# Is it beginning?



## Padre

Dow was off 1000 points last week, this week has not yet begun in the US, but in Asia the Shanghai index is down almost 10% today, and Japan and Australia are also both down significantly...


----------



## camo2460

I think that an economic collapse is the most probable thing to happen, out of all the bad things that could happen, and I think that the collapse is imminent. What happens after that is any ones guess, but it could be the straw that breaks the Camels back.


----------



## hiwall

The DOW futures are down 414 points as I type this. All Asian markets down around 4% or more. Oil down. This could be the beginning of the end, Who knows:dunno:


----------



## Padre

The elites can only maintain power so long as their Ponzi remains in place. If this marks the destabilization point then things made in rifle afterwards. I'm not one for predictions but it seems like a lot of different trends are suggesting this fall is going to be interesting and perhaps as follows starting soon...


----------



## Marcus

http://www.cnbc.com/2015/08/24/wall-street-prepped-for-meltdown-as-futures-plunge.html

"U.S. stock index futures screamed lower, with Dow futures tumbling as much as 350 points, as fears surrounding the health of China's economy multiplied.

These concerns saw the benchmark Shanghai Composite index notch up its biggest one-day percentage loss since 2007 on Monday, closing down 8.5 percent."

If you have unhedged stock positions, you are *not* going to enjoy today. 
Dow futures (vs fair value): -313.75 -1.9%
S&P futures (vs fair value): -30.29 - 1.5%
Nasdaq 100 futures (vs fair value): -135.92 -3.2%

These are the losses at the *open* of trading. Depending on the volume and size of sell orders from over the weekend, we could easily see the Dow down 500 points in the first hour.
We are also likely to see trading pauses (of 5 minutes each) in individual stocks today as people rush to lock in profits. Apple and Disney may see this occur.
I don't think we'll see market-wide trading halts (15 minutes) since the levels are 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the previous close close in the S&P 500. 7% of the previous close of the S&P 500 is roughly 140 points, and I don't think we'll see that big a drop today. I do think a 3-4% drop in the S&P 500 is about right.

For those of you with *unhedged* stock positions, the door has probably already closed on getting out without taking a 10% haircut of prices from last Monday.


----------



## Tweto

Dow futures at -482 now. 

Market technician's expect the bear Dow will go down another 40% or more.


----------



## Marcus

The Dow is down 575 vs fair value right now.
The S&P is down 61 vs fair value. That's close to half of the loss necessary to trip the first 15 minute trading pause.


----------



## bigg777

I was trying to post an article from zerohedge.com that details the 60% drop in bulk freight rates that are being experienced due to lack of demand worldwide. I can't get the link to work properly without linking to another forum.

Suffice it to say that it is not financial markets that are leading the way down here, they are a lagging indicator of the financial turmoil that is hitting world economies very hard right now.

Dry bulk shipping rates have plummeted by 60%+ over the last 3 weeks, because less freight is being ordered by consumer nations for the coming 3 & 6 month period.

Buckle up and keep your powder dry, it looks like a wild ride ahead!


----------



## Marcus

Is this it, bigg?
http://www.zerohedge.com/news/2015-...reight-rates-asia-europe-crash-60-three-weeks

"Three weeks ago, when we last looked at the collapse in trade along what may be the most trafficked route involving China, i.e., from Asia to Northern Europe, we noted that while that particular shipping freight rate Europe had crashed some 23% on just one week, there was some good news: at least the Baltic Dry index was still inexplicably rising, and at last check it was hovering just above 1,100.

That is no longer the case, and just as with everything else in recent months, the Baltic Dry dead cat bounce is now over, with the BDIY topping out just above 1200 on August 4, and now back in triple digit territory, rapidly sliding back to the reality of recent record lows which a few months ago we suggested hinted that much more is wrong with global trade, and the global economy, than artificially manipulated stock markets would admit."


----------



## Marcus

BTW, the NYSE has invoked Rule 48 today.

http://nyserules.nyse.com/NYSETools...e=chp_1_3_7_14&manual=/nyse/rules/nyse-rules/

"Rule 48. Exemptive Relief - Extreme Market Volatility Condition

(a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of DMMs to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

(b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

(c) A suspension under section (b) of this Rule is subject to the following provisions:

(1) (A) Before declaring an extreme market volatility condition, the qualified Exchange officer shall consider the facts and circumstances that are likely to have Floor-wide impact for a particular trading session, including volatility in the previous day's trading session, trading in foreign markets before the open, substantial activity in the futures market before the open, the volume of pre-opening indications of interest, evidence of pre-opening significant order imbalances across the market, government announcements, news and corporate events, and such other market conditions that could impact Floor-wide trading conditions.

(B) Such review shall be undertaken in consultation with relevant officers of NYSE Market and NYSE Regulation, as appropriate. Following the review, the qualified Exchange officer or his or her designee shall document the basis for declaring an extreme market volatility condition.

(2) The qualified Exchange officer will, as promptly as practicable in the circumstances, inform the Securities and Exchange Commission staff that an extreme market volatility condition has been declared, the basis for such declaration, and what relief has been granted.

(3) An extreme market volatility condition may only be declared before the scheduled opening or reopening following a market-wide halt of securities at the Exchange.

(4) A declaration of an extreme market volatility condition shall be in effect only for the particular opening or reopening for the trading session on the particular day that the extreme market volatility condition is determined to exist. The Exchange may declare a separate extreme market volatility condition on subsequent days subject to sections (b)(1) through (b)(3) above.

(5) A declaration of extreme market volatility shall not relieve DMMs from the obligation to make pre-opening indications in situations where the opening of a security is delayed for reasons unrelated to the extreme market volatility condition.

(d) For purposes of this Rule, a "qualified Exchange officer" means the Chief Executive Officer of ICE, or his or her designee, or the Chief Executive Officer of NYSE Regulation, Inc., or his or her designee."

Edit:*Dow mini-futures and S&P futures are limit down.*


----------



## Hooch

A handfull of middle east markets took a nosedive yesterday too, as well as oil going lower again. It seems like a very interesting day ahead...


----------



## bigg777

That was it marcus, thanks!


----------



## hiwall

The DOW was down over 1000 points briefly after open. It will be an interesting day.


----------



## Marcus

As I look right now, we're down 191 on the Dow, 30 on the S&P, and 45 on the NASDAQ.

As I've pointed out before, the sharks make money on movement. It doesn't really matter if the movement is up or down. The direction merely indicates what tools they will use.
The financial media is complicit with the professional traders to aggravate these movements. Otherwise, why were there specials last night on [scary music]*The Impending Financial/Stock Meltdown*?[/scary music]
Once you learn *not to pay any attention whatsoever* to these clowns, you'll find that you'll do better in the markets. 
You see the dirty little secret is these clowns make *more money* scaring Main Street Moms and Pops into selling during a 'crisis' or buying at the top than they do with all their 'professional' stock picking.

The bottom line is this: The price of a stock is determined for the most part by it's earnings. Company news is a secondary factor. Outside news, other than wars, tend to be nothing more than noise.

So China slows down. As I've said before, it's about a 2% hit max to the US GDP. So economic activity will be at last year's or the year before's level. Big F****** Deal. The issue with a slowdown in China is mainly confined to China and those countries that supply China with raw materials. In the US, that will be coal, soybeans, and maybe airplanes. Meanwhile, Chinese junk will be cheaper.

So how did I play this morning's crisis?
I lowballed the prices on all my hedges. Unfortunately, only about half got filled since I went for the throat. But I still did alright since I also took the opportunity to significantly lower my cost basis on some of my positions. Oh and 25% of my positions are now up for the day.


----------



## Genevieve

why is marcus speaking in a foreign language?
:scratch

*I would like to find an ACCURATE step by step timeline of what will/would happen in an economic collapse here. NOT what we should do/buy now but an actual accurate step by step timeline of what could happen.*

It would give me an outline to check and maybe use in order to be able to weather it somewhat.

the only dealings we have with the stock market is through an ira with hubby's work and we actually do not even pay attention to it because we figure by the time we retire ( which in being honest we will work till we die) there will be nothing to receive. We get updates occasionally by the company that the workplace uses to deal with it and we just look to see if we gain or lose.
We're not depending on that money if there is any. just like ss. lol I doubt very seriously we'll see anything from that once we hit "retirement" age ( which they keep moving up).
If we pay off the mortgage we will be in damn good shape. that is our biggest payout every month. once that money can go for other things we could get to where we could be almost completely self sufficient.


----------



## hiwall

> I would like to find an ACCURATE step by step timeline of what will/would happen in an economic collapse here.


Obviously all Anyone can give is speculation.

The DOW is down 415 points right now. Many people stayed up all night watching all the world markets fall.


----------



## BillS

Padre said:


> Dow was off 1000 points last week, this week has not yet begun in the US, but in Asia the Shanghai index is down almost 10% today, and Japan and Australia are also both down significantly...


There's an estimated $1 quadrillion in derivatives. Chances are the big banks have enough derivatives exposure connected to the stock market to take down the entire financial system. So yes, this could be the beginning of the end.


----------



## Marcus

Genevieve said:


> *I would like to find an ACCURATE step by step timeline of what will/would happen in an economic collapse here. NOT what we should do/buy now but an actual accurate step by step timeline of what could happen.*
> 
> It would give me an outline to check and maybe use in order to be able to weather it somewhat.


Opinions on something like that would vary widely.

But there are some events and other things to watch for.

Red Flags:

The Fed raises interest rates in September or maybe even in December.

Worldwide shipping collapses. The Baltic Dry Index is a good indicator of economic activity. Right now, shipments from China to the EU are way down. If this spreads to other routes/regions, it could mean major trouble.

China continues to de-value the yuan. That means a global currency war and a race to the bottom as countries seek to maintain their export markets.

A Democrat wins in 2016.

Capital controls in any 1st world country.

Oil remains below $40. This will cause significant unemployment here in the US as oil exploration will fall to next to nothing.

Any sort of problem in the bond markets caused by the dumping of US Treasuries by China.

I'm sure others can add to this list.

Locally, what I'd look for is a bit different:

Cut backs in local government services.

Banks limiting cash withdrawals.

Locally owned stores starting to have more empty shelves or less inventory on hand.

Less construction activity.

New car dealers going out of business or struggling.

Food/gas prices going up.

More idle truckers or railroad workers.

Higher local unemployment.

Higher crime rate and/or riots

The dead giveaway will be when Food Stamp cards no longer work or utilities are cut.

The end result will probably be a depression or hyperinflation depending on what exactly happens and how it goes down. As far as exactly what happens and in what order, nobody knows. There will be signs both large and small. It's up to the individual to pay attention and use their own judgement. One thing is for sure though: Your freedom will be at risk.


----------



## Caribou

Genevieve said:


> why is marcus speaking in a foreign language?
> :scratch
> 
> *I would like to find an ACCURATE step by step timeline of what will/would happen in an economic collapse here. NOT what we should do/buy now but an actual accurate step by step timeline of what could happen.*
> 
> It would give me an outline to check and maybe use in order to be able to weather it somewhat.
> 
> the only dealings we have with the stock market is through an ira with hubby's work and we actually do not even pay attention to it because we figure by the time we retire ( which in being honest we will work till we die) there will be nothing to receive. We get updates occasionally by the company that the workplace uses to deal with it and we just look to see if we gain or lose.
> We're not depending on that money if there is any. just like ss. lol I doubt very seriously we'll see anything from that once we hit "retirement" age ( which they keep moving up).
> If we pay off the mortgage we will be in damn good shape. that is our biggest payout every month. once that money can go for other things we could get to where we could be almost completely self sufficient.


I would like that too. Unfortunately, there are so many variables&#8230;. I tried to play in the market once but I quickly learned that there is a reason that we pay the pros. I settled on picking mutual funds with a good track record and then settled in for the long run.


----------



## TheLazyL

Stock.

A worthless piece of paper that you buy,
with hopes of selling it for more,
then what you paid for it.


----------



## bigg777

The one thing that will not happen is - the talking heads at the TV stations telling you that there will be serious trouble. They will report on it in hindsight, but they will not tell you when trouble is incoming.

The one man I've been listening closely to is Mohammed El-Erian, Chief Economic Advisor at Allianz Financial. He has been warning of a liquidity crisis in the markets for quite a while. He is not a doomsayer or conspiracy theorist and he has been preaching caution in the retail investment markets for months.


----------



## Gians

*My speculation*

Just another burp, hang tight, it'll pass.


----------



## Viking

This is not the snowflake that started the avalanche as Jim Rickards has talked about, but it could be the snowflakes that add up to tons more buildup that will make the avalanche many times stronger, things have been festering in economics for many years and no one has really corrected the problems, which in the end makes things far worse, the PTB is good at throwing trillions of dollars at the problems to keep thing afloat. There will come a time when a single snowflake will start the mother of all avalanches and it will probably come from something we'd least expect, in the meantime, just keep prepping for whatever comes our way.


----------



## Marcus

This morning we're looking at a huge open with the futures as follows (vs fair value):
Dow +391
S&P +43
Nasdaq +126

Meanwhile the Shanghai index is down another 7.6% and the major European indices are up 3-4%.
As Gians said, this too shall pass.

As far as Mohammed El-Erian, he serves on Obama's Global Development Council. His father was a diplomat serving at the UN and as ambassador to France. He has strong ties to the power structure. I'm not saying ignore him, but he is a trans-nationalist.


----------



## Tweto

Be aware, bear markets start just like this, several down days followed by some up days. This could be a bottom, but it could also be the beginnings of a several year down trend.

Look at world financial situations and try to find some could news, I can't.

Younger people have never seen a bear market and will always think that the markets go up. Even some of the professional market pundits have never lived through a bear market as an investor. The last few weeks have been a classic start to a bear trend which could last for years.

That's why I will be waiting to December to see if the markets continue down.

Yesterday (Aug 24) the markets dropped almost 1100 points and then rebounded 700 points. That 700 points was generated by foreign buys trying to find a safe market. And yet even after that the markets still closed down.


----------



## hiwall

A major market crash is too early yet. Remember everyone says this fall


----------



## Marcus

Tweto said:


> Be aware, bear markets start just like this, several down days followed by some up days. This could be a bottom, but it could also be the beginnings of a several year down trend.


I agree it could be the start of a bear market. From the perspective of how long it's been since we've had a bear market, it is past time for one. It's also past time for a recession.

The only wildcard to all this is the effect all the QE will have on the economic cycles. Because ZIRP and QE haven't ever been tried here before, neither the Fed nor anyone else knows exactly how this will end. We could be entering a period like Japan did in the mid-2000s. This may mean we haven't seen the end of QE. It all depends on what happens in the future. I do think a rate hike is probably off the table for the foreseeable future.



Tweto said:


> Look at world financial situations and try to find some could news, I can't.
> 
> Yesterday (Aug 24) the markets dropped almost 1100 points and then rebounded 700 points. That 700 points was generated by foreign buys trying to find a safe market. And yet even after that the markets still closed down.


I assume you mean good news. There is good news, but it's overshadowed by the Chinese woes and problems here.

In case you're wondering why we ended down today, the best explanation I heard was mutual funds. Mutual funds only trade once per day, at the end of the trading day.

There were huge order imbalances (more sellers than buyers) in the mutual funds, and the people who run mutual funds are like bookies in that they don't like one-sided action. So they laid off the action by selling assets in the market which is what caused the market to drop. It's a tail wagging the dog effect.

The good news about the late session drop is it cleared out a bunch of the weak hands. Going forward that will mean a more stable market whether it goes up or down.


----------



## Padre

CBO reporting today to Congress that debt is becoming unsustainable...

http://www.washingtontimes.com/news/2015/aug/25/budget-deficit-smallest-obamas-tenure-cbo/


----------



## Tweto

Marcus;

I don't know the financial instruments that closed the market down in the last few mins of the trading Tuesday, but I do know that before the markets opened the talking heads were discussing the Dow futures of +500 and that maybe the bottom would be today when the floor trader said that today is a fool's rally and the markets will be in the red by the end of the day. He continued to say that there is more down trending left.

BTW I did mean "good", I probably misspelled the word and then it was auto corrected to "could".


----------



## BillS

TheLazyL said:


> Stock.
> 
> A worthless piece of paper that you buy,
> with hopes of selling it for more,
> then what you paid for it.


It used to be that companies paid dividends on their stock. You bought stock because of the money the company would give you. The price of the stock was secondary. Now very few companies pay dividends and their stock prices are too high to buy for the purpose of receiving dividends.


----------



## BillS

Padre said:


> CBO reporting today to Congress that debt is becoming unsustainable...
> 
> http://www.washingtontimes.com/news/2015/aug/25/budget-deficit-smallest-obamas-tenure-cbo/


I think it's unsustainable now. If you factor in unfunded liabilities for social security, medicare, medicaid, and federal pensions then the real deficit is about $5 trillion a year according to shadowstats.com.


----------



## BillS

Gians said:


> Just another burp, hang tight, it'll pass.


I doubt it. At best we'll see another 1929-style stock market crash. At worst, the derivatives will take down the world's financial system, and we'll have a civilization-ending catastrophe.

There could be a complete collapse by the end of the year. Or the world's central banks could continue to paper over their problems with massive money printing and that will buy us some more time.

Pretty much at any time we could see the US dollar being significantly devalued. A 20% devaluation would cause immediate 25% price increases with everything. China was the first to devalue. Other countries will follow suit. And it will become a race to the bottom.

Now is a good time to buy more metals if you can afford it. I wanted to buy the newest Mac Mini but instead I bought another 25 ounces of silver.


----------



## Marcus

Psst Bill,

The US Dollar has been devaluing every since 1913 thanks to the Fed.

Devaluing the dollar is inflationary (prices on goods and services go up) while a stock market crash is more deflationary (more goods and services chasing fewer dollars.)


----------



## smaj100

Bloomberg and zerohedge are both reporting massive selloffs of UST in the 100's of billions range. Just in the past 2 weeks China has sold $100b of UST and has warned Washington it will continue to unload it's debt to try and stabilize the Yuan. Things could get a lot worse soon.


----------



## BillS

smaj100 said:


> Bloomberg and zerohedge are both reporting massive selloffs of UST in the 100's of billions range. Just in the past 2 weeks China has sold $100b of UST and has warned Washington it will continue to unload it's debt to try and stabilize the Yuan. Things could get a lot worse soon.


Perfect excuse to dump Treasuries. Perfect time too with a lot of money leaving the market and heading into the "safe haven" of Treasuries.


----------



## hiwall

smaj100 said:


> Bloomberg and zerohedge are both reporting massive selloffs of UST in the 100's of billions range. Just in the past 2 weeks China has sold $100b of UST and has warned Washington it will continue to unload it's debt to try and stabilize the Yuan. Things could get a lot worse soon.


Do they need the money now or does China see the writing on the wall and wants to use this as an excuse to to sell off now when they can get value for those dollars.


----------



## HardCider

I checked out my hedge fund (coffee can) and I have a good supply of cash. The bank account(seed banks in the freezer) is looking good. The commodities located in the pantry and barnyard look unaffected by current market swings. The precious metal supply(lead bars/ammo) are stacked high and I'm thinking about heading out as I speak to do some work and bush hogging out on the 401K.

So far, so good. I do hope to invest in some pork bellies soon if I can find the breed I'm interested in with out having to travel too far to pick them up. And hopefully I will have a massive sell off of eggs at the farmer's market this Saturday.


----------



## Marcus

Last Friday, the S&P 500 closed at 1970.89.
Today, it closed at 1988.87.
That means it closed up for the week 17.98 or almost 1%. 

A few more weeks like this and I'll be able to afford a new BOV.


----------



## Marcus

This is a podcast of this week's show/commercial by Ken Moraif. He is a financial planner who primarily deals with people over the age of 50. The takeaway is he is advised his clients to get out of the market on 8/21 and go to cash. The operative part is within the first 15 minutes of the podcast.

https://moneymatters.net/news-media/podcasts/11-podcasts/848-august-29-2015.html

https://moneymatters.net/news-media/email-market-alerts/849-email-market-alert.html

THIS IS PROBABLY A BEAR MARKET
August 28th, 2015 -This may not be the Bear Market when all is said and done, but all of the signs that I see are pointing to it.

In the last week, we have had a historic up and a historic down day. History tells us that that since 1985 every single one of the top 20 biggest up and biggest down days occurred during a bear market. We had one of each this week! (See chapter 11 of my book "Buy, Hold, & SELL!" for a detailed discussion.) This could be the first time in 30 years that these big up and down days do not occur during a bear market, but I doubt it. During that time, we have had four bear markets, three of which were of historic proportions. Those bears were 1987, 2000, and 2008.

All of those bears produced devastating losses and people that experienced them will never forget them. Can you afford to experience a bear market?

There are two disturbing facts that point toward trouble ahead, according to Mike Larson's August 27th MoneyandMarkets.com newsletter:

"First, the amount of spare cash on the books at U.S. mutual funds just sank to 3.2% in early August. That's the lowest in history.

As a percentage of stock market capitalization, fund cash levels are also hovering right around the record low set in 2000. You probably don't need me to remind you that's when the Nasdaq topped out and subsequently crashed by around 80%.

Second, big money investors haven't just been burning through all their spare cash to buy stocks. They've been borrowing gobs of money to buy even more.

As of April - roughly where the broad markets peaked - investors had racked up a whopping $507.2 billion in margin debt on the New York Stock Exchange alone. That was the highest in U.S. history, and more than two-and-a-half-times the $182 billion outstanding when the current bull market began in March 2009.

Take a look for yourself. We're practically off the charts compared with the previous peaks from the dot-com and credit market bubbles:

Not familiar with margin borrowing? Then here's a quick primer: It's when you borrow against your stock and bond portfolio to buy even more stocks, bonds, or other assets. The amount you're allowed to borrow depends on what kind of assets you own, and which broker you use.

The net effect is to boost your leverage. The more the market goes up, the more money you make - much more than if you just bought with spare cash.

But when markets tank, so does the value of the collateral backing your margin loans. Brokers have built-in risk thresholds that require them to issue margin calls if the value of your collateral goes down. When you get one, you either have to put up more cash, or your broker will start selling your assets.

See the problem here? Falling markets force margin calls, which result in brokers selling customer assets. That puts more selling pressure on the markets, triggering even more margin calls &#8230; and even more selling. It's a self-fulfilling process that helps exacerbate ugly days in the market like we've just had."

I could not have said it better myself. It is also a concerning fact that this is exactly what happened in 1929. Record borrowing to invest in the stock market was a precursor to a massive sell off.

Do you wonder why the Chinese stock market has been mysteriously going up? Where is this buying coming from? According to Bloomberg, the Chinese government has said that they want the stock market to look good ahead of their big military parade on September 3rd. There is much speculation that the Chinese government is doing the buying behind the scenes so as to continue the false impression that all is well. After all, we can't have their stock market in freefall during that very patriotic day, can we? Would not be good for the PR machine.

China has also been secretly selling about $40 billion of US Treasuries a month for the last few months. Why would they do that? I believe it is because they are in worse shape than they are saying, and they need the money.

The next global recession may be made in China.

The view that a global recession is coming from the emerging countries is being shared by investors around the world and is reflected in the outflows of money from those countries. They pulled $2.7 billion out of developing economies on Aug. 24th. That matches the Sept. 17, 2008, selloff during the week Lehman Brothers went bankrupt. While the circumstances are different today than they were then, we all remember what happened to global markets during the months after that.

The counter argument is that the US economy is growing and that no recession is on the horizon, and all of this is a tempest in a teapot. The US will, just like it has in the past, pull the rest of the world out of recession. Or will it?

The federal government reported two very different estimates of the U.S. economy's growth rate in the second quarter. The Gross Domestic Product (GDP) and the Gross Domestic Income (GDI). The one that got all the media attention was the stong GDP number that came in at an annualized rate of 3.7%. Not many people noticed that the GDI increased at an annual rate of just 0.6 percent.

Since both measure the same thing: the size of the economy, that is a big discrepancy. The GDI number is telling us that the US economy is barely above recession. Which one is correct? Time will tell.

One thing is for sure, we are barely able to create the jobs that we need in this country, let alone create the jobs for the whole planet!

https://moneymatters.net/news-media...rt-dow-up-600-points-what-does-this-mean.html

MARKET ALERT: DOW UP 600 POINTS. WHAT DOES THIS MEAN?
August 26th, 2015 - The market was up over 600 points today so you may be asking "are we out of the woods? Is it time to buy again? Was our sell premature?"

The answer is "no" based on historical data. We all know that the past does not guarantee the future but here are the statistics going back 30 years to 1985:

Of the 20 best trading days that occurred during that period all happened during bear markets. 100% of them. Three happened in 1987, which was a terrible bear market. Two happened in 1998, which was also a bear market. Five of them happened during the Y2K bear market. And 10 of them happened during the 2008-9 market crash.

Today's big rise could very well be the first one in 30 years that was not during a bear market, but I doubt it.

Today's rise was historic but history tells us that a big up day like today is not something to necessarily celebrate rather it is something to be concerned about.

Last Friday was a historically bad trading day. So let's examine the 20 worst trading day since 1985.

100% of those trading days also came during bear markets. Five of them in 1987. Two of them in 1998. One in 2000. And 12 of them in 2008-9.

So what does this tell us? What I see is that we had a historically good day and a historically bad day all in the last four trading days! Over the last 30 years both of those things have occurred every time during bear markets.

Again, history does not predict the future but I would say that there is a very compelling argument to be made that we are in a bear market.

The question I would ask you is: can you afford to take the chance? Can you afford to go through another 1987, 1998, 2000, or 2008?

If you are retired or retiring soon I know that the answer is that you cannot.

As you know by now, we have recommended to our clients that we sell all of our equities. We do not want to see our clients lose devastating amounts of money.

https://moneymatters.net/news-media...t-alert-we-have-reached-our-sell-trigger.html

MARKET ALERT: WE HAVE REACHED OUR SELL TRIGGER
August 21st, 2015 - Well, I actually didn't think it was possible to reach our sell trigger today but we did.

Therefore, it is now time to sell.

The radio show was recorded Friday morning and therefore I said that we had not reached our sell trigger yet. This is the advantage that you have by getting this email rather than someone who just wants to listen to the radio show to know what to do. Listeners of the radio show will not find out until a week later that we have sold.

Our strategy is not perfect and those of you that have been following me for a long time know that our strategy predicts bear markets but it also predicts bear markets that don't happen. It is certainly possible that the market will bounce back from here and that this is not the beginning of a bear market. However, now that we have hit our trigger point the odds are very high that this is the bear market that we have been expecting. It seems that it came sooner than I thought.

Note: This guy is selling stuff. I'm not.

I'm putting this up here so those of you with 401k's and IRAs can consider moving a portion of your retirement assets to cash or money market equivalents and avoid possible losses if he is correct and a bear market is coming.
I'm roughly 50% in cash at the moment, and *I know how to profit in a declining market.* If you don't know how to profit in a declining market, it would be prudent to reduce your risk.
I make no representations that Mr. Moraif is correct since my only knowledge of him is through his radio shows. But, I would feel bad if I didn't at least alert you to his warning.


----------



## Tweto

I have been reviewing some video pundit's old you tube video's from the first of the year concerning a financial correction and or collapse this year. Several have been right on and predicted this from as early as April 2015. The ones that got this correction right are also saying that this is just the beginning and that what has happened so far is just the pre crash and that they expect the real crash in the next 2 months.

This exercise is valuable to identify the people to listen to going forward and to be able to put credence in their forecasts.


----------



## bigg777

The majority of the economies on Earth are sliding into recession, partly if not mostly caused by the Federal Reserve's actions over the last few years. The U.S.A. may not be showing signs of recession at this point, but most, if not all, of the countries we export to are headed into or are already in technical (2 fiscal quarters of contraction) recessions.

Where do you think that leaves us going forward?opcorn2:


----------



## Tweto

I think we are headed for deflationary times followed a few years away by inflation. Almost all the experts that are predicting hyperinflation are also saying that there will be a period of deflation before the inflation starts.


----------



## Marcus

We're already experiencing deflation in commodity prices and have been for over a year. This is being caused by a slowdown in China as their construction boom has ended. 
The problem now is there's so much overcapacity in raw material production it will take years to work it off especially if certain countries (China) prop up their sagging industries through government support. This will eventually lead to tariff wars which was one of the things that caused the Great Depression to be so deep and long. It's almost eerie the number of parallels between today and 1929-1930.

As bad as you may think it will be here, it'll be a lot worse everywhere else in the world since many developing countries have huge debt loads. This includes China whose debt is is over 250% of GDP. The cutbacks here will necessarily be to social programs since they've already imposed deep cuts to the military. All they can cut to military spending is weapons programs which will mean jobs. The cuts to social programs will mean rioting in the big cities as the welfare state comes to an end. It will also mean the illegal immigration problem will soon solve itself since there won't be any jobs for them. I am afraid we'll see more than a few instances of civil unrest as wages fall since the social fabric has been intentionally destroyed by the left.


----------



## hiwall

I can agree with most everything except-----------------


> It will also mean the illegal immigration problem will soon solve itself since there won't be any jobs for them.


----------



## bigg777

I am in agreement to a degree with both marcus and hiwall on the Illegals. In 2008-2009 there was a serious drop-off in illegal immigrants being detained at the southern border and many illegals left to return to their homes of origin.

The problem won't be solved but we will most likely see a slow down in illegal border crossings for 2 reasons; 1) illegal drug use will drop-off somewhat, so less will need to be imported from Mexico and 2) there will not be the drive to come to "El Norte" to earn money to mail back to Mamasita y los Niños y las Niñas. (AND have a second illegal & immoral family up here)


----------



## Marcus

That's what I mean, bigg.

In cases where there is economic stress, we'll likely see employers choosing to hire Americans over illegals all other things being equal. Right now, illegals will work for less. But when the welfare safety net is removed and the able-bodied must work or starve, we will see wages falling for both Americans and illegals. At some point, the difference between those wages will make less likely that an employer will choose illegals.

We'll also see legislation at the state and national levels that will severely punish employers who use illegals. There will be a mantra something along the lines of American jobs for Americans. We're also going to see changes in how hospitals deal with pregnant illegals. It'll be more of a cash in advance for services or go elsewhere.


----------



## Tweto

Just watched the Sunday morning news shows and without exception every talking head down played the importance of the world financial situation and China to the US markets. To top that off they were saying that what we have seen so far is just a correction and that the US economy is still strong, they failed to say that the markets will recover or that the markets are going down.

If history repeats its self the markets may reach a new high before the real crash in the next few months.


----------



## hiwall

> As bad as you may think it will be here, it'll be a lot worse everywhere else in the world since many developing countries have huge debt loads. This includes China whose debt is is over 250% of GDP. The cutbacks here will necessarily be to social programs since they've already imposed deep cuts to the military. All they can cut to military spending is weapons programs which will mean jobs. The cuts to social programs will mean rioting in the big cities as the welfare state comes to an end. It will also mean the illegal immigration problem will soon solve itself since there won't be any jobs for them. I am afraid we'll see more than a few instances of civil unrest as wages fall since the social fabric has been intentionally destroyed by the left.


If as you say things will get very bad here (and I agree) and that no matter how bad they get here they will be much worse in other countries (and again I agree) that means that things in Mexico and points south will be dire indeed. People WILL move from those stricken areas north into the great USA. 
In other news-
Both Canada and Mexico (the two countries who are the biggest recipients of US exports) have seen their respective currencies shrink in value and at the same time the US dollar has rose in value. Both of these nations are also in recession. This has had a major impact on US exports (they are becoming way more expensive). This trend will very likely continue and if the fed does increase interest rates you will certainly see a spike in the value of the US dollar which will make the export situation worse.
Look at basically all of South America. Those countries are in economic turmoil right now. The whole continent! We occasionally hear a report about how bad things are in Venezuela but it is bad in almost every country down there. Venezuela is just the poster child that is in news (and is maybe in the worst shape). Brazil was the 'rich' country down there but certainly not now. They are getting worse everyday (along with all their neighbors).
When you go through town and see that scruffy guy on the street corner with the sign that reads "The end is near" - believe him.


----------



## Marcus

hiwall said:


> Both Canada and Mexico (the two countries who are the biggest recipients of US exports) have seen their respective currencies shrink in value and at the same time the US dollar has rose in value. Both of these nations are also in recession. This has had a major impact on US exports (they are becoming way more expensive). This trend will very likely continue and if the fed does increase interest rates you will certainly see a spike in the value of the US dollar which will make the export situation worse.
> Look at basically all of South America. Those countries are in economic turmoil right now. The whole continent! We occasionally hear a report about how bad things are in Venezuela but it is bad in almost every country down there. Venezuela is just the poster child that is in news (and is maybe in the worst shape). Brazil was the 'rich' country down there but certainly not now.


Yes, the Canadian dollar has come down in value, but it's come down from heights not seen since the mid-1970s. It was trading above par value as recently as 2013 (the CAD was worth more than the USD), so a change in relative valuations is not surprising given that the Fed has ended QE. The two biggest problems Canada has are the oil bust and a housing bubble. They could be in for a rough ride.

South America, much like Canada, Australia, and many parts of Asia, is tied to China as a source of raw materials. As Chinese demand for resources has dwindled, these economies are pretty much all in the same boat since they're resource economies. They have overcapacity that will have to curtailed along with debt caused from building that overcapacity. I expect Canada will fare best out of these regions if for no other reason than their proximity to the US and higher standard of living.

The economic data I reviewed on Mexico showed a small .5% increase in GDP forecast for this year.

The market has already priced in a rate increase by the Fed. That's one of the reasons the relative strength of the dollar rose so much earlier this year.

People will only come up here from down south if there is work for them. As the oil bust starts to take hold in Texas and the other oil producing states, those jobs will disappear or be filled by American workers. The lower the price of oil goes, the deeper the cuts in the oilfield and related industries will be. US Steel is already closing a plant in Alabama, and I know of an aluminum smelter closing soon elsewhere due to slack demand and unsustainable prices.


----------



## LastOutlaw

Marcus said:


> As the oil bust starts to take hold in Texas and the other oil producing states, those jobs will disappear or be filled by American workers. The lower the price of oil goes, the deeper the cuts in the oilfield and related industries will be. US Steel is already closing a plant in Alabama, and I know of an aluminum smelter closing soon elsewhere due to slack demand and unsustainable prices.


This is already happening as far as oil production goes. Someone I know has mineral rights in Tx. They have been getting notices of bankruptcy from Texas oil companies they have been doing business with for years.

Keep in mind that every U.S. oil company that goes under simply forces us into more foreign dependency on imported oil.

Most oil jobs are held by us citizens, not illegals.


----------



## Marcus

LastOutlaw said:


> This is already happening as far as oil production goes. Someone I know has mineral rights in Tx. They have been getting notices of bankruptcy from Texas oil companies they have been doing business with for years.


If that person is smart, they'll go turn off the pump jack. Otherwise, their royalty checks could be held up by the bankruptcy. They need to check their oil leases too to see how fast they can kick the oil company out. If they're getting monthly or quarterly royalty checks, as soon as the oil company misses paying a check, they need to go down to the courthouse and file a lien against the company and pay a deputy to watch while they lock up the pump jack and put a new lock and chain on the gate. They also need to start monitoring the pump meter.

I speak from experience. There's a bunch of fly by night outfits and they know all the bankruptcy laws backwards and forwards. We nearly lost a calf in a sump pit that wasn't fenced off. After that happened, my dad told them to get their shit off our property. They came back with the we have a lease mantra, and my dad told them he had a 16 gauge that said that their lease was up. They threatened to sue, and my dad said he knew someone on the Railroad Commission that he figured would be real interested in hearing about that calf. They cleared out after that.


----------



## Padre

How much longer? We are down 2000 points off the high, although people were still fooled into buying last week. If they can hold the line somewhere above 15k, and call it a correction then nothing changes, they will bide their time until people stop paying attention and then begin the bull market propaganda all over again. If the market corrects down to <6k, which is where I think it really should be then we need to start worrying about collapse, because dow 6000 puts a lot of presure on debt. Already we have seen a few prominent local defaults, dow 6k would accelerate those and threaten a national default.


----------



## Tweto

If this is a normal beginning to a bear market then we will see an upswing in the markets to almost a new high and then another collapse and that should be when it just continues down. This will take months to sort out. 

There are a huge number of private investors now that have never seen a bear market and they have been conditioned to think that the markets always go up never down. The few people at the top that are pulling the strings recognizes this and will sucker the masses into buying now so the professionals can take their money again before the party is over.

I agree with Padre, the markets could end up down in the 6000 Dow range before it's over.


----------



## Marcus

There's also all those youngsters (under 30) in the financial industry who probably weren't out of college during the last todo so they are pretty much useless to give advice to anyone concerning what to do during a bear market.

*But,* I don't think we'll see the S&P 500 at 676 again (March, 2009.)

Before I begin, I will point out that the Dow (DJIA) is not really important. It is only one of many different indices, and because it only has 30 companies (that change over time), it is not even a good measure of the state of the economy because it is so narrow. None of the original Dow components have continuously stayed on that index. The S&P 500 or the Russell 2000 are much better indications of the overall state of the economy since they're both much broader measures of the economy.

So how do we see the S&P 500 at 676?

The valuation of a company is predicated on its future earnings. You start by looking at past earnings and then applying adjustments going forward. One of the ways we see 676 is if earnings fall. The earnings of all 500 companies would have to fall to roughly a third of their current levels to reach 676. That's assuming that P/E ratios (Price/Earnings) stay at or near historical levels. There's really only 2 ways earnings could fall by that much: A huge increase in corporate taxes or a huge drop in economic activity or both.

P/E ratios traditionally are around 15-17 in normal economic times. No, we're not in normal economic times. The Fed, with QE & ZIRP, have distorted returns in 'safe' investments like CDs and US Treasuries in an effort to drive people into the stock market in order to seek returns. That's one of the reasons why the markets have done so well over the last 6 years. It's the only game in town. *But* what happens when interest rates start going up? Typically, you'll see P/E ratios drop which is one of the major reasons I see for what has happened in the last month. The Fed indicated they'd probably raise rates this month, and the markets reacted. The funny thing is the market has already pretty much priced in a rate increase, but I also think it was a matter of the financial sharks not wanting to let a supposed 'crisis' go to waste in an effort to fleece the naive. Meanwhile today, we're nearly back to the channel the S&P has been in all year.

If interest rates normalize (6%) over the next few years, will the indices plummet? No. I really don't think the Fed will raise rates faster than about 1%/year over the next few years as they seek to return to more normal times. They want to take it slow as we emerge from an unprecedented low interest rate environment. *Plus,* we're about due for another recession so they have to be careful they don't cause one by raising rates too fast. There's other issues with government debt and higher interest rates, but that problem is not how we get to 676.

Now should we see hyperinflation (>20%/year), it is possible to get to 676 or even lower. It becomes a mathematical exercise to calculate company valuations based on future earnings and larger than normal discount rates. The present value will vary widely depending on the assumptions regarding interest rates.

The other major way we could see 676 is through a disruption of normal business caused by a war, terrorist attack, EMP, embargo, political/constitutional crisis, or something similar. Whatever it is, it has to be nationwide to affect almost every one of the 500 companies. Most of these are low probability events.


----------



## hiwall

I rather do believe that we will see major things happen in the next three or four months. But I admit that I am the worst guy with predictions. We will just have to wait and see. The biggest odds of course are that nothing happens other than the same o same o.


----------



## LincTex

LastOutlaw said:


> This is already happening as far as oil production goes. Someone I know has mineral rights in Tx. They have been getting notices of bankruptcy from Texas oil companies they have been doing business with for years.


The holder of the mineral rights still possesses the oil that's still in the ground. If the Oil company (a middleman) they sell to stops buying, they can wait until prices go up and sell the product to another company... or find another one to sell to at the lower prices we see now.

I'm in aerospace - - and the Brazilians are REALLY stepping up the game in the MRO field. More and more 12,500lb+ MTOW class planes heads to Brazil to have A, B, and C checks done. (Mostly regional airliners)

No, not illegals taking the jobs - but still damages American jobs all the same.


----------



## bigg777

Marcus said:


> . . .So how do we see the S&P 500 at 676? . . .
> 
> Now should we see hyperinflation (>20%/year) . . .
> 
> The other major way we could see 676 is through a disruption of normal business caused by a war, terrorist attack, EMP, embargo, political/constitutional crisis, or something similar. Whatever it is, it has to be nationwide to affect almost every one of the 500 companies. Most of these are low probability events.


On a "normal" daily basis, I agree with your logical analysis of market action and expectation. However, IMHO, investor psychology trumps every mathematical & logical explanation for the markets' movement. With the advent of quant. algorithms and high frequency trading dominating more and more of the market, retail/human traders are much more likely to panic and try to either preserve capital or chase returns.

The irrational behavior of markets has been on display lately and I foresee more volatility and higher risk going forward. This does not bode well for the markets, investors or our economy. Volatile environments like this increase the likelihood of "black swan" events, due to panic, greed and unlawful activity. Just one man's opinion.


----------



## Marcus

bigg777 said:


> ...However, IMHO, investor psychology trumps every mathematical & logical explanation for the markets' movement. With the advent of quant. algorithms and high frequency trading dominating more and more of the market, retail/human traders are much more likely to panic and try to either preserve capital or chase returns.


There's a thing known as sentiment which is what you're describing. Sentiment can, and often does drive the market on a given day. It can override data and cause large movements up or down. Sentiment without data backing it up tends to be short-term. Most of the HFT (High Frequency Traders) are seeking to take advantage of arbitrage opportunities which are pricing errors that usually don't last very long. I myself have even been able to notice an arbitrage opportunity this year and take advantage of it. It lasted a whole 15 minutes and was worth a couple of hundred dollars.



bigg777 said:


> The irrational behavior of markets has been on display lately and I foresee more volatility and higher risk going forward. This does not bode well for the markets, investors or our economy. Volatile environments like this increase the likelihood of "black swan" events, due to panic, greed and unlawful activity. Just one man's opinion.


On higher volatility days, trading pauses and/or stoppages are built in after certain levels of losses. These levels start at 7% and run to 20% at which point trading is halted for the remainder of the day. Thus, there are limits to the amount of losses per day in the stock market.

Additionally, there is a thing called the 'uptick rule' which can greatly restrict short selling when a stock declines 10% in a single day. It lasts the rest of that day and all of the next trading day. The purpose is to prevent a Bear Raid against a stock that is down on a given day. There is some evidence that a Bear Raid against Citigroup was one of the causes of the 2008 financial crisis.

In the futures markets, there are also limits to how much the index futures can move. Likewise in financial and commodity markets, prices are only allowed to move so much up or down in a given day. It's called limit up or limit down depending on the direction.

Remember too that the Fed (or other central banks) can and will intervene in the bond markets while the SEC will encourage market makers to support stocks during volatile days.

Central banks intervene regularly to support their currencies or to sell their currencies if it gets stronger than the central banks desire. The Swiss sold francs earlier this year to support the Euro as they felt it was getting too weak against the franc. Likewise, China devalued the yuan in August in an effort to boost their exports.

The reason for all these rules and limits is to buy time for cooler heads to prevail and allow markets to remain orderly. It also limits possible manipulation by those seeking to profit by stampeding the herd.

The other thing that caused problems in 2008 was a lack of liquidity in markets. One of the good things about all those excess reserves held by banks is liquidity shouldn't be a problem in the bond markets.

Volatility in and of itself isn't a problem for traders since there are always ways to make money on price movement. It's those people who choose not to hedge their bets who are at risk. I've made nearly $2000 in the last 2 weeks on a $6800 investment by taking advantage on volatility on a single position. And no, I'm not particularly good at playing the volatility. I've only been right ~77% of the time playing the volatility during this time.


----------



## pinksolja

off-topic: do you guys know of any articles, forums, news broadcast, sites or anything that would give a hint if the market will go up or down? well i know it impossible to predict the market especially nowadays but maybe.. just maybe.. there is..


----------



## hiwall

> if the market will go up or down?


You and everyone else wants to know the future of the markets.


----------



## Marcus

pinksolja said:


> off-topic: do you guys know of any articles, forums, news broadcast, sites or anything that would give a hint if the market will go up or down? well i know it impossible to predict the market especially nowadays but maybe.. just maybe.. there is..


http://www.cnbc.com/pre-markets/

This will tell you how the futures are doing and is a decent indicator of how the market will open. If you look at how the overseas markets are doing or did, that too is another indicator. These are 0-6 hours indicators.

For a longer term indicator, the Baltic Dry Index is a good projection for future shipping activity and thus future economic activity 6 months to a year out.

One can look at the futures markets to try and discern what will happen in the 6 hour to 6 month gap, but that's usually an exercise in futility since there will always be conflicting signals.

It's much better to just position yourself for either eventuality and take advantage of the one that happens. A person can use options to hedge risk on individual positions and easily halve the downside risk while still allowing for some appreciation.


----------



## bkt

pinksolja said:


> off-topic: do you guys know of any articles, forums, news broadcast, sites or anything that would give a hint if the market will go up or down? well i know it impossible to predict the market especially nowadays but maybe.. just maybe.. there is..


Zerohedge.com is pretty good, but nothing can accurately predict the markets all the time.


----------



## pinksolja

thank you for sharing that  im just looking for market insights, will check it out


----------



## VoorTrekker

CSX, BNSF, possibly Union Pacific will be shutting down operations because of a Congressional mandate which can't be met by the legislated deadline.

Their stock prices on common stock has been dropping and a prudent investor would wait a few and begin buying larger blocks of stock than the usual one or two shares. 

They pay dividends and yields so long term investing is a sound part of strategic financial planning. 

I don't think the world shut down will happen this or next year. International commerce is still moving and the U.S. domestic manufacturing and interstate commerce is only slowing, not stopping.


----------



## VoorTrekker

Should BNSF and U.P. shut down, JB Hunt, SWIFT, Schneider will have massive lay offs. Much of California has intermodal (containers arriving on rail and departing on rail, drivers move it 150-300 miles from the railhead) because many truck drivers refuse to go to big rig extortion California.


----------



## Dakine

VoorTrekker said:


> Should BNSF and U.P. shut down, JB Hunt, SWIFT, Schneider will have massive lay offs. Much of California has intermodal (containers arriving on rail and departing on rail, drivers move it 150-300 miles from the railhead) because many truck drivers refuse to go to big rig extortion California.


it wont be just commiefornia. I used to work for ATSF before it became the Big New Santa Fe; you can write off AZ, and for damn sure Chicago is done and everything they serve.

It's all about the pig docks. CA may be more vulnerable per capita, but every state is affected... those mile long trains you see of semi trailers... they are going to whatever Costco, Walmart, Kmart, Albertsons, Vons, Kroger, <insert important retail vendor here> that you rely on...

I've personally BUILT those trains, assigning the trailers to cars and signing off on the manifest. it's way more than CA... EVERY state!

Not me, I'm in South Dakota! okay... where do you think all the zombies are going when they have (steal) gas to get out of the population centers when those trains stop moving? just because you're not literally in the train hub, doesn't mean you wont be affected by it's disappearance.

just sayin...


----------



## Tweto

Union Pacific laid-off several hundred white collar workers at the head quarters in Omaha. The company never gave an acceptable explanation for the lay-offs.
That was several weeks ago and now there are radio commercials advertising for anyone that can drive a truck to apply at several different trucking companies.

I don't understand what's going on yet.


----------



## hiwall

The trucking industry says loads are way down. Nothing makes any sense anymore.


----------



## dlharris

We are OTR flatbed drivers....loads are way down. They keep advertising for drivers because the turn over rate is crazy in trucking.


----------



## VoorTrekker

Tweto- those lay offs may have been the result of an executive manager dropping paycheck (whores) from the payrolls because they produced nothing and had no viable service to the company; (manager of linoleum floors, etc.)

Truck companies advertise for new drivers because of the turnover and because they abuse drivers and bully drivers while f*ck*ing up the whole program and blaming the drivers. 

Loads are down for some, hardly a slow down for others.

Dakine, we understand that intermodal is a big egg in the transportation basket. Could you expound more on your perspective, this is getting interesting.


----------



## cantinawest

*It may begin this year...*

The economic correction may begin this year.

These are banks and institutions that are not known for "crying wolf"

http://blogs.wsj.com/moneybeat/2016/01/12/rbs-warns-sell-everything/?mod=e2fbRBS

*RBS economists have urged investors to sell everything except high-quality bonds, warning of a "fairly cataclysmic year ahead."

Writing in a client note dated Jan. 8, the bank's European rates research team said that clients should be concentrating on return of capital, not return on capital, and that an ominous outlook to the world economy "all looks similar to 2008."

The Key Points

The note is particularly bearish on China and global commodities, and predicts that oil could fall as low as $16 a barrel.
In a grim set of predictions, Andrew Roberts, head of European economics, rates & CEEMEA research said that the world has far too much debt to be able to grow well.
He also warned that advances in technology and automation are set to wipe out up to half of all jobs in the developed world.
The note says equities could fall 10% to 20%.
It predicts the year will be spent focusing on how to exit positions that have benefited from long-running QE, including emerging markets, credit and equities.

"The world is slowing, trade is slowing, credit is slowing, we are in a currency war, global disinflation is turning to global deflation as China finally realizes what it needs to do (devalue soon, and sharp) and the U.S. then, against ALL THIS countervailing pressure, then stokes the fire by hiking rates," Mr. Roberts wrote.

While the Fed's interest rate move last year suggests a positive outlook for the U.S., the ECB's quantitative easing is having a powerful effect, and eurozone activity picked up at the end of last year, there are undeniable headwinds, not least from China, oil and commodities.

Mr. Roberts has been bearish on the global macro outlook since late November, and has since then has written in client notes of the similarities between now and the run-up to the financial crisis.

Bears Out in Force

Although RBS's note is particularly gloomy, it's not the first bank to kick off the year with a series of bearish predictions on the world economy:

JP Morgan on Tuesday became the third bank to push back its forecast for the timing of a Bank of England rate rise, joining Goldman Sachs and Bank of America Merrill Lynch.
Morgan Stanley wrote in a note on Monday that oil prices could fall a further 10% to 25% if the dollar continues to strengthen.
Other major banks including Bank of America Merrill Lynch, Barclays, Deutsche Bank, Societe Generale and Macquarie have also cut their oil forecasts in the past week. Standard Chartered in fact said it could fall as low as $10 a barrel, but that's not its main price scenario.
Ratings agency Standard & Poor's has more companies on a negative outlook than at any time since the financial crisis.
A survey published by M&G and YouGov on Tuesday, based on data collected in the final quarter of 2015, shows that U.K. consumer inflation expectations are at their lowest level in three years.

This story first appeared on WSJ City: Fast, fact-packed updates on financial news impacting London. Made for mobile. Download http://apple.co/1PfV*


----------



## smaj100

Anyone seeing any reports about shipping grinding to a halt in the north atlantic? I've seen several reports showing the giant flotilla of oil tankers in the gulf anchored off shore, non of them being moved in to offload. With more recent reports from China about the market being frozen to try to stop its slide into the abyss. 

Is it me or are the dots that need to be connected beginning to appear a little brighter?


----------



## hiwall

I don't have a clue about what will happen this year. But to me things all look bad and I am sure happy I have all the supplies that I do.


----------



## Magus

cantinawest said:


> The economic correction may begin this year.
> 
> These are banks and institutions that are not known for "crying wolf"
> 
> http://blogs.wsj.com/moneybeat/2016/01/12/rbs-warns-sell-everything/?mod=e2fbRBS
> 
> *RBS economists have urged investors to sell everything except high-quality bonds, warning of a "fairly cataclysmic year ahead."
> 
> Writing in a client note dated Jan. 8, the bank's European rates research team said that clients should be concentrating on return of capital, not return on capital, and that an ominous outlook to the world economy "all looks similar to 2008."
> 
> The Key Points
> 
> The note is particularly bearish on China and global commodities, and predicts that oil could fall as low as $16 a barrel.
> In a grim set of predictions, Andrew Roberts, head of European economics, rates & CEEMEA research said that the world has far too much debt to be able to grow well.
> He also warned that advances in technology and automation are set to wipe out up to half of all jobs in the developed world.
> The note says equities could fall 10% to 20%.
> It predicts the year will be spent focusing on how to exit positions that have benefited from long-running QE, including emerging markets, credit and equities.
> 
> "The world is slowing, trade is slowing, credit is slowing, we are in a currency war, global disinflation is turning to global deflation as China finally realizes what it needs to do (devalue soon, and sharp) and the U.S. then, against ALL THIS countervailing pressure, then stokes the fire by hiking rates," Mr. Roberts wrote.
> 
> While the Fed's interest rate move last year suggests a positive outlook for the U.S., the ECB's quantitative easing is having a powerful effect, and eurozone activity picked up at the end of last year, there are undeniable headwinds, not least from China, oil and commodities.
> 
> Mr. Roberts has been bearish on the global macro outlook since late November, and has since then has written in client notes of the similarities between now and the run-up to the financial crisis.
> 
> Bears Out in Force
> 
> Although RBS's note is particularly gloomy, it's not the first bank to kick off the year with a series of bearish predictions on the world economy:
> 
> JP Morgan on Tuesday became the third bank to push back its forecast for the timing of a Bank of England rate rise, joining Goldman Sachs and Bank of America Merrill Lynch.
> Morgan Stanley wrote in a note on Monday that oil prices could fall a further 10% to 25% if the dollar continues to strengthen.
> Other major banks including Bank of America Merrill Lynch, Barclays, Deutsche Bank, Societe Generale and Macquarie have also cut their oil forecasts in the past week. Standard Chartered in fact said it could fall as low as $10 a barrel, but that's not its main price scenario.
> Ratings agency Standard & Poor's has more companies on a negative outlook than at any time since the financial crisis.
> A survey published by M&G and YouGov on Tuesday, based on data collected in the final quarter of 2015, shows that U.K. consumer inflation expectations are at their lowest level in three years.
> 
> This story first appeared on WSJ City: Fast, fact-packed updates on financial news impacting London. Made for mobile. Download http://apple.co/1PfV*


It "Began" in 1996 with NAFTA, the engine is all warmed up now and ready to burn rubber. [read that your 401K]. On a side note, it's RUMORED that currently there are NO shipping vessels headed to the U.S or Canada and haven't been for two weeks.Maybe a Canadian member or two can give us a ground eye view or simply answer: Is the Canadian $ crashing?"


----------



## Tirediron

Magus said:


> It "Began" in 1996 with NAFTA, the engine is all warmed up now and ready to burn rubber. [read that your 401K]. On a side note, it's RUMORED that currently there are NO shipping vessels headed to the U.S or Canada and haven't been for two weeks.Maybe a Canadian member or two can give us a ground eye view or simply answer: Is the Canadian $ crashing?"


Our Dollar is tied heavily to the price of oil. a lower dollar (to a point ) is good for our economy, We have a new Leftist (as left a you can go with out using the communist word) provincial Government in the economic engine of this country, and a pretty left of center Party running the Country, so no one is placing a lot of faith in our Dollar at the moment, Crashing I doubt it, like not in the hyper inflation stage unless the US dollar tanks, then who knows, but Canada could close the borders and we would probably thrive, except for bananas coffee etc, which while nice are not necessary


----------



## Marcus

smaj100 said:


> I've seen several reports showing the giant flotilla of oil tankers in the gulf anchored off shore, non of them being moved in to offload.


With land storage tanks nearly full, this actually makes a lot of economic sense for the owners of the oil and for the shipping companies too. The oil owners get relatively low cost storage while the shipping companies get *some* money to offset their costs. Since the ships aren't moving, the per diem costs to the shipping company go way down too.


----------



## Marcus

While I'm not usually a big fan of MSM, I've found that there is usually more truth in the business news. He makes several points I've made before plus a few I haven't.

http://www.cnbc.com/2016/01/15/a-recession-worse-than-2008-is-coming-commentary.html

"But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one - we are overdue."

"The problem is that China accounted for 34 percent of global growth, and the nation's multiplier effect on emerging markets takes that number to over 50 percent."

"The rebound in GDP coming out of the Great Recession was artificially engendered by the Fed's wealth effect. Now, the re-engineered bubble in stocks and real estate is reversing and should cause a severe contraction in consumer spending."

"Therefore, this inevitable, and by all accounts brutal upcoming recession, will coincide with two unprecedented and extremely dangerous conditions that should make the next downturn worse than 2008.

First, the Fed will not be able to lower interest rates and provide any debt-service relief for the economy. In the wake of the Great Recession, former Fed Chair Ben Bernanke took the overnight interbank lending rate down to zero percent from 5.25 percent and printed $3.7 trillion. The Fed bought longer-term debt in order to push mortgages and nearly every other form of debt to record lows.

The best the Fed can do now is to take away its 0.25 percent rate hike made in December.

Second, the federal government increased the amount of publicly-traded debt by $8.5 trillion (an increase of 170 percent), and ran $1.5 trillion deficits to try to boost consumption through transfer payments. Another such ramp up in deficits and debt, which are a normal function of recessions after revenue collapses, would cause an interest-rate spike that would turn this next recession into a devastating depression.

It is my belief that, in order to avoid the surging cost of debt-service payments on both the public and private-sector level, the Fed will feel compelled to launch a massive and unlimited round of bond purchases. However, not only are interest rates already at historic lows, but faith in the ability of central banks to provide sustainable GDP growth will have already been destroyed, given their failed eight-year experiment in QE.

Therefore, the ability of government to save the markets and the economy this time around will be extremely difficult, if not impossible. Look for chaos in currency, bond and equity markets on an international scale throughout 2016. Indeed, it already has begun."


----------



## bkt

I'd argue we never recovered from the previous recession. Artificially inflating the stock market, monetizing debt, and forcing interest rates low would not be necessary in a truly healthy economy.

Unemployment is extremely high in reality but the government uses a screwy method to count those unemployed to make the rate appear low. Again, this wouldn't be necessary if the rate really were as low as is claimed.

Inflation is up there, too. With oil being as cheap as it is - and it has been fairly low for some time - one would expect gas prices to plummet, but they haven't. Food is expensive, too. Of course, neither are included in government inflation rate calculations. The government uses hedonic quality adjustment to give us a fudged consumer price index. Wages have been largely flat for the better part of a decade. Yet again, none of these are signs of a happy, healthy economy.

There are plenty of other things one could point to and say "they wouldn't be doing that if everything were OK."

Is it beginning? Well, what is "it"? A catastrophic economic collapse that will land us all in a global Mad Max dystopia? Maybe. But the bad decisions were made a very long time ago and the economy has not been in good shape for some time. I think we're in the collapse now - it isn't quick and it won't be until central banks can't hold things together anymore. It sure seems like central banks all around the world are having all kinds of problems, so maybe there's something big right around the corner. Maybe they'll be able to fudge the numbers some more and keep things rolling for another few years. Time will tell.


----------



## Tirediron

Big Scary component in this ear is the industrial base has mostly been shipped to China. 
Transportation tends to run on ragged margins even in the best economies, so in a fragile economy they are all ready stretched. 

Very few countries can stand alone any more.


----------



## Asiza

How far can the dow drop without triggering things like bank closures? Sorry - this subject is not my strong point


----------



## hiwall

Asiza said:


> How far can the dow drop without triggering things like bank closures? Sorry - this subject is not my strong point


A very long ways.

A DOW at 12,000 would be a huge drop and yet I'm sure the banks would remain open.


----------



## Asiza

Thanks for answering -- So are we still a ways away from everything grinding to a halt? Trying to get my mind around this because I'm really not ready


----------



## Tweto

bkt said:


> .
> 
> Inflation is up there, too. With oil being as cheap as it is - and it has been fairly low for some time - one would expect gas prices to plummet, but they haven't. Food is expensive, too. Of course, neither are included in government inflation rate calculations. The government uses hedonic quality adjustment to give us a fudged consumer price index. Wages have been largely flat for the better part of a decade. Yet again, none of these are signs of a happy, healthy economy.
> 
> There are plenty of other things one could point to and say "they wouldn't be doing that if everything were OK."
> 
> I need to add my comment about inflation. Yes certain consumer items have gone up such as; food, but oil is way down, lead, copper, silver and gold are way down. Most durable items have just started to decrease in price. And now the stock market is heading down.
> 
> The New York fed used a weasel statement yesterday saying that we are entering a period of negative inflation (deflation) and that negative FOMC rates are on the table. If you pay special attention to Janet Yellon's speeches she is always saying that the purpose of printing all this money is to fuel inflation. Even in a few speeches she has said that her biggest fear is deflation. The "D" word is similar to the "N" word for them, they never want to say deflation, it's like yelling fire in a movie theater.
> 
> Our economy is swirling around the drain right now. The Baltic dry index is at all time lows. Walmart is closing stores, K-mart is closing stores.
> 
> The biggest clue of all was BO's SOTU speech and his continual reference to how great the economy is doing. Since BHO is the all time biggest liar then what ever he says should be considered the reverse of the truth.
> 
> The economy is heading down and with all that's going on in the world we now have a multiple opportunities for a Black Swann event that would add fuel to the collapse.


----------



## bkt

The COMEX dropped the ball terribly when they permitted printing paper metal that could be redeemed either in physical_ or cash_. For most folks, the idea behind metal is to have it as a hedge in case cash goes bye-bye. Anyway, pump-n-dump on paper metal has resulted in precious metals prices being pushed down artificially. The market doesn't say gold is only worth $1089/oz, the banks and COMEX do. There's the problem: no free market.

Oil is down, too, as you say. But have the costs of gas, diesel and kerosene gone down commensurately? Nope.


----------



## bkt

Asiza said:


> Thanks for answering -- So are we still a ways away from everything grinding to a halt? Trying to get my mind around this because I'm really not ready


No one can predict when something will happen, but it is certain that something will happen. History is our guide: in the past, when banks, corporations and governments have done the things banks, corporations and governments are doing today Bad Things[tm] have happened each and every time.

Do what makes sense for you, but I recommend paying off debt as a priority, keeping a store of consumables on hand that will cover you and yours for as long as you can manage, learn how to grow food, hunt, fish and can food, have a store of wealth in your possession (not paper!), maintain a means of transportation and have the tools and knowledge for personal defense.

Start small. Before long, you'll make serious progress. This place is a great resource for learning how to do things and the people here are happy to help. 

And don't worry about being "ready". I've been prepping for many years and I don't feel I'm "ready"; there's always more to do. But the more you do, the more you find you're covered, particularly for personal SHTF situations.


----------



## Tweto

bkt said:


> The COMEX dropped the ball terribly when they permitted printing paper metal that could be redeemed either in physical_ or cash_. For most folks, the idea behind metal is to have it as a hedge in case cash goes bye-bye. Anyway, pump-n-dump on paper metal has resulted in precious metals prices being pushed down artificially. The market doesn't say gold is only worth $1089/oz, the banks and COMEX do. There's the problem: no free market.
> 
> Oil is down, too, as you say. But have the costs of gas, diesel and kerosene gone down commensurately? Nope.


I can't talk about diesel or kerosene but gasoline is way down. I keep records of every gallon I purchase, just a few years ago I was paying $4.00 a gallon no I'm paying $2.02 and I just drove past that same gas station today it's now at $1.89.

BTW the traders on the COMEX have said that oil will be down to $15-$20 before it bottoms.


----------



## bkt

Tweto said:


> I can't talk about diesel or kerosene but gasoline is way down. I keep records of every gallon I purchase, just a few years ago I was paying $4.00 a gallon no I'm paying $2.02 and I just drove past that same gas station today it's now at $1.89.
> 
> BTW the traders on the COMEX have said that oil will be down to $15-$20 before it bottoms.


The price is still ~$2.50 where I am but much of that can probably be attributed to New York's desire to tax the bejeebus out of everything. Still, there was a time not too long ago when it was well below $2.00/gallon here and the price of oil was where it is now.

We'll see what happens. Hopefully, the cost of fuel will go down. That affects the price of just about everything that needs to be harvested or moved from one place to another.

On the issue of oil prices falling, many folks have said OPEC dropped the price deliberately to hit investors of oil/gas production in the US hard and to shut down operations here. The low per barrel cost has indeed hurt US producers in investors in those producers. Given many commodity prices are artificially low or inflated, it would come as no surprise to find oil being forced low by those who produce it.

But after they kill off the competition, will it stay cheap? I doubt it.


----------



## Marcus

bkt said:


> I'd argue we never recovered from the previous recession. Artificially inflating the stock market, monetizing debt, and forcing interest rates low would not be necessary in a truly healthy economy.


I agree that we've never truly recovered. I 'think' historians will treat everything since 2008 as all being part of the same economic event. I've always maintained that the exit strategy from QE was going to be a dangerous time.

I also agree that the numbers for unemployment and inflation are cooked to reflect a reality that greatly differs from the experiences of most Americans. I use a few grocery items as a very simple indicator that we're being lied to.
Can of pinto beans: used to be $0.49 now $0.69
Can of Rotel: used to be $0.49 now $0.98
2 Liter bottle of Coke: used to be $0.99 now $1.50

Wages are starting to creep back up, but they're only now getting back to 2007 levels. So there's 8 years of wage growth lost while inflation didn't stop. This lowers everyone's standard of living.



> Is it beginning? Well, what is "it"? A catastrophic economic collapse that will land us all in a global Mad Max dystopia? Maybe. But the bad decisions were made a very long time ago and the economy has not been in good shape for some time. I think we're in the collapse now - it isn't quick and it won't be until central banks can't hold things together anymore. It sure seems like central banks all around the world are having all kinds of problems, so maybe there's something big right around the corner. Maybe they'll be able to fudge the numbers some more and keep things rolling for another few years. Time will tell.


We may well be in slow motion collapse. The retirement of the Baby Boomers will no doubt accelerate the process as unfunded liabilities become a serious problem at the local, state, and national levels.


----------



## Marcus

One of the things to always remember is that a trader can make just as much money in a declining market as they can in an ascending market. One thing to *know* is the last 2 weeks aren't the end to a bear market. IIRC, a normal bear market lasts about 18 months from start to finish. How low could the S&P go? I wouldn't be surprised to see 1200-1300 _if it is a normal bear market._ If it becomes an abnormal bear market, I wouldn't be too surprised to see 700-800, or about a 60% decline.

The thing to remember about oil is supply greatly exceeds demand with Iran still to export their oil. Storage in the US is very close to capacity with no decline in production in sight. The main bottleneck is in refinery capacity.

I think that bkt is correct about paying off debt especially if we enter a deflationary period.

As far as what the Fed _can_ do, we could eventually see negative interest rates but that will open up a whole new can of worms for debt holders.


----------



## hiwall

There is also a real possibility of more QE along with negative interest rates. Who knows what will happen? The markets may even turn and go up (but I rather doubt it).
With economies failing the risk of war is high.
2016 will likely be an interesting year.


----------



## Asiza

This last page, reading all of your thoughts, actually makes more sense than all the stuff out on the 'net'. I'll think I'll just lurk here for a while until I become competent.

bkt, thank for what you've said. We don't have many debts - no credit based debts for sure. I am unemployable though so, income has gone _way_ down, but everything else is rising. Natural gas, electric, cable/phone/internet packages, and food have all had a steady increase and it hasn't slowed. My rent has increased by $250.00 just in the last 4 years, whereas before it was stable for eight years. The reason is, my landlady is getting raked over the coals by her home insurance provider.

Marcus has it right for sure; for people like me, that is. "_We may well be in slow motion collapse."_

Thanks guys - settling back now, to listen to you all talk it out.


----------



## hiwall

> Thanks guys - settling back now, to listen to you all talk it out.


Not really too much to talk about. We all just have to sit back and watch how this all plays out. Anything can happen. All any of us can do is try and make wise use of the money we have. Pay down debt, buy durable goods that will last, keep a good stock of food, and learn as much as we can about everything we can.


----------



## Marcus

I have to agree with hiwall about taking a wait and see attitude.

From *my* perspective, I see a much greater likelihood that the markets will drop in the near term rather than bouncing back.
The slowdown in China with its' effects on trade and commodity prices, the oil glut for the foreseeable future and its' effects on employment and the oil industry, and the actions of the Fed are all strong headwinds to a rising market.
*But this is just my perspective.* I trade in the market, but I'm not a market maker nor do I trade enough volume to affect prices.
I have gone to 70% cash in my brokerage accounts although I still do trade throughout the day when technical indicators alert me to higher probability trades. These positions usually close within an hour although I will sometimes hold overnight. For my longer term positions, I have insured that these positions are protected from declines.

What I suggest most folks do right now is exercise caution. 
If you own individual stocks or ETFs, buy some puts to protect your downside risk. These puts can be largely paid for by selling call options against the stock (covered calls.) For instance if a stock is $30, buy the $25 puts and sell the $35 calls with the same expiration month/week. This will cap your loss at $5 while also capping your profit at $5.
If you only own mutual funds (like in a 401K,) I would suggest moving most of your holdings to the money market choice until things settle down.
The whole idea is to protect your future against huge losses. Think of it as insurance.


----------



## Asiza

Marcus said:


> I have to agree with hiwall about taking a wait and see attitude.
> 
> From *my* perspective, I see a much greater likelihood that the markets will drop in the near term rather than bouncing back.
> The slowdown in China with its' effects on trade and commodity prices, the oil glut for the foreseeable future and its' effects on employment and the oil industry, and the actions of the Fed are all strong headwinds to a rising market.
> *But this is just my perspective.* I trade in the market, but I'm not a market maker nor do I trade enough volume to affect prices.
> I have gone to 70% cash in my brokerage accounts although I still do trade throughout the day when technical indicators alert me to higher probability trades. These positions usually close within an hour although I will sometimes hold overnight. For my longer term positions, I have insured that these positions are protected from declines.
> 
> What I suggest most folks do right now is exercise caution.
> If you own individual stocks or ETFs, buy some puts to protect your downside risk. These puts can be largely paid for by selling call options against the stock (covered calls.) For instance if a stock is $30, buy the $25 puts and sell the $35 calls with the same expiration month/week. This will cap your loss at $5 while also capping your profit at $5.
> If you only own mutual funds (like in a 401K,) I would suggest moving most of your holdings to the money market choice until things settle down.
> The whole idea is to protect your future against huge losses. Think of it as insurance.


lol, I can't even keep a savings account without tapping into it. The best I can do financially is throwing change in a bucket and cashing in cans.


----------



## Tweto

I'm 100% in cash and will stay out of the markets for the foreseeable future.

The chances that it will continue down is huge and the chances it you go back up is small. I savvy investor would be shorting right now, but that's not me.

I don't like it but this could be just the beginning of bad financial news for several years.


----------

