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 What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to "take advantage" of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash. Well guess what? It is happening again. In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars. The previous high was 381 billion dollars which occurred back in July 2007. Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall. The stock market just continues to rise even though the underlying economic fundamentals continue to get worse. So should we be alarmed? Is the stock market bubble going to burst at some point? Well, if history is any indication we are in big trouble. In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed. That certainly does not mean that the market is going to crash this week, but it is a major red flag. (Read More....)
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 The election results made it abundantly clear that taxes are going to be going up, and right now a lot of wealthy people all over America are trying to figure out how to best position themselves for the hit that is coming. There are a whole host of tax cuts that are set to expire on December 31st, and many analysts are now speculating that we could see a race to dump stocks and other financial assets before 2013 in order to get better tax treatment on those sales. Of course it is still possible that Congress may reach a bargain which would avoid these tax increases, but with each passing day that appears to be increasingly unlikely - especially regarding the tax increases on the wealthy. Whatever you may believe about this politically, the truth is that we should all be able to agree that these looming tax increases provide an incentive for wealthy people to sell off financial assets now rather than later. After all, there are very few people out there that would actually prefer to pay higher taxes on purpose. If the race to dump financial assets becomes a landslide, could this push stocks down significantly late in the year? Already there are all sorts of technical signs that indicate that stocks are ready for a "correction" at the very least. For example, the S&P 500 has already closed below its 200 day moving average for several days in a row. Could the "sell off" that has already begun become a race for the exits? (Read More....)
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 Have you heard the good news? Financial armageddon has been averted. The economic collapse in Europe has been cancelled. Everything is going to be okay. Well, actually none of those statements is true, but news of the "debt deal" in Europe has set off a frenzy of irrational exuberance throughout the financial world anyway. Newspapers all over the globe are declaring that the financial crisis in Europe is over. Stock markets all over the world are soaring. The Dow was up nearly 3 percent today, and this recent surge is helping the S&P 500 to have its best month since 1974. Global financial markets are experiencing an explosion of optimism right now. Yes, European leaders have been able to kick the can down the road for a few months and a total Greek default is not going to happen right now. However, as you will see below, the core elements of this "debt deal" actually make a financial disaster in Europe even more likely in the future. (Read More....)
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 Will global financial markets reach a breaking point during the month of October? Right now there are all kinds of signs that the financial world is about to experience a nervous breakdown. Massive amounts of investor money is being pulled out of the stock market and mammoth bets are being made against the S&P 500 in October. The European debt crisis continues to grow even worse and weird financial moves are being made all over the globe. Does all of this unusual activity indicate that something big is about to happen? Let's hope not. But historically, the biggest stock market crashes have tended to happen in the fall. So are we on the verge of a "Black October"? (Read More....)
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 Well, it's official. U.S. stock prices have fallen for six weeks in a row. So will next week make it seven? The last time stocks declined for seven weeks in a row was back in May 2001 when the "dot-com" bubble was bursting. At this point, the Dow has declined by approximately 5 percent since the beginning of June. Things don't look good. So exactly what is going on here? Well, it is undeniable that the recent mini-bubble in stocks has been too good to be true. The S&P 500 had surged nearly 30 percent since last September. Much of this has been fueled by the Federal Reserve's latest round of quantitative easing, but now that is coming to an end in a few weeks and investors are a bit spooked. Meanwhile, wars and revolutions are sweeping the Middle East, Japan is dealing with the damage caused by the tsunami and by Fukushima, Europe is trying to figure out how to bail out Greece again and the U.S. debt crisis is continually getting worse. In addition, wave after wave of bad economic news is certainly not helping the mood on Wall Street. In many ways, a "perfect storm" is developing and many are now extremely concerned about what the rest of 2011 is going to bring for Wall Street. (Read More....)
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 Have you heard the news? The stock market is absolutely soaring and according to the U.S. government and the Federal Reserve we are in the beginning stages of a robust economic recovery. Yippee! The S&P 500 is up 6.8 percent so far in 2011, and the stock market recently hit a two and a half year high. So shouldn't we all be celebrating? Well, if stock market performance was an accurate measure of economic health, then Zimbabwe would have had one of the healthiest economies on the entire globe during the last decade. But just like Zimbabwe's stock market was artificially pumped up with "funny money" that was rapidly being devalued, so is ours. All of the "quantitative easing" that the Federal Reserve has been doing is pumping plenty of money into the financial markets and is helping to inflate a false stock market bubble, but it is doing very little to alleviate the suffering of the U.S. middle class. In fact, when you take a closer look at the numbers you quickly find out that the suffering of the middle class is getting even worse. (Read More....)
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 Can anyone explain the very strange behavior that we are seeing in world financial markets right now? Corporate insiders are bailing out of the U.S. stock market at a very alarming rate. Investors are moving mountains of money into gold and other commodities. In fact, there is such a rush towards gold that shortages are starting to be reported in some areas. Meanwhile, some very, very unusual option activity has started to show up. In particular, someone is making some incredibly large bets that the S&P 500 is going to absolutely tank during the month of October. Central banks around the world have caught a case of "loose money fever" and are apparently hoping that a new flood of paper money will shock the global economy back to life. Meanwhile, the furor over the foreclosure procedure abuses of the major U.S mortgage companies threatens to bring even more turmoil to the U.S. housing industry. (Read More....)
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18 Sobering Facts Which Prove That The Middle Class Is Not Being Included In This “Economic Recovery”
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