2017 Has Been The Best Year For The Stock Market EVER

We have never seen a better year for stocks in all of U.S. history.  Just five days after Donald Trump entered the White House, the Dow Jones Industrial Average hit the 20,000 mark for the first time ever.  On Monday, the Dow closed at 24,792.20, and there doesn’t seem to be any end to the rally in sight.  Overall, the Dow Jones Industrial Average is up more than 5,000 points so far in 2017, and that absolutely shatters all of the old records.  Previously, the most that the Dow had risen in a single year was 3,472 points in 2013.

Yes, I know that it may seem odd for a website that continually chronicles our ongoing “economic collapse” to be talking about a boom in stock market prices.  But of course there has not been a corresponding economic boom to match the rise in stock prices.  This artificial stock market bubble has been created by unprecedented central bank intervention, and every previous stock market bubble in our history has ended with a horrible crash.

But for the moment, it is certainly appropriate to be in awe of what has transpired in the financial markets in 2017.  Never before have we seen the Dow close at a record high 70 times in a single year, and we still have almost two weeks to go.

Stocks have risen every single month in 2017, and that is the very first time that has ever happened as well.  No matter how much bad news has come out, stock prices have just kept climbing and climbing and climbing.

Since Donald Trump’s surprise election victory last November, the Dow is up a whopping 34 percent.

34 percent!

Wall Street has never seen better times than this.  Overall, U.S. stockholders have seen more than 5 trillion dollars in paper gains since Trump was elected, and this has created a real estate boom in some of the wealthier areas of the nation.

Of course markets go down a lot faster than they go up, and that 5 trillion dollars in paper gains could be wiped out very rapidly in the event of a major disaster, but for the moment investors are absolutely thrilled with what has been happening.

Of course there are red flags all over the place, but not too many people are even paying attention at this point. Right now the S&P 500 is the most overbought that it has been since 1958, and earlier today a CNBC article declared that U.S. stocks are “very, very overbought”, but this will probably just encourage people to buy even more.

These days, if stocks are up that is a signal to buy, and if stocks are down that is a signal to buy.

Of course we witnessed similar euphoria just before the dotcom bubble burst and just before the financial crisis of 2008, but most Americans have extremely short memories.

For most of us, those crashes might as well be ancient history.

But just like in each of those cases, market euphoria tends to hit a peak before things completely fall apart.  Bill Stone, the chief investment strategist for PNC Asset Management Group, recently made this point very succinctly

“It is going to get to a point where it can’t get any better anymore,” he said. “In the market it’s always brightest before it gets dark.”

Others are being even more blunt.  For example, trends forecaster Gerald Celente is convinced that “equity markets around the world are going to crash” in 2018…

“Yes.  Everyone knows that the markets are overvalued.  The Schiller PE ratios rival those of the pre-1929 stock market crash and the Dot-Com bubble…The Black Swan Event: When war breaks out in the Middle East, the equity markets around the world are going to crash.  The Black Swan that is going to create ‘Market Shock’ is going to be an outbreak of war in the Middle East.  And when that happens, you are going to see gold and silver skyrocket.  That’s our forecast for one of the top 10 trends of 2018.”

Personally, I never believed that the stock market bubble could ever be inflated to such absurd proportions, and so I am just in awe at what is taking place on Wall Street.

Since the last financial crisis our national debt has doubled, corporate debt has doubled, U.S. consumers are now 13 trillion dollars in debt, our economic infrastructure continues to be gutted, more than 40 million Americans are living in poverty and our financial institutions are being more reckless than at any other point in our entire history.

But for the moment, it is working.  We have been on the greatest debt binge in world history since the end of the last recession, and most people seem to believe that the debt-fueled standard of living that we are currently enjoying is somehow going to be sustainable.

Nothing about our long-term economic outlook has fundamentally changed.  Just because the authorities were able to extend this bubble for a little while longer does not mean that we are going to get to escape the consequences of decades of incredibly foolish decisions.

We just keep on mortgaging the future, but the funny thing about the future is that eventually it shows up.

And when our day of reckoning finally does arrive, the pain that it is going to cause is going to be absolutely off the charts.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

The Dow Peaked At 14,000 Before The Last Stock Market Crash, And Now Dow 24,000 Is Here

The absurdity that we are witnessing in the financial markets is absolutely breathtaking.  Just recently, a good friend reminded me that the Dow peaked at just above 14,000 before the last stock market crash, and stock prices were definitely over-inflated at that time.  Subsequently the Dow crashed below 7,000 before rebounding, and now thanks to this week’s rally we on the threshold of Dow 24,000.  When you look at a chart of the Dow Jones Industrial Average, you would be tempted to think that we must be in the greatest economic boom in American history, but the truth is that our economy has only grown by an average of just 1.33 percent over the last 10 years.  Every crazy stock market bubble throughout our history has always ended badly, and this one will be no exception.

And even though the Dow showed a nice gain on Wednesday, the Nasdaq got absolutely hammered.  In fact, almost every major tech stock was down big.  The following comes from CNN

Meanwhile, big tech stocks — which have propelled the market higher all year — were tanking. The Nasdaq fell more than 1%, led by big drops in Google (GOOGL, Tech30) owner Alphabet, Amazon (AMZN, Tech30), Apple (AAPL, Tech30), Facebook (FB, Tech30) and Netflix (NFLX, Tech30).

Momentum darlings Nvidia (NVDA, Tech30) and PayPal (PYPL, Tech30) and red hot gaming stocks Electronic Arts (EA, Tech30) and Activision Blizzard (ATVI, Tech30) plunged too. They have been some of the market’s top stocks throughout most of 2017.

Many believe that the markets are about to turn down in a major way.  What goes up must eventually come down, and at this point even Goldman Sachs is warning that a bear market is coming

“It has seldom been the case that equities, bonds and credit have been similarly expensive at the same time, only in the Roaring ’20s and the Golden ’50s,” Goldman Sachs International strategists including Christian Mueller-Glissman wrote in a note this week. “All good things must come to an end” and “there will be a bear market, eventually” they said.

As central banks cut back their quantitative easing, pushing up the premiums investors demand to hold longer-dated bonds, returns are “likely to be lower across assets” over the medium term, the analysts said. A second, less likely, scenario would involve “fast pain.” Stock and bond valuations would both get hit, with the mix depending on whether the trigger involved a negative growth shock, or a growth shock alongside an inflation pick-up.

Nobody believes that this crazy stock market party can go on forever.

These days, the real debate seems to be between those that are convinced that the markets will crash violently and those that believe that a “soft landing” can be achieved.

I would definitely be in favor of a “soft landing”, but those that have followed my work for an extended period of time know that I do not think that this will happen.  And with each passing day, more prominent voices in the financial world are coming to the same conclusion.  Here is one recent example

Vanguard’s chief economist Joe Davis said investors need to be prepared for a significant downturn in the stock market, which is now at a 70 percent chance of crashing.  That chance is significantly higher than it has been over the past 60 years.

The economist added, It’s unreasonable to expect rates of returns, which exceeded our own bullish forecast from 2010, to continue.”

A stock market crash has followed every major stock bubble in our history, and right at this moment we are in the terminal phase of one of the greatest stock market bubbles ever.  There are so many indicators that are screaming that we are in danger, and one of the favorite ones that I like to point to is margin debt.  The following commentary and chart were recently published by Wolf Richter

This chart shows margin debt (red line, left scale) and the S&P 500 (blue line, right scale), both adjusted for inflation to tune out the effects of the dwindling value of the dollar over the decades (chart by Advisor Perspectives):

Stock market leverage is the big accelerator on the way up. Leverage supplies liquidity that has been freshly created by the lender. This isn’t money moving from one asset to another. This is money that is being created to be plowed into stocks. And when stocks sink, leverage becomes the big accelerator on the way down.

Markets tend to go down much faster than they go up, and I have a feeling that when this market crashes it is going to happen very, very rapidly.

The only reason stock prices ever got this high in the first place was due to unprecedented intervention by global central banks.  They created trillions of dollars out of thin air and plowed those funds directly into the financial markets, and of course that was going to inflate asset prices.

But now global central banks are putting on the brakes simultaneously, and this has got to be one of the greatest sell signals that we have ever witnessed in modern financial history.

Even Federal Reserve Chair Janet Yellen says that she is concerned about causing “a boom-bust condition in the economy”, and yet she insists that the Fed is going to continue to gradually raise rates anyway

Federal Reserve Chair Janet Yellen said the central bank is concerned with growth get out of hand and thus is committed to continuing to raise rates in a gradual manner.

“We don’t want to cause a boom-bust condition in the economy,” Yellen told Congress in her semiannual testimony Wednesday.

While Yellen did not specifically commit to a December rate hike, her comments indicated that her views have not changed with her desire for the central bank to continue normalizing policy after years of historically high accommodation.

I never thought that this stock market bubble would get this large.  We are way, way overdue for a financial correction, but right now we are in a party that never seems to end.

But end it will, and when that happens the pain that will be experienced on Wall Street will be unlike anything that we have ever seen before.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Is It Just A Coincidence That The Dow Has Hit 20,000 At The Same Time The National Debt Is Reaching $20 Trillion?

Dow Fueled By DebtThe Dow Jones Industrial Average provides us with some pretty strong evidence that our “stock market boom” has been fueled by debt.  On Wednesday, the Dow crossed the 20,000 mark for the first time ever, and this comes at a time when the U.S. national debt is right on the verge of hitting 20 trillion dollars.  Is this just a coincidence?  As you will see, there has been a very close correlation between the national debt and the Dow Jones Industrial Average for a very long time.

For example, when Ronald Reagan took office in 1991, the U.S. national debt had just hit 994 billion dollars and the Dow was sitting at 951.  And as you can see from this chart by Matterhorn.gold via David Stockman, roughly that same ratio has held true throughout subsequent presidential administrations…

Dow Fueled By Debt

During the Clinton years the Dow raced out ahead of the national debt, but an “adjustment” during the Bush years brought things back into line.

The cold hard truth is that we have been living way above our means for decades.  Our “prosperity” has been fueled by the greatest debt binge in the history of the world, and we are greatly fooling ourselves if we think otherwise.

We would never have gotten to 20,000 on the Dow if Barack Obama and Congress had not gotten us into an extra 9.3 trillion dollars of debt over the past eight years.

Unfortunately, most people do not understand this, and the mainstream media is treating “Dow 20,000” as if it is some sort of great historical achievement

The average began tracking the most powerful corporate stocks in 1896, and has served as a broad measure of the market’s health through 22 presidents, 22 recessions, a Great Depression, at least two crashes and innumerable rallies, corrections, bull and bear markets. The blue chip reading finally cracked the 20,000 benchmark for the first time early Wednesday.

During the current bull market, the second longest in history, the Dow has more than tripled since March 2009.

Since Donald Trump’s surprise election victory, the Dow has now climbed by approximately 2150 points.

And it took just 64 calendar days for the Dow to go from 19,000 to 20,000.  That is an astounding pace, and financial markets around the rest of the planet are doing very well right now too.  In fact, global stocks rose to a 19 month high on Wednesday.

So where do we go from here?

Well, if Donald Trump wants to see Dow 30,000 during his presidency, then history tells us that he needs to take us to 30 trillion dollars in debt.

Of course that would be absolute insanity even if it was somehow possible.  Each additional dollar of debt destroys the future of our country just a little bit more, and at some point this colossal bubble is going to burst.

But you can’t tell most of the “financial experts” these things.  Most of them simply believe that the “market always goes higher over time”

The “market always goes higher over time,” Todd Morgan, chairman of Bel Air Investment Advisors. “The lesson here is that through wars, recessions, elections, impeachments, financial crises, and on and on, investing for the long term in high-quality stocks is the key to building wealth. … We are telling our clients that you can’t time the market. Think long term. Stay the course. We expect the market to see Dow 30,000 in my lifetime, and for my grandchildren to see Dow 50,000 in their lifetime.”

My hope is that the market will continue to go up.  But nobody can deny that valuations are already at absurdly high levels, and the only way that this party can keep going is to continue to fuel it with more and more debt.

But for the moment, there is a tremendous amount of optimism out there, and most experts expect the Dow to continue to set new highs.  In fact, CNBC says that whenever the Dow crosses a new threshold like this it usually means good things for investors…

CNBC looked at market data from the past 30 years and zeroed in on the times when the Dow has crossed levels like 2,000, 3,000, 4,000 … all the way up to the 19,000 level it hit in November. At those times, investors can typically expect traders to push it up even higher, according to data from Kensho. Not only does the Dow go up, but it outperforms the S&P 500 index along the way.

But as USA Today has explained, not all Americans are benefiting from this stock market rally…

The breakthrough came just four trading days into Trump’s presidency, a whirlwind in which the billionaire has reaffirmed his commitment to strengthen the U.S. economy and create more jobs and higher wages for workers. Still, nearly half of Americans have not benefited from the so-called “Trump Rally,” which has generated more than $2.2 trillion in paper gains for the Wilshire 5000 Total Stock Index since Election Day. The reason: only 52% of Americans polled by Gallup last April said they “have money invested in stocks” — the lowest stock ownership rate in the 19 years Gallup has tracked the data and down sharply from 65% in 2007 before the financial crisis.

Hopefully the good times will continue to roll for as long as possible.

But there is no possible way that they can keep going indefinitely.

For decades, our debt has been growing much faster than our GDP has.  By definition, this is an unsustainable situation.  At some point we will have accumulated so much debt that our financial system will no longer be able to hold up under the strain.

Many were convinced that we would reach that point before the U.S. national debt hit 20 trillion dollars, and yet here we are.

So how much higher can we go before the bubble bursts?

That is a very good question, and I don’t know if anyone has the right answer.

But for President Trump, this is going to present him with quite a dilemma.

Either he can keep the debt party going for as long as possible, or he can try to get us to take some tough financial medicine right now.

If an attempt is made to deal with our debt problems now, we will experience severe economic pain almost immediately.

But if the can keeps being kicked down the road, our long-term prognosis is just going to keep getting worse and worse.

And if we try to delay the inevitable indefinitely, at some point the laws of economics are going to make our hard choices for us.

So let us celebrate “Dow 20,000”, but let us also understand that it is far more likely that we will see “Dow 10,000” again before we ever see “Dow 30,000”.

2015 Was The Worst Year For The Stock Market Since 2008

New Year's Eve - Public DomainIt’s official – 2015 was a horrible year for stocks.  On the last day of the year, the Dow Jones Industrial Average was down another 178 points, and overall it was the worst year for the Dow since 2008.  But of course the Dow was far from alone.  The S&P 500, the Russell 2000 and Dow Transports also all had their worst years since 2008.  Isn’t it funny how these things seem to happen every seven years?  But compared to other investments, stocks had a relatively “good” year.  In 2015, junk bonds, oil and industrial commodities all crashed hard – just like they all did just prior to the great stock market crash of 2008.  According to CNN, almost 70 percent of all investors lost money in 2015, and things are unfolding in textbook fashion for much more financial chaos in 2016.

Globally, over the past 12 months we have seen financial shaking unlike anything that we have experienced since the last great financial crisis.  During the month of August markets all over the world started to go haywire, and at one point approximately 11 trillion dollars of financial wealth had been wiped out globally according to author Jonathan Cahn.

Since that time, U.S. stocks rebounded quite a bit, but they still ended red for the year.  Other global markets were not nearly as fortunate.  Some major indexes finished 2015 down 20 percent or more, and European stocks just had their second worst December ever.

I honestly don’t understand the “nothing is happening” crowd.  The numbers clearly tell us that a global financial crisis began in 2015, and it threatens to accelerate greatly as we head into 2016.

Actually, there are a whole lot of people out there that would be truly thankful if “nothing” had happened over the past 12 months.  For example, there are five very unfortunate corporate CEOs that collectively lost 20 billion dollars in 2015…

Five CEOs of companies in the Russell 1000 index, including Nicholas Woodman of camera maker GoPro (GPRO), Sheldon Adelson of casino operator Las Vegas Sands (LVS) and even the famed investor Warren Buffett of Berkshire Hathaway (BRKA), lost more money on their companies’ shares than any other CEOs this year, according to a USA TODAY analysis of data from S&P Capital IQ.

These five CEOs were handed a whopping collective $20 billion loss on their company stock in 2015. Each and every one of these CEOs lost $1 billion or more – based on the average number of shares they’ve owned this year.

The biggest loser of the group was Warren Buffett.

He lost an astounding 7.8 billion dollars in 2015.

Do you think that he believes that “nothing happened” this past year?

And if “nothing happened”, then why are hedge funds “dropping like flies” right now?  The following comes from Zero Hedge

Two days, ago we noted that hedge funds are now dropping like flies in a year in which generating alpha has become virtually impossible for the majority of the vastly overpaid 2 and 20 “smart money” out there (and where levered beta is no longer the “sure thing” it used to be when the Fed was pumping trillions into stocks) when we reported that Seneca Capital, the $500 million multi-strat hedge fund belonging to Doug Hirsh (of Sohn Investment Conference fame), is shutting down.

And just within the last 24 hours, another very prominent hedge fund has collapsed.  SAB Capital, which once managed more than a billion dollars, is shutting down after huge losses this year.  Here is more from Zero Hedge

It turns out that despite our intention, the question was not rhetorical because just a few hours later Bloomberg answered when it reported that the latest hedge fund shutdown casualty was another iconic, long-term investor: Scott Bommer’s SAB Capital, which as of a year ago managed $1.1 billion, and which after 17 years of managing money and after dropping roughly 11% in the first eight month of 2015, has decided to return all outside client money, and converting the hedge fund into a family office (after all one has to preserve one’s offshore tax benefits).

Overall, 674 hedge funds shut down during the first nine months of this year, and the final number for 2015 will actually be far higher because the rate of closings has accelerated as we have approached the end of this calendar year.  When the final numbers come in, I would not be surprised to hear that 1,000 hedge funds had closed up shop in 2015.

Meanwhile, underlying economic conditions continue to deteriorate.

Corporate profits are steadily falling, the bond distress ratio just hit the highest level that we have seen since September 2009, and corporate debt defaults have risen to the highest level that we have seen since the last recession.

And this week we got a couple of new numbers that indicate that the U.S. economy is slowing down much faster than anticipated.

The first big surprise was the Dallas Fed’s general business activity index

The Dallas Fed’s general business activity index plunged to -20.1 in December from -4.9 in November. This was much worse than the -7.0 expected by economists.

Any reading below 0 signals contraction, and this index has been below 0 all year.

The next big surprise was the Chicago purchasing manager index

The Chicago purchasing manager index unexpectedly plunged to 42.9 in December, its lowest reading since July 2009.

Any reading below 50 signals a contraction in business activity.

This was down from 48.7 in November and much worse than the 50.0 expected by economists.

When the final numbers for the fourth quarter are in a few months from now, I believe that they will show that the U.S. economy officially entered recession territory at this time.

And the truth is that deep recessions have already started for some of the other biggest economies on the planet.  For example, I recently wrote about the deep troubles that Canada is now experiencing, and things have already gotten so bad in Brazil that Goldman Sachs is referring to that crisis as “an outright depression“.

Many people seem to assume that since I have a website called “The Economic Collapse Blog” that I must want everything to fall apart.  But that is not true at all.  I love my country, I enjoy my life, and I would be perfectly content to spend 2016 peacefully passing the time here in the mountains with my wonderful wife.  The longer things can stay somewhat “normal”, the better it is for all of us.

Unfortunately, for decades we have been making incredibly foolish decisions as a society, and the consequences of those decisions are now catching up with us in a major way.

Jonathan Cahn likes to say that “a great shaking is coming”, and I very much agree with him.

In fact, I think that it is going to be here a lot sooner than most people think.

So buckle up, because I believe that 2016 is going to be quite a wild ride.

The Stock Markets Of The 10 Largest Global Economies Are All Crashing

Globe InterconnectednessYou would think that the simultaneous crashing of all of the largest stock markets around the world would be very big news.  But so far the mainstream media in the United States is treating it like it isn’t really a big deal.  Over the last sixty days, we have witnessed the most significant global stock market decline since the fall of 2008, and yet most people still seem to think that this is just a temporary “bump in the road” and that the bull market will soon resume.  Hopefully they are right.  When the Dow Jones Industrial Average plummeted 777 points on September 29th, 2008 everyone freaked out and rightly so.  But a stock market crash doesn’t have to be limited to a single day.  Since the peak of the market earlier this year, the Dow is down almost three times as much as that 777 point crash back in 2008.  Over the last sixty days, we have seen the 8th largest single day stock market crash in U.S. history on a point basis and the 10th largest single day stock market crash in U.S. history on a point basis.  You would think that this would be enough to wake people up, but most Americans still don’t seem very alarmed.  And of course what has happened to U.S. stocks so far is quite mild compared to what has been going on in the rest of the world.

Right now, stock market wealth is being wiped out all over the planet, and none of the largest global economies have been exempt from this.  The following is a summary of what we have seen in recent days…

#1 The United States – The Dow Jones Industrial Average is down more than 2000 points since the peak of the market.  Last month we saw stocks decline by more than 500 points on consecutive trading days for the first time ever, and there has not been this much turmoil in U.S. markets since the fall of 2008.

#2 China – The Shanghai Composite Index has plummeted nearly 40 percent since hitting a peak earlier this year.  The Chinese economy is steadily slowing down, and we just learned that China’s manufacturing index has hit a 78 month low.

#3 Japan – The Nikkei has experienced extremely violent moves recently, and it is now down more than 3000 points from the peak that was hit earlier in 2015.  The Japanese economy and the Japanese financial system are both basket cases at this point, and it isn’t going to take much to push Japan into a full-blown financial collapse.

#4 Germany – Almost one-fourth of the value of German stocks has already been wiped out, and this crash threatens to get much worse.  The Volkswagen emissions scandal is making headlines all over the globe, and don’t forget to watch for massive trouble at Germany’s biggest bank.

#5 The United Kingdom – British stocks are down about 16 percent from the peak of the market, and the UK economy is definitely on shaky ground.

#6 France – French stocks have declined nearly 18 percent, and it has become exceedingly apparent that France is on the exact same path that Greece has already gone down.

#7 Brazil – Brazil is the epicenter of the South American financial crisis of 2015.  Stocks in Brazil have plunged more than 12,000 points since the peak, and the nation has already officially entered a new recession.

#8 Italy – Watch Italy.  Italian stocks are already down 15 percent, and look for the Italian economy to make very big headlines in the months ahead.

#9 India – Stocks in India have now dropped close to 4000 points, and analysts are deeply concerned about this major exporting nation as global trade continues to contract.

#10 Russia – Even though the price of oil has crashed, Russia is actually doing better than almost everyone else on this list.  Russian stocks have fallen by about 10 percent so far, and if the price of oil stays this low the Russian financial system will continue to suffer.

What we are witnessing now is the continuation of a cycle of financial downturns that has happened every seven years.  The following is a summary of how this cycle has played out over the past 50 years

  • It started in 1966 with a 20 percent stock market crash.
  • Seven years later, the market lost another 45 percent (1973-74).
  • Seven years later was the beginning of the “hard recession” (1980).
  • Seven years later was the Black Monday crash of 1987.
  • Seven years later was the bond market crash of 1994.
  • Seven years later was 9/11 and the 2001 tech bubble collapse.
  • Seven years later was the 2008 global financial collapse.
  • 2015: What’s next?

A lot of people were expecting something “big” to happen on September 14th and were disappointed when nothing happened.

But the truth is that it has never been about looking at any one particular day.  Over the past sixty days we have seen absolutely extraordinary things happen all over the planet, and yet some people are not even paying attention because they did not meet their preconceived notions of how events should play out.

And this is just the beginning.  We haven’t even gotten to the great derivatives crisis that is coming yet.  All of these things are going to take time to fully unfold.

A lot of people that write about “economic collapse” talk about it like it will be some type of “event” that will happen on a day or a week and then we will recover.

Well, that is not what it is going to be like.

You need to be ready to endure a very, very long crisis.  The suffering that is coming to this nation is beyond what most of us could even imagine.

Even now we are seeing early signs of it.  For instance, the mayor of Los Angeles says that the growth of homelessness in his city has gotten so bad that it is now “an emergency”

On Tuesday, Los Angeles officials announced the city’s homelessness problem has become an emergency, and proposed allotting $100 million to help shelter the city’s massive and growing indigent population.

LA Mayor Eric Garcetti also issued a directive on Monday evening for the city to free up $13 million to help house the estimated 26,000 people who are living on the city’s streets.

According to the Los Angeles Homeless Services Authority, the number of encampments and people living in vehicles has increased by 85% over the last two years alone.

And in recent years we have seen poverty absolutely explode all over the nation.  The “bread lines” of the Great Depression have been replaced with EBT cards, and there is a possibility that a government shutdown in October could “suspend or delay food stamp payments”

A government shutdown Oct. 1 could immediately suspend or delay food stamp payments to some of the 46 million Americans who receive the food aid.

The Agriculture Department said Tuesday that it will stop providing benefits at the beginning of October if Congress does not pass legislation to keep government agencies open.

“If Congress does not act to avert a lapse in appropriations, then USDA will not have the funding necessary for SNAP benefits in October and will be forced to stop providing benefits within the first several days of October,” said Catherine Cochran, a spokeswoman for USDA. “Once that occurs, families won’t be able to use these benefits at grocery stores to buy the food their families need.”

In the U.S. alone, there are tens of millions of people that could not survive without the help of the federal government, and more people are falling out of the middle class every single day.

Our economy is already falling apart all around us, and now another great financial crisis has begun.

When will the “nothing is happening” crowd finally wake up?

Hopefully it will be before they are sitting out on the street begging for spare change to feed their family.

Stock Market Crash 2015: The Dow Has Already Plummeted 2200 Points From The Peak

Crack The Sky - Public DomainThose that watched their stocks steadily increase in value for years are now seeing all of that “wealth” disappear at a staggering pace.  The only way you actually make money in the stock market is if you get out in time, and many Americans are discovering that all or most of their gains have already been wiped out.  At this point, the Dow Jones Industrial Average has dipped below where it was at the end of the 2013 calendar year.  That means that nearly two years of gains have already been obliterated.  On Friday, the Dow was down another 272 points, and it is now down more than 2200 points from the peak of the market back in May.  For months, I have been detailing how things were setting up for this kind of financial crash in textbook fashion, and now events are playing out just as I warned.  But this is just the beginning – what is coming next is going to shock the world.

We have already seen the 8th largest and 10th largest single day stock market crashes in all of U.S. history happen within the past few weeks.  In fact, it was actually the very first time that we have ever seen the Dow fall by more than 500 points on consecutive trading days.

On August 25th, I warned that there would be some huge rebound days where we would see lots of “panic buying”, and on August 26th we witnessed the 3rd largest single day stock market increase in all of U.S. history.

Headlines all over America trumpeted the “fact” that the stock market had “recovered”, but the mainstream media failed to mention that the only two better days for the stock market were right in the middle of the stock market crash of 2008.

In this article, I explained that this is exactly the type of market behavior that we expect to see during a full-blown market meltdown.  There are going to be even more violent swings in the market in the weeks ahead, but the general direction will be down.

Friday was definitely another down day.  The following is how Zero Hedge summarized the carnage…

  • Dow Industrials lowest weekly close since April 2014
  • Dow Transports lowest weekly close since May 2014
  • S&P 500 lowest weekly close since Oct 2014’s Bullard lows
  • Nikkei dumped over 7% this week – worst week since April 2014
  • Utilities collapsed 5.1% this week – worst week since March 2009
  • Financials lowest weekly close since Oct 2014’s Bullard lows
  • Biotechs lowest weekly close since Feb 2015
  • Investment Grade Corporate Bond Spreads worst since June 2013
  • Treasury Curve (2s30s) flattened 6bps today – biggest drop in 2 weeks.
  • JPY strengthened 2.4% on week against the USD – strongest week since August 2013 (up 4.5% in 3 weeks) – major carry unwind!

I wish I could tell you that things are going to get better, but I can’t do that.  There are some giant financial bubbles that are starting to unwind, and this process is going to take time to fully unfold.

And this is truly a global phenomenon.  Chinese stocks have been crashing horribly, Japanese stocks just had their worst week in over a year, Canada and much of South America are plunging into recession, and Europe is probably in worse shape than everyone else if you look at the fundamentals.

Even though U.S. stocks have already fallen substantially, the truth is that they easily have much farther to fall.  Yale economics professor Robert Shiller believes that we could actually soon see the Dow plunge all the way to 11,000

In what amounts to an ominous message for Wall Street, Robert Shiller, a Yale economics professor and author of Irrational Exuberance, doled out some serious bear talk this morning.

Shiller told CNBC Thursday morning that “this is a dangerous time” for the stock market.

Shiller, who has a reputation for calling market tops, warned that the Dow Jones industrial average, which closed Wednesday at 16,351, could fall as low as 11,000, a potential drop of more than 30% from current levels.

At the moment, the Dow is sitting just above 16,000, which is an exceedingly important psychological level.

If the Dow breaks below 16,000 and stays there for a few days, it is quite likely that full-blown panic will set in.

And once we see the Dow dip below 15,000, people will be going insane.

Another key indicator to watch is the VIX (the CBOE Volatility Index).  If you are not familiar with the VIX, here is  a pretty good definition from Investopedia

The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge.”

Right now it is sitting at 27.80.  If the VIX rises above 40 and stays there, that will be a major red flag.

We have entered “the danger zone“, and events are going to start moving very rapidly now.  If you have been listening to the warnings, you are going to understand why things are happening and you are going to know what to do.

Unfortunately, most people are going to have that “deer in the headlights” look because they will not understand what is happening and they will be frozen by fear.

Stay tuned to this website and to End Of The American Dream because things are about to get very weird and I will do my best to explain them as the coming weeks and months play out.

So what do you think the rest of September will bring?

Please feel free to join the discussion by posting a comment below…

CNN Tells Americans That The Stock Market Is Not Going To Crash

CNN Newsroom - Photo by Doug WaldronOn Wednesday we witnessed the third largest single day point gain for the Dow Jones Industrial Average ever.  That sounds like great news until you realize that the two largest were in October 2008 – right in the middle of the last financial crisis.  This is a perfect example of what I wrote about yesterday.  Every time the market crashes, there are huge up days, huge down days and giant waves of market momentum.  Even though the Dow was up 619 points on Wednesday, overall we are still down more than 2,000 points from the peak of the market.  During the weeks and months to come, we are going to see many more wild market swings, but the overall direction of the market will be down.

Sadly, the mainstream media is still peddling the lie that everything is going to be just fine.  So millions upon and millions of Americans are just going to sit there while their investments get wiped out.  In the six trading days leading up to Wednesday, Americans lost a staggering 2.1 trillion dollars as stocks plunged, and the truth is that this nightmare is only just beginning.

Early on Wednesday morning, CNN published an article entitled “Why U.S. stocks aren’t headed for a crash“.  I had to laugh when I saw that headline.  If CNN is going to make this kind of a claim, they better have something very solid to base it on.  But instead, these are the five reasons we were given for why the stock market is not going to collapse…

1. “The U.S. economy isn’t on the verge of a recession.”

This is exactly what all of the “experts” told us back in 2007 and 2008 too.  In America today, the homeownership rate is at a 48 year low, 46 million Americans go to food banks, and economic growth has slowed to a standstill (and that is if you actually buy the highly manipulated official numbers).  The truth, of course, is that things continue to progressively get worse as our long-term economic decline continues to unfold.  For much more on this, please see my previous article entitled “12 Ways The Economy Is Already In Worse Shape Than It Was During The Depths Of The Last Recession“.

2. “China’s effect on U.S. is limited.”

Really? Go to just about any major retail store and start reading labels.  You will likely find far more things that were “made in China” than you will American-made products.  The global economy is more interconnected than ever before, and the Chinese stock market is the second largest on the entire planet.  Of course what is happening in China is going to affect us.

3. “American businesses are doing pretty well (outside of energy).”

Actually, they were doing pretty well for a while, but now things are turning.  Many large corporations are reporting declining orders, declining revenues and declining profits.  Unsold inventories are beginning to pile up and the pace of layoffs is starting to increase.  All of the things that we would expect to see just prior to another recession are happening.

4. “The Federal Reserve sounds cautious.”

This is laughable.  Ultimately, it isn’t going to matter much at all whether the Federal Reserve barely raises rates or not.  The era of “central bank omnipotence” is at an end.  Just look at what is happening over in Europe.  All of the quantitative easing that the ECB has been doing has not kept their markets from crashing in recent days.  Those that believe that the Federal Reserve can somehow miraculously keep the stock market from crashing this time around are going to end up deeply, deeply disappointed.

5. “Stock prices aren’t crazy high anymore.”

There is some truth to this last point.  Instead of stock prices being really, really, really crazy now they are just really, really crazy.  But as I have pointed out in many previous articles, the technical indicators are very clearly telling us that U.S. stocks still have a long, long way to go down.

But let’s hope that CNN is actually right – at least in the short-term.

Let’s hope that markets settle down and that things stabilize for at least a few weeks.

In order for that to happen, markets need to become a lot less volatile than they are right now.  The rollercoaster ride that we have been on in recent days has been extraordinary

The Dow traveled another 1,600 points during Tuesday’s trading session, adding to the 4,900 points the index traveled in down and up moves on Monday.

Markets tend to go up slowly and steadily when things are calm, and they tend to go down rapidly when things are volatile.

If you are rooting for a return of the bull market, you should be hoping for nice, boring trading days where the Dow goes up by about 100 points or so.  Wild swings like we have seen on Friday, Monday, Tuesday and Wednesday are very strong indicators that we have entered a bear market.

What we have been witnessing over the past week is almost unprecedented.  Just check out this piece of analysis from Bloomberg

By one metric, investors would have to go back 75 years to find the last time the S&P 500’s losses were this abrupt.

Bespoke Investment Group observed that the S&P 500 has closed more than four standard deviations below its 50-day moving average for the third consecutive session. That’s only the second time this has happened in the history of the index.

Of course after such a dramatic plunge it was inevitable that we were going to have a “bounce back day” where there was lots of panic buying.  Initially it looked like it would be Tuesday, but it turned out to be Wednesday instead.

But if you think that the big gain on Wednesday somehow means that the crisis is “over”, you are going to be sorely mistaken.

Personally, I am hoping that we at least see a bit of a pause in the action, but there is absolutely no guarantee that we will even get that.

As the markets have been flying around, more and more Americans are becoming curious about the potential for a full-blown stock market crash.  The following comes from Business Insider

This one’s pretty easy: according to Google search trends, more Americans are searching for “stock market crash” now that at any point since the last crash.

Right now, search traffic for the term “stock market crash” is hitting about 70% of the most volume this term has ever gotten through Google search.

And so while this data doesn’t convey absolute search volume for the term, we do know that Americans appear to be looking for information about a stock market crash at the highest level in about 7 years.

Very interesting.

In addition, Americans are also becoming more pessimistic about the overall economy.  According to Gallup, the level of confidence that Americans have about the future performance of the U.S. economy is the lowest that it has been in about a year.

And remember – it isn’t just U.S. markets that are starting to go crazy.  All over the planet stocks are crashing and recessions are starting.  In fact, I can’t remember a time when there has been this much economic chaos erupting all over the world all at once.

So can the U.S. resist the overall trend and pull out of this market crash?

Please feel free to share what you think by posting a comment below…

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