This fresh downturn has pushed the Dow and the S&P 500 very firmly into correction territory, and the Russell 2000 is now officially in bear market territory. The ferocity of this stock market crash is stunning many of the experts, and many investors are beginning to panic. Back in early October, the Dow hit an all-time high of 26,951.81, but on Monday it closed at just 23,592.98. That means that the Dow has now plunged more than 3,300 points from the peak of the market, and many believe that this stock crash is just getting started.

When it was first being reported that the stock market was on pace for the worst December since the Great Depression, I have to admit that I was skeptical.

But CNBC has the numbers to back up that claim…

Two benchmark U.S. stock indexes are careening toward a historically bad December.

Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 are down 7.8 percent and 7.6 percent this month, respectively.

And we still have two weeks remaining in December. If things continue to unravel, we could potentially be talking about a truly historic month for Wall Street.

But we certainly don’t need things to get any worse, because the damage that has already been done has been immense. The following numbers come from Zero Hedge…

Dow -12.7% from highs (correction)
S&P -13.7% from highs (correction)
Nasdaq Composite -17.3% from highs (correction)
Dow Transports -19.4% from highs (correction)
Russell 2000 -20.6% from highs (bear market)

The Russell 2000 is often an early indicator of where the rest of the market is going, and if that turns out to be the case this time around then we should expect the Dow and the S&P 500 to fall a lot farther.

When asked about this market downturn by CNBC, one equity strategist actually used the “R” word…

“The sell-off comes from the risk-off sentiment. Small caps are riskier than large caps, and there are some concerns about the end of a cycle in the U.S. and that we are entering a recession,” said Tobias Levkovich, chief U.S. equity strategist at Citi.

We haven’t even had any sort of a major “trigger event”, and yet stock prices have been steadily falling for weeks.

How bad could things ultimately get if there is some sort of “Lehman Brothers moment” that sets off a full-blown state of panic?

Already, many are using the term “bear market” to describe what is happening. For instance, Jeffrey Gundlach attracted a huge amount of attention when he made the following statement on Monday…

DoubleLine Capital CEO Jeffrey Gundlach said Monday that he “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018.

“I’m pretty sure this is a bear market,” Gundlach told Scott Wapner on CNBC’s Halftime Report. The major averages fell to session lows following his comments.

And some high profile stocks are already well beyond bear market territory. Goldman Sachs is now down 40 percent from the 52-week high, and the banking sector as a whole is just getting crushed.

Trillions upon trillions of dollars of paper wealth has disappeared, and needless to say, hedge funds are starting to go down like dominoes. Earlier today, a New York Post article used phrases such as “losing their shirts” and “financial wipeout”…

The stars of the biggest hedge funds are losing their shirts as analysts fear a major financial wipeout is imminent.

From Ken Griffin’s Citadel, to Israel Englander’s Millennium Management, one big name after another is racking up negative returns lately, amid bad bets in a saturated market.

On Monday, we witnessed more forced hedge fund liquidations, and that was one of the major factors that pushed prices down…

As we noted previously, you are witnessing a massive culling of the hedge fund industry as hundreds of funds are liquidated and thousands more get sizable redemptions. Many of these funds own the same companies—the outcasts from the indexed world, the cheap, the unloved; the same stocks that many other hedge fund managers own. With the hedge fund industry going in reverse, there is suddenly no natural buyer for what must be sold. As a result, you are seeing waves of forced sell orders and few buyers (which for those so inclined, is creating good bargains all around).

Those of you that have been waiting for the stock market to implode can finally stop waiting.

It is here, and it is really, really bad.

Meanwhile, a new survey contains more evidence that average Americans are becoming increasingly pessimistic about the U.S. economy. In fact, the numbers in the survey were “essentially reversed” from earlier this year…

Overall, 28 percent of Americans said the economy will get better in the next year, while 33 percent predict it will get worse, according to the survey, which was released Sunday. Those numbers were essentially reversed from January, when 35 percent said the economy would get better and 20 percent said it would get worse.

The psychological shift that I wrote about a few weeks ago appears to be accelerating. It is starting to become exceedingly clear that a major crisis has begun, and now the big question is this – how bad will things get in 2019?

Well, Ron Paul told CNBC that “it could be worse than 1929″…

Paul said Thursday on CNBC‘s “Futures Now that “Once this volatility shows that we’re not going to resume the bull market, then people are going to rush for the exits.” Paul added that “it could be worse than 1929.” He was referencing the fateful day in October of 1929 when the stock market crashed, and the United States was flung into the Great Depression that lasted ten years. During that year, a worldwide depression was ignited because of the U.S.’s market crash. The stock market began hemorrhaging and after falling almost 90 percent, sent the U.S. economy crashing a burning.

Will it ultimately be that bad?

Only time will tell, but right now things certainly do not look good, and I have a feeling that they are about to get a whole lot worse.

The Rise And Fall Of Netflix: Here Are 5 Reasons Why Netflix Stock Is Crashing As The Company Heads For Oblivion

Netflix originally had a truly disruptive business model and they fundamentally changed the way that Americans consume media, but now they are heading for the same fate as Blockbuster. For years, Netflix was really the only game in town, but now content costs are spiraling out of control and new competitors with even deeper pockets threaten to become the dominant players in the industry. Of course Netflix is not going to die overnight, but the writing is on the wall. In fact, Netflix stock has already been crashing over the last several months as investors have begun to realize that the future is not bright for the company. Back in the middle of the summer, the stock price peaked at $423.21, and as I write this article it is currently at $269.70. That is an astounding collapse, and here are 5 reasons why Netflix is headed for so much trouble…

#1 The Loss Of Key Content

At one time Netflix boasted the most impressive lineup of television shows and movies in the entire world by a wide margin, but those days are long gone. The steady loss of content threatens to become an avalanche over the next two years as Disney, Fox and WarnerMedia all pull key content from the service…

Disney is launching its own Netflix-style subscription VOD service next year — dubbed Disney+ — so Netflix will be losing Disney-owned content starting next year. Disney is acquiring 20th Century Fox, so expect more of Fox’s content to leave Netflix, as well. AT&T’s WarnerMedia had pegged Q4 2019 for its own broad-focused SVOD entry, so it’s also going to be pulling back its own stuff from Netflix.

#2 Disney+ Looks Like A Netflix Killer

If you are going to sign up for a streaming service for your family, would you want the one with Disney movies, the Marvel universe, Star Wars, Pixar and ESPN or would you want the one without all of those things?

Disney already has the best content, and they have much deeper pockets than Netflix does. As Stephen McBride has noted, it is going to be very difficult for Netflix to compete with that…

Disney will launch its own streaming service called “Disney+” next year. It’s going to pull all its shows and movies off Netflix and put them on Disney+ instead.

This is a huge problem for Netflix because Disney has the world’s best content by a long shot. It owns household brands like Marvel… Pixar Animations… Star Wars… ESPN… ABC… X-Men… not to mention all the traditional characters like Mickey Mouse and Donald Duck.

#3 Amazon Prime Is Ramping Up Their Spending On Original Shows

Amazon is willing to spend billions on original content, and they have already been gobbling up market share. Though still behind Netflix, Amazon has shown a willingness to do whatever it takes to become a major player.

For example, at one time you could watch Downton Abbey on Netflix, but now that entire series is exclusively found on Amazon Prime.

And when Amazon announced that it was going to spend 5 billion dollars on original content next year, that freaked out Netflix so much that they increased their planned spending on original content to 12 billion dollars…

In February, Amazon (AMZN) announced it would spend $5 billion developing original shows and movies this year. In response, Netflix upped its spending by 50%.

Netflix had planned to spend $8 billion on shows and series this year… now it’ll spend roughly $12 billion. It now invests more in content than any other American TV network.

#4 Netflix Cannot Win A Content Arms Race Because They Are Already Drowning In Debt

Netflix subscribers may appreciate all of the new content that the company has been churning out, but it has come at a very great cost.

Netflix was already drowning in debt prior to 2018, and that debt has shot up by 71 percent to $8.3 billion so far this year.

Meanwhile, two competitors with much deeper pockets will be able to outspend the company very easily in future years…

According to content spending numbers reported by research firm Ampere Analysis, Disney and Fox are projected to spend $22 billion per year on both original and acquired content. Similarly, Comcast and Sky are expected to spend $21 billion in 2018.

#5 The Cost Of Licensed Content Is Getting Out Of Control

Netflix has been heavily promoting their own original content, but 63 percent of the content that their subscribers consume is still from other sources…

Original content accounted for 37% of Netflix’s U.S. streams in October 2018, up from 24% a year earlier (and just 14% in January 2017), per video-measurement firm 7Park Data. But that means the majority (63%) of Netflix’s viewing is still from licensed content.

And that licensed content is becoming prohibitively expensive. For example, Netflix just made a deal to renew streaming of “Friends” for another year for 100 million dollars…

Warner Bros.-owned “Friends” stood at No. 3 — with its ongoing popularity helping to explain why Netflix was motivated to ink a one-year renewal for the ’90s-era sitcom, in a deal reportedly worth $100 million.

It absolutely amazes me that millions of Americans are still willing to tune in to old reruns of that show, but apparently it is happening.

But there is no way that deal makes any economic sense whatsoever.

At this point, Netflix is bleeding cash at a rate that is staggering. It has been projected that Netflix’s free cash flow will be negative 2.79 billion dollars in 2018, which will be the worst year that it has ever experienced.

Looking forward, Netflix will be steadily losing key content and subscribers to competitors, and it is inevitable that their borrowing costs will go up quite a bit.

Without sufficient revenue to service their exploding debt, it is only a matter of time before Netflix flames out and is forced to surrender.

Netflix shares are still worth $269.70 at the moment, but that won’t last for long. Eventually the company is going to zero, and no amount of irrational optimism will stop that from happening.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Legendary Investor Jim Rogers Warns That The Worst Stock Market Crash In Your Lifetime Is Coming ‘This Year Or Next’

If Jim Rogers is right, the worst stock market crash that any of us has ever seen is right around the corner. For the past 15 years, Rogers has been a frequent guest analyst on CNBC, Fox News and elsewhere, and he is immensely respected for the depth of knowledge and experience that he brings to the table. So the fact that he is warning that we are about to see the worst stock market crash in any of our lifetimes is making a lot of waves in the financial community. And of course Rogers is far from alone. Previously, I have written about several other prominent experts that are warning that a new financial crisis is imminent, and I have also discussed how a number of big investors are quietly positioning themselves to make an enormous amount of money when the markets crash. Could it be possible that all of these incredibly sharp minds could be wrong? Yes, but I wouldn’t bet on it.

I was actually quite stunned when I first learned what Jim Rogers had told Henry Blodget of Business Insider during a recent interview. Rogers has built up a tremendous amount of credibility, but now he is putting that credibility on the line by warning that a great stock market crash will happen by the end of next year. Here is the key portion of the interview …

Blodget: Well, yeah, TV ratings do seem to go up during crashes, but then they completely disappear when everyone is obliterated, so no one is hoping for that. So when is this going to happen?

Rogers: Later this year or next.

Blodget: Later this year or next?

Rogers: Yeah, yeah, yeah. Write it down.

There is no backing out of a statement like that.

If Rogers is wrong, he will never hear the end of it.

Subsequently, Blodget and Rogers also discussed how severe the coming crisis would be…

Blodget: And how big a crash could we be looking at?

Rogers: It’s going to be the worst in your lifetime.

Blodget: I’ve had some pretty big ones in my lifetime.

Rogers: It’s going to be the biggest in my lifetime, and I’m older than you. No, it’s going to be serious stuff.

So that means that Rogers is convinced that the coming crisis is going to be even worse than what we went through in 2008.

Of course this is something that I have been warning about for quite a while, but for Jim Rogers to make a statement like this is a really, really big deal.

Later in the interview, Rogers shared more details about what he believes the coming crisis will look like…

You’re going to see governments fail. You’re going to see countries fail, this time around. Iceland failed last time. Other countries fail. You’re going to see more of that.

You’re going to see parties disappear. You’re going to see institutions that have been around for a long time — Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.

That definitely sounds like an “economic collapse” to me. Of course the truth is that the U.S. economy is already in the midst of a slow-motion economic collapse that stretches back for decades, but this coming crisis that Rogers is talking about is going to great accelerate matters.

Let us hope that it is put off for as long as possible, but at some point we are simply going to run out of time.

And when markets do start falling, they can move very, very rapidly. Just look at what happened on Friday. Technology sector stocks were down 2.7 percent, and the FAANG stocks were some of the biggest movers…

Facebook fell $5.11, or 3.3%, to $149.60.

Apple fell $6.01, or 3.9%, to $148.90.

Amazon fell $31.96, or 3.2%, to $978.31 now demoted from the elect group for 4-digit stocks back to the large group of 3-digit stocks.

Netflix plunged $7.85, or 4.7%, to $158.20.

Alphabet – the G in FAANG – fell $33.58, or 3.4%, to $952.23, moving further away from everyone’s dream of closing at $1,000.

If we are indeed moving toward a new crisis, one of the things that we will want to watch for is an inverting of the yield curve.

We saw this happen in 2000 and in 2006, and on both occasions it foreshadowed that a huge stock market crash was coming in the not too distant future.

Unfortunately, CNBC says that a new inversion of the yield curve could happen “by the end of this year”…

The bounce in Treasury yields witnessed after the election of Donald Trump is now decaying in the D.C. swamp. If the Federal Reserve continues to ignore this slow growth and deflationary signal from the bond market and continues along its current rate hiking path, the yield curve will invert by the end of this year and an equity market plunge and a recession is sure to follow.

An inverted yield curve, which has correctly predicted the last seven recessions going back to the late 1960’s, occurs when short-term interest rates yield more than longer-term rates. Why is an inverted yield curve so crucial in determining the direction of markets and the economy? Because when bank assets (longer-duration loans) generate less income than bank liabilities (short-term deposits), the incentive to make new loans dries up along with the money supply. And when asset bubbles are starved of that monetary fuel they burst. The severity of the recession depends on the intensity of the asset bubbles in existence prior to the inversion.

Another key indicator is the growth of commercial and industrial loans. According to Zero Hedge, this indicator has correctly foreshadowed every single recession since 1960…

While many “conventional” indicators of US economic vibrancy and strength have lost their informational and predictive value over the past decade (GDP fluctuates erratically especially in Q1, employment is the lowest this century yet real wage growth is non-existent, inflation remains under the Fed’s target despite its $4.5 trillion balance sheet and so on), one indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon.

So considering the fact that this indicator has been so accurate, it is extremely alarming that we could see our “first negative loan growth” since the last financial crisis “in roughly 4 to 6 weeks”…

After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011 – after slowing to 2.3% and 1.8% in the previous two weeks.

Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks.

And when you throw in all of the other signs that the U.S. economy is slowing down, a very clear picture begins to emerge.

It has been said that those that do not learn from history are doomed to repeat it. As a society, we certainly didn’t learn much from the horrible financial disaster of 2008, and now so many of the exact same patterns are repeating once again.

An unprecedented financial crisis is most definitely heading our way, and the only thing left to be answered is how soon it will get here.

(Originally published on The Economic Collapse Blog)

Why Are So Many Big Investors Positioning Themselves To Make Giant Amounts Of Money If The Stock Market Crashes?

I keep hearing from people that think that the stock market is going to crash by the end of the year. Hopefully that will not happen, but the ridiculous stock prices that we are seeing right now certainly cannot last forever. On Sunday, I was chatting with a friend that had just been to a financial conference. He was quite surprised that one of the things being taught to the attendees of this conference was how to position themselves to make an enormous amount of money when the stock market crashes dramatically in the near future. Markets tend to go down a lot faster than they go up, and so when the inevitable market crash does take place those that have made large bets against the market will make huge fortunes. It happened in 2008, and it will happen again. But it was unsettling to my friend Robert that there were so many people that were gleefully looking forward to this.

Of course some of the biggest names in the investing world are also anticipating a major downturn very soon. I have previously written about how Warren Buffett’s Berkshire Hathaway Inc. is sitting on a pile of 86 billion dollars in cash right now. Nobody ever knows exactly what Buffett is thinking, but it isn’t too hard to figure out that he plans to use those billions to buy up stocks for a song after a big market crash happens.

I have also previously written about many other big names throughout the financial world that are warning that a new financial crisis is imminent. The last time I saw so many prominent investors sounding the alarm was just before the market crash of 2008, but most people didn’t listen that time around either.

And of course those that believe that a market crash is coming are doing a lot more than just talking about it. According to Zero Hedge, there are now more short positions betting against the Russell 2000 than we have seen at any time in the last six years…

The Russell 2000 Index posted a 2.2% decline in May, its worst month since October, and it appears a large swath of investors is now betting it has further to fall.

As Bloomberg notes, hedge funds and other major speculators have a combined net short position of 73,030 contracts in the small-cap index’s futures, according to the latest data from the Commodity Futures Trading Commission.

Russell 2000 sentiment has sharply declined since January, when future contract positioning reached record bullishness. It’s now the most short since May 2011.

The last time investors were this short the Russell 2000, it fell by almost 30 percent.

Can we expect something similar this time?

We will just have to wait and see.

Meanwhile, there has also been a surge in the number of investors betting that we will soon see increased market volatility…

As Bloomberg notes, with the VIX down more than 30% this year through the end of last week, investors have been using options to bet on volatility.

As the chart above shows, the volume of contracts wagering on a resurgence of market turmoil has reached its highest level since last February relative to those calling for a drop in price movements.

Because markets tend to go down much faster than they go up, most of those that bet on increased volatility are typically doing so because they believe that a stock market crash is coming very soon.

And it is also interesting to note that hedge funds are jumping into gold at a rate that we have not seen since 2007…

Hedge funds are jumping back into gold.

Money managers boosted their long positions in U.S. futures by the most in almost a decade in the week ended May 23, Commodity Futures Trading Commission data show.

Gold is a safe haven asset, and it is a very good place to be during a major financial crisis. So if hedge funds are anticipating that we are on the verge of a major market downturn, it would make sense for them to be piling into gold.

All of the moves that I have discussed above will end up looking quite foolish if stocks just keep going up and up and up.

But if the market crashes, those that have positioned themselves ahead of time will end up making a killing.

Today the stock market bears absolutely no resemblance to economic reality, but at some point that will change. And with each passing day we just continue to get more bad economic news.

Yesterday, I showed that according to official U.S. government figures there are 102 million working age Americans that do not have a job right now. Today, we got more confirmation that the U.S. economy is slowing down. We learned that new vehicle sales fell on a year-over-year basis for the fifth month in a row in May, and we learned that factory orders and new orders for durable goods both declined last month. And for a lot more numbers just like those, please see this article.

The U.S. economy is not “healthy” and it hasn’t been for a very long time. Because we have shipped so many jobs overseas, manufacturing’s share of U.S. employment has fallen to an all-time record low. The middle class is shrinking, and somewhere around two-thirds of the country is living paycheck to paycheck. We have been able to maintain our national standard of living by going on the greatest debt binge of all time, but every additional dollar of debt that we take on makes our long-term outlook even worse.

Just because he is living in the White House does not mean that Donald Trump can automatically turn things around. Without the help of Congress, he cannot cut taxes, repeal Obamacare, eliminate unnecessary federal agencies or implement many of the other items on his economic agenda.

And the truth is that because of the way that our system is structured, the Federal Reserve actually has much, much more power over the economy than Donald Trump does. When the financial markets crash and we officially enter the next recession, most of the blame will be placed on Trump, but it won’t be his fault. Instead, it will be primarily the Federal Reserve’s fault, and we need to educate the American people about this ahead of time.

What goes up must come down, and this irrational stock bubble has been living on borrowed time for quite a while now.

It isn’t going to take much to push things over the edge, and there are all sorts of candidates for what the next “trigger event” will be.

(Originally published on The Economic Collapse Blog)

A 918 Point Stock Market Crash In Japan And Deutsche Bank Denies That It Is About To Collapse

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…

Mitsubishi UFJ Financial Group plunged 8.7%, down 47% from June 2015.
Mizuho Financial Group plunged 6.2%, down 38% since June 2015.
Sumitomo Mitsui plunged 6.2%, down 26% since May 2015
Nomura plunged a juicy 9.1%, down 42% since June 2015

A lot of analysts have been very focused on the downturn in China in recent months, but I think that it is much more important to watch Japan right now.

I have become fully convinced that the Japanese financial system is going to play a central role in the initial stages of this new global financial meltdown, and so I encourage everyone to keep a close eye on the Nikkei every single night.

Meanwhile, the stock price of German banking giant Deutsche Bank crashed to a record low on Tuesday. If you will recall, Deutsche Bank reported a loss of 7.6 billion dollars in 2015, and I wrote quite a bit about their ongoing problems yesterday.

Things have gotten so bad that now Deutsche Bank has been forced to come out and publicly deny that they are in trouble…

Deutsche Bank co-CEO John Cryan moved to quell fears about the bank’s stability Tuesday with a surprise memo saying its balance sheet “remains absolutely rock-solid.”

The comments come as investors grow increasingly nervous about the health of European banks, which have taken a hit on the fall in energy prices and which face rising concerns over their cash levels.

Of course Lehman Brothers issued the same kind of denials just before they collapsed in 2008. Cryan’s comments did little to calm the markets, and even Jim Cramer saw right through them…

“You know, Deutsche Bank puts out a note saying, ‘listen, don’t worry, all good.’ Reminds me of JPMorgan saying if you have to say that you’re creditworthy then it’s already too late.”

Another thing that Lehman Brothers did just before they collapsed in 2008 was to lay off workers. We have seen a number of major banks do this lately, including Deutsche Bank…

Cryan, 55, has been seeking to boost capital buffers and profitability by cutting costs and eliminating thousands of jobs as volatile markets undermine revenue and outstanding regulatory probes raise the specter of fresh capital measures to help cover continued legal charges. The cost of protecting Deutsche Bank’s debt against default has more than doubled this year, while the shares have dropped about 42 percent.

The following chart comes from Zero Hedge. Nobody on the Internet does a better job with charts than Zero Hedge does. I would recommend visiting them right after you visit The Economic Collapse Blog each day (wink wink). This chart shows that Deutsche Bank stock has already fallen lower than it was during any point during the last financial crisis…

Deutsche Bank is the biggest and most important bank in the biggest and most important economy in the EU, and it has exposure to derivatives that is approximately 20 times Germany’s GDP.

If that doesn’t alarm you, I don’t know what will.

The biggest financial bubble in the history of the world has entered a terminal phase, and the parallels to the last financial crisis have become so apparent that just about anyone can see them at this point. Just consider some of the ominous warnings that we have seen recently…

Billionaire Carl Icahn, for example, recently raised a red flag on a national broadcast when he declared, “The public is walking into a trap again as they did in 2007.”

And the prophetic economist Andrew Smithers warns, “U.S. stocks are now about 80% overvalued.”

Smithers backs up his prediction using a ratio which proves that the only time in history stocks were this risky was 1929 and 1999. And we all know what happened next. Stocks fell by 89% and 50%, respectively.

Even the Royal Bank of Scotland says the markets are flashing stress alerts akin to the 2008 crisis. They told their clients to “Sell Everything” because “in a crowded hall, the exit doors are small.”

And let’s not forget that famous billionaire retail magnate Hugo Salinas Price has warned that the global economy “is going into a depression“.

The chaos that we have seen this week is simply a logical progression of the crisis that began during the second half of last year. If you were to create a checklist of all the things that you would expect to see during the initial stages of a new financial crisis, all of the boxes would be checked.

In the days ahead, keep your eyes on Germany and Japan.

Yes, the Italian banking system is completely collapsing right now, but I believe that what is happening in Germany is going to be the key to the meltdown of Europe, and I am convinced that Deutsche Bank is going to be the star of the show.

Meanwhile, don’t underestimate what is taking place in Japan.

The Japanese still have the third largest economy on the entire planet, and their financial system is essentially a Ponzi scheme built on top of a house of cards that has a rapidly aging population as the foundation.

As Japan falls, that will be a signal that financial Armageddon is now upon us.

And after last night, it appears that moment is a lot closer than a lot of us may have thought.

(Originally published on The Economic Collapse Blog)

The Federal Reserve Just Made Another Huge Mistake

As stocks continue to crash, you can blame the Federal Reserve, because the Fed is more responsible for creating the current financial bubble that we are living in than anyone else. When the Federal Reserve pushed interest rates all the way to the floor and injected lots of hot money into the financial markets during their quantitative easing programs, this pushed stock prices to wildly artificial levels. The only way that it would have been possible to keep stock prices at those wildly artificial levels would have been to keep interest rates ultra-low and to keep recklessly creating lots of new money. But now the Federal Reserve has ended quantitative easing and has embarked on a program of very slowly raising interest rates. This is going to have very severe consequences for the markets, but Janet Yellen doesn’t seem to care.

There is a reason why the financial world hangs on every single word that is issued by the Fed. That is because the massively inflated stock prices that we see today were a creation of the Fed and are completely dependent on the Fed for their continued existence.

Right now, stock prices are still 30 to 40 percent above what the economic fundamentals say that they should be based on historical averages. And if we are now plunging into a very deep recession as I contend, stock prices should probably fall by a total of more than 50 percent from where they are now.

The only way that stock prices could have ever gotten this disconnected from economic reality is with the help of the Federal Reserve. And since the U.S. dollar is the primary reserve currency of the entire planet, the actions of the Fed over the past few years have created stock market bubbles all over the globe.

But the only way to keep the party going is to keep the hot money flowing. Unfortunately for investors, Janet Yellen and her friends at the Fed have chosen to go the other direction. Not only has quantitative easing ended, but the Fed has also decided to slowly raise interest rates. The Fed left rates unchanged on Wednesday, but we were told that we are probably still on schedule for another rate hike in March.

So how did the markets respond to the Fed?

Well, after attempting to go green for much of the day, the Dow started plunging very rapidly and ended up down 222 points.

The markets understand the reality of what they are now facing. They know that stock prices are artificially high and that if the Fed keeps tightening that it is inevitable that they will fall back to earth.

In a true free market system, stock prices would be far, far lower than they are right now. Everyone knows this – including Jim Cramer. Just check out what he told CNBC viewers earlier today…

Jim Cramer was tempted to resurface his “they know nothing” rant after hearing the Fed speak on Wednesday. He was hoping that a few boxes on his market bottom checklist might be checked off, but it seems that the bear market has not yet run its course.

“The Fed’s wishy-washy statement on interest rates today left stocks sinking back into oblivion after a nice rally yesterday,” the “Mad Money” host said.

Without artificial help from the Fed, stocks will most definitely continue to sink into oblivion.

That is because these current stock prices are not based on anything real.

And so as this new financial crisis continues to unfold, the magnitude of the crash is going to be much worse than it otherwise would have been.

It has often been said that the higher you go the farther you have to fall. Because the Federal Reserve has pumped up stock prices to ridiculously high levels, that just means that the pain on the way down is going to be that much worse.

It is also important to remember that stocks tend to fall much more rapidly than they rise. And when we see a giant crash in the financial markets, that creates a tremendous amount of fear and panic. The last time there was great fear and panic for an extended period of time was during the crisis of 2008 and 2009, and this created a tremendous credit crunch.

During a credit crunch, financial institutions because very hesitant to lend to one another or to anyone else. And since our economy is extremely dependent on the flow of credit, economic activity slows down dramatically.

As this current financial crisis escalates, you are going to notice certain things begin to happen. If you own a business or you work at a business, you may start to notice that fewer people are coming in, and those people that do come in are going have less money to spend.

As economic activity slows, employers will be forced to lay off workers, and many businesses will shut down completely. And since 63 percent of all Americans are living paycheck to paycheck, many will suddenly find themselves unable to meet their monthly expenses. Foreclosures will skyrocket, and large numbers of people will go from living a comfortable middle class lifestyle to being essentially out on the street very, very rapidly.

At this point, many experts believe that the economic outlook for the coming months is quite grim. For example, just consider what Marc Faber is saying…

It won’t come as a surprise to market watchers that “Dr. Doom” Marc Faber isn’t getting any more cheerful.

But the noted bear at least found a sense of humor on Wednesday into which he could channel his bleakness.

The publisher of the “Gloom, Boom & Doom Report” told attendees at the annual “Inside ETFs” conference that the medium-term economic outlook has become “so depressing” that he may as well fill a newly installed pool with beer instead of water.

If the Federal Reserve had left interest rates at more reasonable levels and had never done any quantitative easing, we would have been forced to address our fundamental economic problems more honestly and stock prices would be far, far lower today.

But now that the Fed has created this giant artificial financial bubble, the coming crash is going to be much worse than it otherwise would have been. And the tremendous amount of panic that this crash will cause will paralyze much of the economy and will ultimately lead to a far deeper economic downturn than we witnessed last time around.

Once the Fed started wildly injecting money into the system, they had no other choice but to keep on doing it.

By removing the artificial support that they had been giving to the financial markets, they are making a huge mistake, and they are setting the stage for an economic tragedy that will affect the lives of every man, woman and child in America.

(Originally published on The Economic Collapse Blog)

7 Percent Crash Causes Emergency Shutdown Of Stock Markets In China For The 2nd Time In 4 Days

Did you see what just happened in China? For the second time in four days, a massive stock market crash has caused an emergency shutdown of the markets in China. On both Monday and Thursday, trading was suspended for 15 minutes when the CSI 300 fell 5 percent, and on both days the total decline very rapidly escalated to 7 percent once trading was reopened. Once a 7 percent drop happens, trading is automatically suspended for the rest of the day. I guess that is one way to keep the stock market from crashing – you just don’t let anyone trade. And of course the panic in China is causing other markets to go haywire as well. As I write this, the Nikkei is down 324 points and Hong Kong is down 572 points.

The amazing thing is that trading was only open in China for about 15 total minutes tonight. Here is how CNBC described what just happened…

China’s stocks were suspended from all trade on Thursday after the CSI300 tumbled more than 7 percent in early trade, triggering the market’s circuit breaker for a second time this week.

That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China’s economic slowdown and its depreciating currency as well as falling oil prices.

On the mainland, the Shanghai Composite tumbled 7.32 percent by at the time of the halt, while the Shenzhen Composite plummeted 8.34 percent. The CSI300, the benchmark index against which China’s new circuit breakers are set, plunged 7.21 percent. If that index rises or falls 5 percent, the market halts all trade for 15 minutes. If it moves 7 percent, trading will be suspended for the rest of the day. In total Thursday, China shares only traded around 15 minutes.

How will European and U.S. markets respond to the chaos in Asia when they open?

That is a very good question. I think that everybody will be watching.

Already, the Dow Jones Industrial Average is down about 500 points for the year. The financial crisis that began in the second half of 2015 is now accelerating as we enter 2016, and nobody is quite sure what is going to happen next.

One key to watch is what happens with the S&P 500.

2000 is kind of like a giant line in the sand on the S&P 500. On Wednesday we saw the market hover around that psychologically-important number, and there is a whole lot of resistance right there. If we break solidly through 2000 and start plunging toward 1900, that is going to break things wide open.

The primary reason for the stock market crash in China on Thursday was another stunning devaluation of the yuan. This explanation from Zero Hedge is very helpful…

Following the collapse of offshore Yuan to 5 year lows and decompression to record spreads to onshore Yuan, The PBOC has stepped in and dramatically devalued the Yuan fix by 0.5% to 6.5646. This is the biggest devaluation since the August collapse. Offshore Yuan has erased what modest bounce gains it achieved intraday and is heading significantly lower once again. Dow futures are down 100 points on the news.

PBOC fixes Yuan at its weakest since March 2011… with the biggest devaluation since August

A massive devaluation of the yuan was also one of the primary reasons for the market turmoil that we saw back in August. The Chinese are playing games with their currency, and this is causing havoc in the global marketplace.

Meanwhile, we have received some other very troubling news about the global economy over the past few days…

-The price of oil continues to collapse. As I write this, the price of U.S. oil is down to $33.26 a barrel. Those that follow my writing regularly already know that this is a really bad sign for the global economy.

-The Baltic Dry Index just hit another brand new all-time record low. Global trade is absolutely imploding, and this is having a devastating impact on China and other major exporting nations.

-U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession. This is precisely what we would expect to see during the early stages of a new crisis.

-U.S. manufacturing imports are also contracting at the fastest pace that we have seen since the last recession. It appears that “the almighty U.S. consumer” is not going to save the global economy after all.

In 2015, trillions of dollars of stock market wealth was wiped out globally. Now this new global financial crisis is picking up speed, and many of the “experts” seem absolutely stunned by what is happening.

But most of my readers are not surprised. That is because I have been breaking down the signs that have been warning us of this new crisis in excruciating detail for months. The financial carnage that we have witnessed around the globe this week is simply a logical progression of what has already been happening.

To be honest, though, even I have been stunned by what has happened in China this week. I can’t say that I expected an emergency shutdown of the Chinese markets two times within the first four trading days of the year.

Panic and fear are beginning to grip the global marketplace, and once that starts to happen events become very difficult to predict.

Let us hope that things settle down soon, but I wouldn’t count on it.

As I have said before, 2016 is the year when everything changes, and we are going to see things take place over the next 12 months that are going to shock the world.

(Originally published on The Economic Collapse Blog)

Guess What Happened The Last Time Junk Bonds Started Crashing Like This?

The extreme carnage that we are witnessing in the junk bond market right now is one of the clearest signals yet that a major U.S. stock market crash is imminent. For those that are not familiar with “junk bonds”, please don’t get put off by the name. They aren’t really “junk”. They simply have a higher risk and thus a higher return than other bonds of the same type. And yesterday, I explained why I watch them so closely. If stocks are going to crash, you would expect to see a junk bond crash first. This happened in 2008, and it is happening again right now. On Monday, a high yield bond ETF known as JNK crashed through the psychologically important 35.00 barrier for the very first time since the last financial crisis. On Tuesday, high yield bonds had their worst day in three months, and JNK plummeted all the way down to 34.44. When I saw this I was absolutely stunned. This is precisely the kind of junk bond crash that I have been anticipating that we would soon witness.

Normally, stocks and junk bonds track one another very closely, but just like before the 2008 crash, they have become decoupled in recent months. Anyone that even has an elementary understanding of the financial world knows that this cannot continue indefinitely. And when they start converging once again, the movement could be quite violent.

When I chose to use the word “carnage” to open this article, I was not exaggerating what is going on in the junk bond market one bit. On Tuesday evening, Jeffrey Gundlach used the exact same word to describe what is happening…

Jeffrey Gundlach, the widely followed investor who runs DoubleLine Capital, said on a webcast on Tuesday that the junk bond market has come under severe selling pressure ahead of the Federal Reserve’s policy meeting next week.

“We are looking at real carnage in the junk bond market,” Gundlach said. Gundlach also said it was too early to buy high-yield junk bonds and energy debt securities. “I don’t like things when they go down every single day.”

Sometimes a chart can be extremely helpful in understanding what is going on. The following chart was posted by Zero Hedge on Tuesday, and it shows that yields on the riskiest junk bonds are heading into the stratosphere…

And for those that are not familiar, it is important to note that when yields go up, bond prices go down. So the chart above is what a “crash” looks like.

Another “leading indicator” that I watch is the behavior of Dow Transports.

Dow Transports started crashing before the Dow Jones Industrial Average did back in August, and now it is happening again…

Dow Transports are in reverse. Down over 3% today, the biggest drop since the Black Monday collapse, Trannies are now below the lows of the Bullard bounce from October 2014 and down a shocking 16% in 2015. This would be the first four-quarters-in-a-row drop in Transports since 1994 and the worst year since 2008…

In addition, we are also seeing trouble signs erupt at major financial institutions just like we did during the run up to the 2008 crash. For example, I have been concerned about Morgan Stanley for quite a while, and on Tuesday we learned that they have just laid off more than a thousand workers…

Struggling Morgan Stanley slashed 1,200 jobs around the world in recent days, a person familiar with the matter told CNNMoney.

The cuts were broad-based and eliminated 25% of the positions within the fixed income and commodities businesses, the person said. Those divisions are grappling with tumbling trading revenue and shrinking fees.

Morgan Stanley also eliminated about 730 back-office jobs like human-resources and IT positions.

Virtually all of the things that we would expect to see just prior to a 2008-style stock market crash are happening right now.

If just two or three leading indicators were flashing red, we could have a really good debate about what they might mean.

But the fact that virtually all of the numbers are screaming a warning at us should mean that the debate is over. Anyone with an open mind should be able to very clearly see what is coming next.

Very quickly, let me give you just 10 signs that indicate that we are right on the precipice of a major recession and a very substantial financial downturn…

1. Global GDP growth has gone negative for the first time since 2009.

2. Corporate earnings growth has turned negative.

3. S&P 500 net profit margins are steeply declining. According to Tony Sagami, “since 1973, there has been only one 60 bps decline in S&P 500 net profit margin that didn’t lead to a recession.”

4. In October, U.S. imports of goods declined by 6.6 percent on a year over year basis.

5. In October, U.S. exports of goods declined by 10.4 percent on a year over year basis.

6. U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession.

7. Corporate debt defaults have risen to the highest level that we have seen since the last recession.

8. Credit card numbers that were recently released show that holiday sales have gone negative for the first time since the last recession.

9. The velocity of money in the United States has dropped to the lowest level ever recorded.

10. Of the 93 largest stock market indexes in the entire world, 47 of them (slightly more than half) have already plunged at least 10 percent year to date.

Just like in 2008, other global financial markets are imploding ahead of a U.S. collapse.

On Tuesday, the Dow Jones Industrial Average was down another 162 points, but we are still within 1000 points of the market peak that was set earlier this year. We are still in far better shape than most of the rest of the world, but that will soon change.

I can’t think of a single leading indicator that is telling us that everything is going to be okay. All of the numbers are pointing to major trouble ahead. So I hope that you are being smart and doing what you can to get prepared while there is still time.

(Originally published on The Economic Collapse Blog)