Global Banking Stocks Are Crashing Hard – Just Like They Did In 2008

Global stocks are falling precipitously once again, and banking stocks are leading the way.  If this reminds you of 2008, it should, because that is precisely what we witnessed back then.  Banking stocks collapsed as fear gripped the marketplace, and ultimately many large global banks had to be bailed out either directly or indirectly by their national governments as they failed one after another.  The health of the banking system is absolutely paramount, because the flow of money is our economic lifeblood.  When the flow of money tightens up during a credit crunch, the consequences can be rapid and dramatic just like we witnessed in 2008.

So let’s keep a very close eye on banking stocks.  Global systemically important bank stocks surged in the aftermath of Trump’s victory in 2016, but now they are absolutely plunging.  They are now down a whopping 27 percent from the peak, and that puts them solidly in bear market territory.

U.S. banking stocks are not officially in bear market territory yet, but they are getting close.  At this point, they are now down 17 percent from the peak…

Monday early afternoon, the US KBW Bank index, which tracks large US banks and serves as a benchmark for the banking sector, is down 2.5% at the moment. It has dropped 17% from its post-Financial Crisis high on January 29.

Of course European banking stocks are doing much worse.  Right now they are down 27 percent from the peak and 23 percent from a year ago.  The following comes from Wolf Richter

But unlike their American brethren, the European banks have remained stuck in the miserable Financial Crisis mire – a financial crisis that in Europe was followed by the Euro Debt Crisis. The Stoxx 600 bank index, which covers major European banks, including our hero Deutsche Bank, has plunged 27% since February 29, 2018, and is down 23% from a year ago

I wish that we didn’t have a global economic system that was so dependent on the “too big to fail” banks, but we do.

If they aren’t healthy, nobody is going to be healthy for long, and it is starting to look and feel a whole lot like 2008.

But unlike 2008, we also have a global trade war to contend with.  The CEO of one yacht company recently told USA Today that tariffs have had a “catastrophic” effect on his company…

Tariffs imposed on goods by the European Union, and the Chinese and American governments on boats, cribs, bourbon, and more have put Wisconsin businesses between a rock and a hard place. The tariffs imposed are already damaging a bloated bubble economy and the hardships are just beginning.

“It’s been catastrophic,” said Rob Parmentier, who is the president and CEO of Marquis-Larson Boat Group, which builds Carver yachts in Pulaski, Wisconsin. According to USA Today, the first “hand grenade,” as Parmentier described it, tossed during the trade wars at him specifically, was a 25 percent tariff the European Union placed this year on boats built in the United States, along with scores of other products including Harley-Davidson motorcycles.

I have previously warned my readers that the damage caused by this trade war would get progressively worse the longer that it lasts.

Many companies have been trying to ride it out, but eventually the money runs out and layoffs start happening

“We’ve had a lot of order cancellations. Canada and Europe have essentially stopped buying boats,” Parmentier said according to USA Today. “We’ve been absorbing some of the additional costs … hoping the tariffs will go away. But we can only do that for so long,” he said. The next step is layoffs.

Anyone that thought that this trade war would not have very serious consequences was just fooling themselves.  According to one source, tariffs paid by U.S. businesses are up 45 percent compared to a year ago…

“For the most recent months available, August 2018, the amount of tariffs paid increased by $1.4 billion — or 45% — as compared to tariffs paid in August 2017. Tariff costs in Michigan tripled to $178 million and more than doubled in multiple states — to $424 million in Texas, $193 million in Illinois, $50 million in Alabama, $29 million in Oklahoma, $23 million in Louisana, and $7.3 million in West Virginia.

These costs strain businesses of all sizes but are particularly painful for small business, manufacturers, and consumers who bear the burden of tariff increases in the form of higher prices,” via the data compiled by The Trade Partnership and released by Tariffs Hurt the Heartland.

And it doesn’t look like this trade war is going to end any time soon.  In fact, one key Chinese official recently made it very clear that China is not afraid of a long trade war…

On Monday in Beijing, Zhang Qingli, a leading member of a Chinese committee tasked with forging alliances with other nations, told a small group of U.S. business leaders, lobbyists and public relations executives that China refuses to be intimidated by an ongoing trade war with the Trump administration.

“China never wants a trade war with anybody, not to mention the U.S., who has been a long term strategic partner, but we also do not fear such a war,” Zhang said through a translator, according to a meeting attendee who declined to be named.

We are entering a time when the economy was likely to slow down anyway, but if stocks continue to crash and global banking woes escalate, that is going to spread fear and panic like wildfire.

And when there is fear and panic in the air, lending tends to really tighten up, and a major credit crunch is just about the last thing that we need right now.

It’s been a really bad October for global markets so far, and more trouble is brewing.  Hold on to your hats, because it looks like it is going to be a bumpy ride ahead.

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.

The Last Days Warrior Summit is the premier online event of 2018 for Christians, Conservatives and Patriots.  It is a premium-members only international event that will empower and equip you with the knowledge and tools that you need as global events begin to escalate dramatically.  The speaker list includes Michael Snyder, Mike Adams, Dave Daubenmire, Ray Gano, Dr. Daniel Daves, Gary Kah, Justus Knight, Doug Krieger, Lyn Leahz, Laura Maxwell and many more. Full summit access will begin on October 25th, and if you would like to register for this unprecedented event you can do so right here.

5 Signs That Global Financial Markets Are Entering A Bear Market, And 11 Ways That You Can Get Prepared For The Chaos That Is Coming…

We haven’t seen carnage like this in the global financial marketplace in quite some time.  On Wednesday, U.S. stocks were down some, but things were much, much worse around the rest of the world.  Global banking stocks are plunging, emerging market stocks are cratering, and emerging market currencies continue their stunning decline.  This represents a dramatic change from the relative stability that we have seen throughout most of 2018.  It is almost as if someone flipped a switch once the month of August began, and the shakiness of global financial markets has many investors wondering what trouble fall will bring.  What we are witnessing right now is not a full-blown panic yet, but it definitely has the potential to turn into one.

The term “bear market” is being thrown around a lot lately, but a lot of people don’t understand what a “bear market” actually is.

A bear market is generally considered to be when we see a decline of 20 percent or more from the 52-week high, and after the carnage of this past week a lot of those thresholds are now being crossed.

It would probably be too early to call this a “global stock market crash”, but we are well on the way to getting there.  The following are 5 signs that global financial markets are entering a bear market…

#1 Global stocks have now fallen beneath all key moving averages.  Those key moving averages are important psychological thresholds for investors, and if we have a few more days like Wednesday we could see global financial markets go into full panic mode.

#2 European banking stocks have now officially entered a bear market, and all major European stock indexes are now red for the year.

#3 Global banking stocks are down a whopping 23 percent from the peak established earlier this year, and that means that they have officially entered a bear market.

#4 Emerging market stocks have fallen 20 percent from the peak, and that means that they are also now in a bear market.

#5 When demand for industrial metals falls, that indicates that an economic slowdown is coming.  On Wednesday, prices for industrial metals fell to their lowest level in almost a year, and “Dr. Copper officially entered a bear market.

If the financial carnage continues (and that is a big “if”), this could be the beginning of another financial crisis like we experienced in 2008, and that would almost certainly mean a crippling global recession.

And of course once the next global recession begins, it is likely to be more painful than we have ever seen before in modern history, because the global debt bubble is far larger than it has ever been before.

We live at a time of great global instability, and there are so many ominous warnings about our future.  A lot of people reach out to me for advice on how to get prepared for what is coming, and I hope to share quite a few tips in future articles.

Today, I would like to share with you 11 tips that my good friend Ray Gano shared with his readers in his most recent article

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1 – Get Out of Debt: The old saying, “the borrower is the servant of the lender”, is so incredibly true.  The key to insulating yourself from an economic meltdown is to become as independent as possible, and as long as you are in debt, you simply are not independent.  You don’t want a horde of creditors chasing after you when things really start to get bad out there.

2 – Find New Sources of Income: With the birth of The IRA, there simply is no such thing as job security anymore.  If you are dependent on a job (“just over broke”) for 100% of your income, you are in a very bad position.  There are thousands of different ways to make extra money.  What you don’t want to do is to have all of your eggs in one basket.  One day when the economy melts down and you are out of a job are you going to be destitute or are you going to be okay?

IF you need some ideas on what you can do, contact me and I can help.

3 – Reduce Your Expenses: Many Americans have left the rat race and have found ways to live on half or even on a quarter of what they were making previously.  It is possible – if you are willing to reduce your expenses.  In the future times are going to be tougher, so learn to start living with less today.

4 – Learn To Grow Your Own / Supplement Your Food: Today the vast majority of Americans are completely dependent on being able to run down to the supermarket or to the local Wal-Mart to buy food.  But what happens when the U.S. dollar declines dramatically in value and it costs ten bucks to buy a loaf of bread?  If you learn to grow your own food (even if is just a small garden) you will be insulating yourself against rising food prices. Another thing is to learn to hunt and fish. There is “low cost” food out there for the taking, you just need to assert yourself. (Low Cost = you still need to pay for hunting and fishing licenses.)

5 – Make Sure You Have A Reliable Water Supply: Water shortages are popping up all over the globe.  Water is quickly becoming one of the “hottest” commodities out there.  Even in the United States, water shortages have been making headline news recently.  As we move into the future, it will be imperative for you and your family to have a reliable source of water.  Some Americans have learned to collect rainwater and many others are using advanced technology such as atmospheric water generators to provide water for their families.  But whatever you do, make sure that you are not caught without a decent source of water in the years ahead.

6 – Buy Land: This is a tough one, because prices are high depending on where you are looking. If you are able to buy land when prices are low, that is going to insulate you a great deal from the rising housing costs that will occur when the U.S dollar does totally go into the tank.

7 – Buy Precious Metals: this is a no brainer, but it still amazes me how many people are not doing this. Right now silver is sitting at $14.41. That is a very affordable price and a price that everyone can afford.  We must start “paying ourselves first” and start pulling in these sort of assets.

The best place that I recommend is Renaissance Precious Metals. It is who I purchase from.

8 – Get Partially Off The Grid: An increasing number of Americans are going “off the grid”.  Essentially what that means is that they are attempting to operate independently of the utility companies.  In particular, going “off the grid” will enable you to insulate yourself from the rapidly rising energy prices that we are going to see in the future.  If you are able to produce energy for your own home, you won’t be freaking out like your neighbors are when electricity prices triple someday.

9 – Store Non-Perishable Supplies: Non-perishable supplies are one investment that is sure to go up in value.  Not that you would resell them.  You store up non-perishable supplies because you are going to need them someday.  So why not stock up on the things that you are going to need now before they double or triple in price in the future?  Your money is not ever going to stretch any farther than it does right now.

EXAMPLE – Toilet Paper

10 – Develop Stronger Relationships: Americans have become very insular creatures.  We act like we don’t need anyone or anything.  But the truth is that as the we see a socio-economic melt down we are going to need each other.  It is those that are developing strong relationships with family and friends right now that will be able to depend on them when times get hard.

11 – Get Educated And Stay Flexible: When times are stable, it is not that important to be informed because things pretty much stay the same.  However, when things are rapidly changing it is imperative to get educated and to stay informed so that you will know what to do.  The times ahead are going to require us all to be very flexible, and it is those who are willing to adapt that will do the best when things get tough.

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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.

The Collapse Of Italy’s Banks Threatens To Plunge The European Financial System Into Chaos

Italy Flag Map - Public DomainThe Italian banking system is a “leaning tower” that truly could completely collapse at literally any moment.  And as Italy’s banks begin to go down like dominoes, it is going to set off financial panic all over Europe unlike anything we have ever seen before.  I wrote about the troubles in Italy back in January, but since that time the crisis has escalated.  At this point, Italian banking stocks have declined a whopping 28 percent since the beginning of 2016, and when you look at some of the biggest Italian banks the numbers become even more frightening.  On Monday, shares of Monte dei Paschi were down 4.7 percent, and they have now plummeted 56 percent since the start of the year.  Shares of Carige were down 8 percent, and they have now plunged a total of 58 percent since the start of the year.  This is what a financial crisis looks like, and just like we are seeing in South America, the problems in Italy appear to be significantly accelerating.

So what makes Italy so important?

Well, we all saw how difficult it was for the rest of Europe to come up with a plan to rescue Greece.  But Greece is relatively small – they only have the 44th largest economy in the world.

The Italian economy is far larger.  Italy has the 8th largest economy in the world, and their government debt to GDP ratio is currently sitting at about 132 percent.

There is no way that Europe has the resources or the ability to handle a full meltdown of the Italian financial system.  Unfortunately, that is precisely what is happening.  Italian banks are absolutely drowning in non-performing loans, and as Jeffrey Moore has noted, this potentially represents “the greatest threat to the world’s already burdened financial system”…

Shares of Italy’s largest financial institutions have plummeted in the opening months of 2016 as piles of bad debt on their balance sheets become too high to ignore.  Amid all of the risks facing EU members in 2016, the risk of contagion from Italy’s troubled banks poses the greatest threat to the world’s already burdened financial system.

At the core of the issue is the concerning level of Non-Performing Loans (NPL’s) on banks’ books, with estimates ranging from 17% to 21% of total lending.  This amounts to approximately €200 billion of NPL’s, or 12% of Italy’s GDP.  Moreover, in some cases, bad loans make up an alarming 30% of individual banks’ balance sheets.

Things have already gotten so bad that the European Central Bank is now monitoring liquidity levels at Monte dei Paschi and Carige on a daily basis.  The following comes from Reuters

The European Central Bank is checking liquidity levels at a number of Italian banks, including Banca Carige and Monte dei Paschi di Siena , on a daily basis, two sources close to the matter said on Monday.

Italian banking shares have fallen sharply since the start of the year amid market concerns about some 360 billion euros of bad loans on their books and weak capital levels.

The ECB has been putting pressure on several Italian banks to improve their capital position. The regulator can decide to monitor liquidity levels at any bank it supervises on a weekly or daily basis if it has any concern about deposits or funding.

 

A run on the big Italian banks has already begun.  Italians have already been quietly pulling billions of euros out of the banking system, and if these banks continue to crumble this “stealth run” could quickly become a stampede.

And of course panic in Italy would quickly spread to other financially troubled members of the eurozone such as Spain, Portugal, Greece and France.  Here is some additional analysis from Jeffrey Moore

A deteriorating financial crisis in Italy could risk repercussions across the EU exponentially greater than those spurred by Greece.  The ripple effects of market turmoil and the potential for dangerous precedents being set by EU authorities in panicked response to that turmoil, could ignite yet more latent financial vulnerabilities in fragile EU members such as Spain and Portugal.

Unfortunately, most Americans are completely blinded to what is going on in the rest of the world because stocks in the U.S. have had a really good run for the past couple of weeks.  Headlines are declaring that the risk of a new recession “has passed” and that the crisis “is over”.  Meanwhile, South America is plunging into a full-blown depression, the Italian banking system is melting down, global manufacturing numbers are the worst that we have seen since the last recession, and global trade is absolutely imploding.

Other than that, things are pretty good.

Seriously, it is absolutely critical that we don’t allow ourselves to be fooled by every little wave of momentum in the stock market.

It is a fact that sales and profits for U.S. corporations are declining.  This is a trend that began all the way back in mid-2014 and that has accelerated during the early stages of 2016.  The following comes from Wolf Richter

Total US business sales – not just sales by S&P 500 companies but also sales by small caps and all other businesses, even those that are not publicly traded – peaked in July 2014 at $1.365 trillion, according to the Census Bureau. By December 2015, total business sales were down 4.6% from that peak. A bad 18 months for sales! They’re back where they’d first been in January 2013!

Sales by S&P 500 companies dropped 3.8% in 2015, according to FactSet, the worst year since the Financial Crisis.

I know that a lot of people have been eagerly anticipating a complete and total global economic collapse for a long time, and many of them just want to “get it over with”.

Well, the truth is that nobody should want to see what is coming.  Personally, I rejoice for every extra day, week or month we are given.  Every extra day is another day to prepare, and every extra day is another day to enjoy the extremely comfortable standard of living that our debt-fueled prosperity has produced for us.

Most Americans have absolutely no idea how spoiled we really are.  Even just fifty years ago, life was so much harder in this country.  If we had to go back and live the way that Americans did 100 or 150 years ago, there are very few of us that would be able to successfully do that.

So enjoy the remaining days of debt-fueled prosperity while you still can, because great change is coming, and it is going to be extremely bitter for most of the population.

18 Signs That Global Financial Markets Smell Blood In The Water

Can you smell it?  There is blood in the water.  Global financial markets are in turmoil.  Banking stocks are getting slaughtered right now.  European bond yields are absolutely soaring.  Major corporations are announcing huge layoffs.  The entire global financial system appears to be racing toward another major crisis.  So could we potentially see a repeat of 2008?  Sadly, when the next big financial crisis happens it might be worse than 2008.  Back in the middle of 2008, the U.S. national debt was less than 10 trillion dollars.  Today it is over 14 trillion dollars. Back in 2008, none of the countries in the EU were on the verge of financial collapse.  Today, several of them are.  This time if the global financial system starts falling apart the big governments around the world are not going to be able to do nearly as much to support it.  That is why what is happening right now is so alarming.  As signs of weakness spread, the short sellers and the speculators are starting to circle.  They can smell the money.

Back in 2008, bank stocks led the decline.  Today, that appears to be happening again.  The “too big to fail” banks are getting absolutely pummeled right now.  Most people don’t have much sympathy for the banksters, but if we do see a repeat of 2008 they are going to be cutting off credit and begging for massive bailouts once again, and that would not be good news for the economy.

In Europe, the EU sovereign debt crisis just seems to get worse by the day.  Bond yields for the PIIGS are going haywire.  The higher the yields go, the worse the crisis is going to get.

Meanwhile, as I have written about previously, a bad mood has descended on world financial markets. Pessimism is everywhere and fear is spreading.  The short sellers and the speculators are eager to jump on any sign of weakness.  Investors all over the globe are extremely nervous right now.

So what happens next?

Well, nobody knows for sure.

But things certainly do not look good.

The following are 18 signs that global financial markets smell blood in the water….

#1 Banks stocks are absolutely getting hammered right now.  Bank of America hit a 52 week low on Monday.  Bank of America shares declined 4 percent to $9.61.

#2 So far this year, Bank of America stock is down about 27 percent.

#3 Bloomberg is reporting that Bank of America may be forced to increase its capital cushion by 50 billion dollars.

#4 Shares of Goldman Sachs and Morgan Stanley are near two year lows.

#5 Shares in Citigroup fell 2.5 percent on Monday.

#6 Moody’s recently warned that it may be forced to downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

#7 Barclays Capital, Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley are all either considering staff cuts or are already laying workers off.

#8 The deputy European director of the International Monetary Fund says that the Greek debt crisis is “on a knife’s edge“.

#9 Moody’s has slashed Ireland’s bond rating all the way to junk status.

#10 The yield on 2 year Portuguese bonds is now over 20 percent, the yield on 2 year Irish bonds is now over 23 percent and the yield on 2 year Greek bonds is now over 35 percent.

#11 Shares of Italy’s largest bank dropped by a whopping 6.4% on Monday.

#12 On Monday, the yield on 10 year Italian bonds was the highest it has been since the euro was adopted.

#13 On Monday, the yield on 10 year Spanish bonds was also the highest it has been since the euro was adopted.

#14 Shares of Germany’s largest bank fell by a staggering 7% on Monday and are down a total of 22% so far this month.

#15 Citigroup’s chief economist, William Buiter, says that without direct intervention by the ECB there is going to be a wave of sovereign defaults across Europe….

“Nothing stands in the way of multiple sovereign defaults except the ECB: they are the only game in town, there is nothing else”

#16 Cisco has announced plans to axe 16 percent of its workers.

#17 Borders Group has announced that it will be liquidating all remaining assets.  That means that 399 stores will be closed and 10,700 workers will lose their jobs.

#18 During times of great crisis, many investors seek safe havens for their money.  On Monday, the price of gold shot past $1600 an ounce.

These are not normal financial times.  The worldwide debt bubble is starting to burst and nobody is quite sure what is going to happen next.  Certainly we are going to continue to see financial authorities all over the world do their best to keep the system going.  But as we saw in 2008, things can spiral out of control very quickly.

Just remember, back at the beginning of 2008 very few people would have ever imagined that the biggest financial institutions in America would be begging for hundreds of billions of dollars in bailouts by the end of that year.

When confidence disappears, the game can change very quickly.  To the vast majority of economists it would have been unimaginable that the yield on 2 year Greek bonds would be over 35 percent in mid-2011.

But here we are.

The entire global financial system is a house of cards built on a foundation of sand.  It is more vulnerable today than it has been at any other time since World War II.  When a couple of major dominoes fall, it is likely to set off a massive chain reaction.

The global financial system of today was not designed with safety and security in mind.  It was designed for greedy people to be able to make as much money as possible as quickly as possible.  The banksters don’t care about the greater good of mankind.  What they care about is making huge piles of cash.

There is way too much risk, way too much debt and way too much leverage in the global financial marketplace.  You would have thought that 2008 should have been a major wake up call for financial authorities around the world, but very few significant changes have been made since that time.

The financial news is just going to keep getting worse.  This financial system is simply unsustainable.  It is fundamentally unsound.  The reality is that financial bubbles cannot keep expanding forever.  Eventually they must burst.

Over the next few weeks, keep a close eye on banking stocks and keep a close eye on European bond yields.

Hopefully things will stabilize.

Hopefully the next wave of the financial collapse is not about to hit us.

Hopefully the entire global financial system is not on the verge of a major implosion.

But you might want to get prepared just in case.

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