The Stock Market Just Crashed In Italy, And Argentina Has Panic-Raised Interest Rates To 65 Percent

In the 9th largest economy in the world, the financial markets are crashing, and in the 21st largest economy in the world the central bank just raised interest rates to 65 percent to support a currency that is completely imploding.  While the mainstream media in the United States continues to be obsessed with all things Kavanaugh, an international financial crisis threatens to spiral out of control.  Stock prices are falling and currencies are collapsing all over the planet, but because the U.S. has been largely unaffected so far the mainstream media is mostly choosing to ignore what is happening.  But the truth is that this is serious.  The financial crisis in Italy threatens to literally tear the EU apart, and South America has become an economic horror show.  The situation in Brazil continues to get worse, the central bank of Argentina has just raised interest rates to 65 percent, and in Venezuela starving people are literally eating cats and dogs in order to survive.  How bad do things have to get before people will start paying attention?

On Friday, Italian stocks had their worst day in more than two years, and it was the big financial stocks that were on the cutting edge of the carnage

Shares in Italian banks .FTIT8300, whose big sovereign bond portfolios makes them sensitive to political risk, bore the brunt of selling pressure, sinking 7.3 percent as government bonds sold off and the focus turned to rating agencies.

Along with the main Italian stock index .FTMIB, the banks had their worst day since the June 2016 Brexit vote triggered a selloff across markets.

Italian bonds got hit extremely hard too.  The following comes from Business Insider

Bond markets are also suffering. The yield on the benchmark 10-year Italian bond jumped in Friday morning trading. Yields move inversely to price, with a higher yield reflecting an increased premium to hold the bond. The 10-year yield hit 3.22% in early morning trade, an increase of more than 10%.

So what sparked the sudden selloff?

Well, the new Italian government and the EU are at odds with one another, and the European elite were greatly displeased when Italy approved a new budget that was far larger than anticipated

On Thursday night, six months after the government’s ascent to power, Italy’s populist coalition government of the Five Star Movement and the Northern League finally agreed on the key tenets of its first budget.

The coalition said in a statement they had agreed to set Italy’s budget deficit at 2.4% of GDP, an increase on the current level and far above the 1.6% that technocratic finance minister Giovanni Tria had lobbied for.

It is easy to criticize Italy, but what we are doing here in the United States is just as bad if not worse.

A new 854 billion dollar spending bill just got pushed through in D.C., and it is going to continue to explode the size of our national debt.  We are going down the exact same path that all of these other nations have gone down, and in the process we are literally committing national suicide.

Just look at what is happening in Argentina.  Years of wild spending have resulted in an economy that is deep in recession.  The Argentine peso has lost approximately 50 percent of its value so far in 2018, and in a desperate attempt to stop the bleeding the central bank of Argentina just panic-raised interest rates to 65 percent.

When interest rates are at 65 percent, you don’t really have an economy anymore.

What you have is an endless nightmare.

In an emergency move, the International Monetary Fund has agreed to increase the size of Argentina’s bailout to 57 billion dollars

The International Monetary Fund and Argentina announced Wednesday an arrangement to increase resources available to the South American country by $19 billion.

The agreement, pending IMF Executive Board approval, would bring the total amount available under the program to $57.4 billion by the end of 2021, up from $50 billion.

That won’t be nearly enough to turn the situation around in Argentina, and the IMF probably knows that.

For a long time many of us have been warning of a coming global financial crisis, and now that day has arrived.

For a long time many of us have been telling you to keep a close eye on Italy, and now a day of reckoning for that very troubled nation is here.

And big problems are coming for the U.S. too.  Signs of imminent economic trouble just keep popping up, and it isn’t going to take much to push us into a new financial crisis that will be much worse than what we witnessed in 2008.

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.

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Do They Know Something We Don’t? Corporate Insiders Are Selling Stocks At The Fastest Pace In 10 Years

A lot of things are starting to happen that we haven’t seen since the last recession.  A few days ago, I wrote about the fact that home sellers in the United States are cutting their prices at the fastest pace in at least eight years, and now we have learned that corporate insiders are selling stocks at the most rapid pace in ten years.  So why are they dumping their shares so quickly?  Do they know something that the rest of us do not?  Certainly nobody can blame them for taking advantage of the ridiculously high stock prices that we are seeing in the marketplace right now.  But stock prices have been very high for a while.  Why is there such a mad rush for the exits all of a sudden?  According to CNN, corporate insiders have sold 5.7 billion dollars worth of stock so far in September…

CEOs are using the market boom to quietly cash in their own chips.

Insiders at US companies have dumped $5.7 billion of stock this month, the highest in any September over the past decade, according to an analysis of regulatory filings by TrimTabs Investment Research.

It’s not a new trend. Insiders, which include corporate officers and directors, sold shares in August at the fastest pace in 10 years as well, TrimTabs said.

It would be one thing if September was an anomaly, but the fact that insider shares were being sold so rapidly in August as well indicates that this is a clear trend.

Could it be possible that these corporate insiders believe that the market is about to take a tumble?

Of course it doesn’t exactly take inside information to see the writing on the wall.  On Wednesday, the Federal Reserve raised interest rates for the third time in 2018.  Overall, this is the Fed’s eighth interest rate increase since 2015, and it looks like the Fed is anticipating three more rate hikes in 2019

Looking ahead to 2019, Fed officials expect at least three rate hikes will be necessary, and one more in 2020.

“The Fed shows no signs of taking (a) breath in rate hikes,” Robert Frick, corporate economist with Navy Federal Credit Union, wrote in a research note.

This is terrible news for stock market investors, because every rate hiking program in the history of the Federal Reserve has ended in a stock market crash and/or a recession.

In fact, since 1957 there have been 18 rate hiking cycles, and every single one of them has ended in disaster.

So do you think that we are going to beat the odds this time?

After raising rates again, the Fed released a statement in which it said that it expects the U.S. economy to grow “for at least three more years”

The Fed sees the economy growing at a faster-than-expected 3.1 percent this year and continuing to expand moderately for at least three more years, amid sustained low unemployment and stable inflation near its 2 percent target.

“The labor market has continued to strengthen … economic activity has been rising at a strong rate,” it said in its statement.

You can believe that if you want, but it is also important to remember that Federal Reserve Chairman Ben Bernanke assured all of us that a recession was not coming in 2008.

And later we learned that the moment when he made that statement a recession had actually already begun.

Needless to say, investors were not thrilled by Wednesday’s rate hike, and the Dow Jones Industrial Average dropped another 100 points.  Stocks have really struggled this week, and we continue to get more disappointing news from the real economy.  On the heels of a “disappointing” existing home sales report, we just received news that new home sales missed expectations

Following existing home sales disappointment, hope was once again high for a bounce in new home sales in August but once again disappointed with a 629k print (up from a revised 608k), but missed expectations of 630k.

While the sales gain was the first in three months, the downward revisions to prior figures indicate that the market in recent months was slower than previously reported, adding to broader indications of cooler demand in residential real estate.

And the trade war continues to take a toll as well.  According to Ford’s chief executive, the metals tariffs are going to result in a billion dollars in lost profits for his company…

Ford CEO Jim Hackett told Bloomberg Television on Wednesday that his company faces $1 billion in lost profits from President Donald Trump’s tariffs.

“The metals tariffs took about $1 billion in profit from us – and the irony is we source most of that in the U.S. today anyways,” Hackett said. “If it goes on longer, there will be more damage.”

Perhaps this is one of the main reasons why it looks like Ford could soon be laying off thousands of workers.

The “smart money” is always one step ahead of the “dumb money”, and corporate insiders have a much better view of what is really going on inside their companies than any of the rest of us do.

So if they are collectively convinced that now is a perfect time to sell, that is a major red flag.

On Wall Street, actions speak much louder than words, and corporate insiders are sending a very loud message by selling so many of their own shares.

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.

Why Are So Many People Talking About The Potential For A Stock Market Crash In October?

It is that time of the year again.  Every year, people start talking about a possible stock market crash in October, because everyone remembers the historic crashes that took place in October 1987 and October 2008.  Could we witness a similar stock market crash in October 2018?  Without a doubt, the market is primed for another crash.  Stock valuations have been in crazytown territory for a very long time, and financial chaos has already begun to erupt in emerging markets all over the globe.  When the stock market does collapse, it won’t exactly be a surprise.  And a lot of people out there are pointing to October for historical reasons.  I did not know this, but it turns out that the month with the most market volatility since the Dow was first established has been the month of October

The difference is quite significant, as judged by a measure of volatility known as the standard deviation: For all Octobers since 1896, when the Dow Jones Industrial Average was created, the standard deviation of the Dow’s daily changes has been 1.44%. That compares to 1.05% for all months other than October.

Like me, you are probably tempted to think that the reason why October’s number is so high is because of what happened in 1987 and 2008.

But even if you pull out those two months, October is still the most volatile

You might think that this difference is caused by a few outliers, such as the 1987 crash (which, of course, occurred in October) or 2008 (the Dow suffered several thousand-point plunges that month as it reacted to the snowballing financial crisis). But you would be wrong: The standard deviation of daily Dow changes is much higher in October than other months even if we eliminate 1987 and 2008 from the sample.

Once we get to Thanksgiving, the market tends to get sleepy, and it usually doesn’t wake up again until the new year begins.

So if something big is going to happen in the market in 2018, it is probably going to happen in the coming weeks.

And it is inevitable that something big will happen at some point.  As Jesse Colombo has pointed out, stocks are more overvalued right now than they were just before the great stock market crash of 1929…

In a bubble, the stock market becomes overpriced relative to its underlying fundamentals such as earnings, revenues, assets, book value, etc. The current bubble cycle is no different: the U.S. stock market is as overvalued as it was at major generational peaks. According to the cyclically-adjusted price-to-earnings ratio (a smoothed price-to-earnings ratio), the U.S. stock market is more overvalued than it was in 1929, right before the stock market crash and Great Depression

It is becoming increasingly obvious what we are heading for, and a growing chorus of market experts are issuing ominous declarations about this market.

For example, David Tice is warning that “we’re getting closer to a meltdown scenario”

According to investor David Tice, who made a name for himself in running the Prudent Bear Fund before selling it to Federated Investors in 2008, the current market is dangerous. Tice was quoted as saying he’s “nervous” because “we’re getting closer to a meltdown scenario.”

And John Hussman ultimately expects “two-thirds of market capitalization” to vanish…

I am aware of no plausible conditions under which current extremes are likely to work out well for investors. There are a few possibilities that could involve a smaller loss than the two-thirds of market capitalization that I expect to vanish, as the run-of-the-mill, baseline expectation for the S&P 500 over the completion of this cycle. Yet it’s worth recognizing that the completion of every market cycle in history has taken the most reliable valuation measures we identify (those best correlated with actual subsequent S&P 500 market returns) to less than half of current levels.

Could you imagine the chaos that would be unleashed if the stock market went down by two-thirds?

That would make what happened in 2008 look like a Sunday picnic.

And there are a lot of parallels between what happened in 2008 and what is happening today.  For example, the housing market is slowing down dramatically just like it did a decade ago.  The following comes from a Bloomberg article that I came across earlier today entitled “Builders Slump as U.S. Housing Market Shifts to the Slow Lane”

The housing market is stalling, and homebuilder stocks are feeling the pain.

The S&P Supercomposite Homebuilding Index is down 21 percent year-to-date, on track for the biggest annual drop since 2008, when it fell 32 percent. That’s even with tax cuts, unemployment near the lowest since 1969 and a real-estate developer in the White House. What gives?

Just a few days ago, I wrote an entire article about the fact that home sellers are cutting prices at the fastest rate that we have seen in eight years.  The housing market is clearly telling us that a big time economic slowdown is coming, but most people are not listening.

Switching gears, we have also recently learned that it looks like Ford Motor Company will soon be laying off lots of workers

Ford Motor employees are warily awaiting details of CEO Jim Hackett’s promised “fitness” plan and the serious possibility of significant job losses as the company faces pressure to improve its operations.

The company has warned of $11 billion in restructuring costs over three to five years, which could mean thousands of worker buyouts, according to analysts.

Why would they be doing that if the economy really was in “good shape”?

And let us not forget about the ongoing woes of the retail industry.  Recently, I was astounded to learn that a whopping 20 percent of all retail space in Manhattan is currently vacant

“When you walk the streets, you see vacancies on every block in all five boroughs, rich or poor areas — even on Madison Avenue, where you used to have to fight to get space,” said Faith Hope Consolo, head of retail leasing for Douglas Elliman Real Estate, who said the increase in storefront vacancies in New York City had created “the most challenging retail landscape in my 25 years in real estate.”

A survey conducted by Douglas Elliman found that about 20 percent of all retail space in Manhattan is currently vacant, she said, compared with roughly 7 percent in 2016.

New York City is one of the few areas around the country that has actually been prospering.

If things are that bad there already, what does that say about the outlook for the rest of the nation?

The truth is that the economy is not nearly as good as you are being told, and things could literally start breaking loose at any moment.

Unfortunately, as a society we have not learned very much from history, and most Americans seem to think that this bubble of artificial prosperity is going to last indefinitely.

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.

Stock Prices Are Surging Because Corporations Are Spending More Money On Stock Buybacks Than Anything Else

The primary reason why stock prices have been soaring in recent months is because corporations have been buying back their own stock at an unprecedented pace.  In fact, the pace of stock buybacks is nearly double what it was at this time last year.  According to Goldman Sachs, S&P 500 companies spent 384 billion dollars buying back stock during the first half of 2018.  That is an absolutely astounding number.  And in many cases, corporations are going deep into debt in order to do this.  Of course this is going to push up stock prices, but corporate America will not be able to inflate this bubble indefinitely.  At some point a credit crunch will come, and the pace of stock buybacks will fall precipitously.

Prior to 1982, corporations were not permitted to go into the market and buy back stock.

The reason for this is obvious – stock buybacks are a really easy way for corporations to manipulate stock prices.

But these days it is expected that most large corporations will engage in this practice.  Large stockholders love to see the price of the stock go up, and they are never going to complain when smaller shareholders are bought out and their share of the company is increased.  And corporate executives love buybacks because so much of their compensation often involves stock options or bonuses related to key metrics such as earnings per share.

So in the end, stock buybacks are often all about greed.  It is a way to funnel money to those at the very top of the pyramid, and those stock market gains are taxed at capital gains rates which are much lower than the rates on normal income.

Normally, you would expect successful companies to invest most of their available cash back into operations so that they can make even more money in the future.  And for 19 of the past 20 years, corporations have spent more on capital investments than anything else.  But now, share buybacks have actually surpassed capital spending.  The following comes from CNN

But that doesn’t mean companies aren’t spending on job-creating investments, like new equipment, research projects and factories. Business spending is up 19% — it’s just that buybacks are growing much faster.

In fact, Goldman Sachs said that buybacks are garnering the largest share of cash spending by S&P 500 firms. It’s a milestone because capital spending had represented the single largest use of cash by corporations in 19 of the past 20 years.

And this trend seems to be accelerating during the second half of 2018.  It is being projected that firms will spend more than 600 billion dollars on stock buybacks during the second half of this year, and that will bring the grand total for 2018 to more than a trillion dollars

And the trend may not be done yet. Goldman Sachs predicted that share buyback authorizations among all US companies in all of 2018 will surpass $1 trillion for the first time ever.

Wow.

Wouldn’t it be nice if we had more than a trillion dollars that we could put toward reducing the national debt?

This is the reason why stocks hit another new all-time record high this week.  Stock buybacks have reached absolutely insane levels, and what we are witnessing is essentially a giant orgy of greed.

To give you some perspective, the previous annual record for stock buybacks was just 589 billion dollars in 2007.

This year, we may come close to doubling the previous record.

And let us not forget that the year after 2007 was the worst financial crisis since the Great Depression.

So what corporations are the worst offenders?  Here is more from CNN

Apple (AAPL) alone spent a whopping $45 billion on buybacks during the first half of 2018, triple what it did during the same time period last year, the firm said. That included a record-shattering sum during the first quarter.

Amgen (AMGN), Cisco (CSCO), AbbVie (ABBV) and Oracle (ORCL) have also showered investors with big boosts to their buyback programs.

As I noted earlier, corporate insiders greatly benefit from stock buybacks, and they took advantage of massively inflated stock prices by selling off $10.3 billion worth of their shares during the month of August.

Inflating your stock price by cannibalizing your own shares is not a good long-term strategy for any corporation, but without a doubt it is making a lot of people very wealthy.

But in the process, the size of the stock market as a whole has been steadily shrinking.  In fact, the number of shares on the S&P 500 has fallen by almost 8 percent since the beginning of 2011…

According to Ed Yardeni, the number of S&P 500 shares has shrunk by 7.7% since the start of 2011. This tends to increase the earnings per remaining share and the dividends available per remaining share.

This is yet another example that shows why the stock market has become completely disconnected from economic reality.  Wall Street is inhabited by con men that are promoting Ponzi scheme after Ponzi scheme, and it is only a matter of time before the entire system collapses under its own weight.

But for now, the euphoria on Wall Street continues as stock prices continue to march higher.  Meanwhile, we continue to get more signs of trouble from the real economy.  For instance, this week we learned that the third largest bank in the entire country is going to lay off thousands of workers

Wells Fargo, the third-biggest U.S. bank, plans to lower its employee headcount by 5 percent to 10 percent in the next three years as part of its ongoing turnaround plan, the company announced Thursday.

The bank has 265,000 employees, meaning the reduction would result in a loss of between 13,250 and 26,500 jobs.

Why would they do that if the economy was in good shape?

And globally, the emerging market currency crisis has continued to escalate.  According to one source, more than 80 percent of all global currencies have fallen in value so far this year…

A review of the values of 143 global currencies indicates that so far this year, more than 80 percent have fallen in value.

Another eleven appear to be pegged to the dollar and 13 have risen in value. Of the 13 that have increased in value, only six are up more than 1 percent versus the dollar.

There have been outsized declines in countries like Venezuela (down 99 percent), Argentina (53 percent) and Turkey (38 percent). However, Brazil is down 20 percent, Russia 15 percent, India 11 percent, Sweden 10 percent, and the Philippines 8 percent. Big economies like China are experiencing a 5 percent currency value decline while the Euro is off by 3 percent.

I applaud those that have made lots of money in the stock market, but the party will not last forever.

In 2007 corporations were pouring hundreds of billions of dollars into stock buybacks, and it propped up the market for a time.  But eventually the bubble burst and the crisis of 2008 was so dramatic that it will be remembered forever.

Now we are facing a similar scenario, and it is just a matter of time before this bubble bursts as well.

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 5 Previous Times This Stock Market Indicator Has Reached This Level Stock Prices Have Fallen By At Least 50 Percent

Have you ever heard of the “Sound Advice Risk Indicator”?  Every single time in our history when it has gone above 2.0 the stock market has crashed, and now it has just surged above that threshold for the very first time since the late 1990s.  That doesn’t mean that a stock market crash is imminent, but it is definitely yet another indication that this stock market bubble is living on borrowed time.  But for the moment, there is still quite a bit of optimism on Wall Street.  The Dow set another brand new all-time record high earlier this week, and on Wednesday we learned that this bull market is now officially the longest in our history

For context, a bull market is defined as a 20% rally on a closing basis that’s at no point derailed by a subsequent 20% decline. March 9, 2009, has long been the agreed-upon starting point for such calculations because that was the absolute bottom for the prior bear market, which ended that day.

The S&P 500 has surged a whopping 323% over the period, with its roughly 19% annualized return slightly lagging behind the historical bull market average of 22%.

Of course the U.S. economy has not been performing nearly as well.  Even if you accept the highly manipulated numbers that the federal government puts out, we haven’t had a year when GDP grew by at least 3 percent since the middle of the Bush administration.

It simply is not possible for stock prices to continue to soar about 20 percent a year when the U.S. economy is growing less than 3 percent a year.  At some point a major adjustment is coming, and it is going to be exceedingly painful.

Author Gray Cardiff has been touting his “Sound Advice Risk Indicator” for many years.  He believes that the relationship between the S&P 500 and the median price of a new house in the United States is very important, and this is the very first time since the late 1990s that this indicator has entered the danger zone

The “Sound Advice Risk Indicator” is a different story. This indicator, the brainchild of Gray Cardiff, editor of the Sound Advice newsletter, is derived from the ratio of the S&P 500 to the median price of a new U.S. house. For the first time since the late 1990s, and for only the sixth time since 1895, this indicator has risen above the 2.0 level that represents a major sell signal for equities.

So should we be concerned?

In previous instances when this level has been breached, a crash hasn’t always happened right away, but in every instance the market eventually fell “by 50 % or more”

To be sure, Cardiff is quick to emphasize, his risk indicator is not a short-term market timing tool. In the wake of past occasions when it rose above 2.0, for example, equities stayed high or even continued rising “for many months, sometimes even a couple of years.” However, he continues, “in all cases, a major decline or crash followed, pulling down stock prices by 50% or more.”

Because Wall Street is so highly leveraged today, a 50 percent decline in stock prices would be totally catastrophic.  Banks would go down one after another, and we would be facing a financial crisis that would make 2008 look like a Sunday picnic.

And the truth is that much of the world is already in crisis mode.  The mainstream media is telling us that Italy is teetering on the brink of “financial disaster”, and China appears to be entering a serious economic downturn as the trade war begins to take a substantial toll on their economy.

Meanwhile, emerging market currencies continue to plummet, and this week it has been Brazil’s turn to capture the headlines.  The Brazilian real is absolutely crashing, and many analysts are pointing to their internal problems as the cause

According to analysts the devaluation of the Brazilian real is not due to the current foreign turbulence but to internal uncertainties and the upcoming October presidential elections.

“The (Brazilian) real was not devalued sixteen percent because of Turkey or other external reasons, it was because the rate of R$3.00 to R$3.30 (per US$1) was absolutely incompatible with the status quo of the Brazilian economy and the expressiveness of the country’s fiscal debt,” said Sidnei Moura Nehme, executive director at NGO.

At the same time, trouble signs continue to emerge here in the United States.

On Wednesday, we learned that Lowe’s is planning to shut down 99 Orchard Supply Hardware stores

The company said Wednesday that the 99 Orchard Supply Hardware stores that Lowe’s owns in California, Oregon and Florida, as well as a distribution center, will be shut down by the end of the fiscal year.

Orchard Supply Hardware has 4,300 employees. Ellison said in the earnings release that the chain’s workers will be given “priority status” if they apply for other jobs at Lowe’s and will also receive job placement assistance and severance.

If the U.S. economy really was in good shape, why would they be doing that?

Ultimately, most people out there realize on some level that our current economic situation is not sustainable.  Stock prices have become completely detached from reality, and we are enjoying a ridiculously high standard of living that has been fueled by the greatest debt binge that the world has ever seen.

We can steal from the future for an extended period of time, but eventually it will catch up with us.

When the stock market finally crashes, the mainstream media will treat it like a big surprise, but the truth is that it shouldn’t catch anybody off guard.  Key stock valuation ratios always return to their long-term averages eventually, and in this case stock prices are going to have to fall at least 40 or 50 percent before they begin to make sense again.

But as I noted earlier, our system is so fragile that we won’t be able to handle that kind of an adjustment.

Our system almost completely collapsed in 2008, but what we are facing is going to be much worse than that.  Most of the wealth of the country will be wiped out in the process, and it will be an exceptionally painful time for the American people.

This article originally appeared on The Economic Collapse Blog.  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.

If You Read Between The Lines, Global Economic Leaders Are Telling Us Exactly What Is Coming

Sometimes, a strongly-worded denial is the most damning evidence of all that something is seriously wrong.  And when things start to really get crazy, “the spin” is often the exact opposite of the truth.  In recent days we have seen a lot of troubling headlines and a lot of chaos in the global financial marketplace, but authorities continue to assure us that everything is going to be just fine.  Of course we witnessed precisely the same thing just prior to the great financial crisis of 2008.  Federal Reserve Chair Ben Bernanke insisted that a recession was not coming, and we proceeded to plunge into the worst economic downturn since the Great Depression.  Is our society experiencing a similar state of denial about what is ahead of us here in 2018?

Let me give you a few examples of some recent things that global economic leaders have said, and what they really meant…

Tesla Motors CEO Elon Musk: “We are definitely not going bankrupt.”

Translation: “We are definitely going bankrupt.”

Tesla is a company that is supposedly worth 51 billion dollars, but the reality is that they are going to zero.  They have been bleeding massive amounts of cash for years, and now a day of reckoning has finally arrived.  A severe liquidity crunch has forced the company to delay payments or to ask for enormous discounts from suppliers, and many of those suppliers are now concerned that Tesla is on the verge of collapse

Specifically, a recent survey sent privately by a well-regarded automotive supplier association to top executives, and seen by the WS , found that 18 of 22 respondents believe that Tesla is now a financial risk to their companies.

Meanwhile, confirming last month’s report that Tesla is increasingly relying on net working capital, and specifically accounts payable to window dress its liquidity, several suppliers said Tesla has tried to stretch out payments or asked for significant cash back. And in some cases, public records show, small suppliers over the past several months have claimed they failed to get paid for services supplied to Tesla.

Shark Tank billionaire Mark Cuban: “I’ve got a whole lot of cash on the sidelines.”

Translation: “I believe that the stock market is about to crash.”

Mark Cuban is not stupid.  Like Warren Buffett, he is sitting on giant piles of cash as he waits for stock valuations to return to their long-term averages.  And when “something happens”, Cuban insists that he is “ready, willing and able” to make some bold moves…

Billionaire entrepreneur Mark Cuban told CNBC on Monday that he’s holding much more cash than he normally does because he’s concerned about the stock market and U.S debt levels.

“I’m down to maybe four dividend-owning stocks, two shorts, and Amazon and Netflix. I’ve got a whole lot of cash on the sidelines,” Cuban said on “Fast Money Halftime Report.” “[I’m] ready, willing and able if something happens” to invest.

Deutsche Bank: We need our employees to “take every opportunity to restrict non-essential travel” in order to cut costs.

Translation: We are on the verge of collapse, and we have got to save every single penny that we can right now.

If you follow my work on a regular basis, you already know that I have been extremely hard on Deutsche Bank.  The biggest bank in Europe is teetering on the brink, and this latest move is more evidence that their days are numbered

Forget the days of traveling first class to meet clients: Deutsche Bank, which following major management upheaval in the past year, is telling its employees to take the bus whenever possible.

In the latest indignity to befall the bank’s employees, in a memo sent by Deutsche Bank CFO James von Moltke, the biggest European bank – if certainly not by market cap – urged employees to “take every opportunity to restrict non-essential travel” until the end of the year adding that “with your help, we will meet our cost-reduction targets.”

Italian Cabinet Undersecretary Giancarlo Giorgetti: “I hope that the quantitative easing program will go forward.”

Translation: If the ECB does not buy our bonds, the Italian financial system is toast.

Italy will almost certainly be the fulcrum of the next European financial crisis, and the truth is that the EU will not have enough money to bail Italy out once it collapses.

So the Italians desperately need the ECB to continue buying their bonds, and the new Italian government seems to understand this very well

Italian Cabinet Undersecretary Giancarlo Giorgetti said he hopes the European Central Bank’s quantitative easing program will be extended to help protect the country from financial speculators.

Italy also needs to be credible to help shield itself, Giorgetti said in an interview with newspaper Il Messaggero. After the Genoa bridge disaster, the country may boost its extra spending request to the European Union, he said.

Signs of trouble continue to erupt in the United States as well.  The trade war is taking a huge toll on businesses of all sizes, and sometimes it is rural America that is being hurt the most.

For instance, the looming closure of the Element Electronics factory in Winnsboro, South Carolina would be absolutely crippling for that community…

TVs at the plant are made out of components that are imported from China, and the tariffs make assembling the TVs here a losing proposition, the company has said. The company is fighting for a waiver but is bracing for shutdown.

Winnsboro is the seat of Fairfield County, where a third of the population lives in poverty. Unemployment among its nearly 23,000 residents is second highest in the state, and, despite periodic rebounds, the population has fallen steadily over the past century.

“This is going to be a ghost town,” Winnsboro resident Herbert Workman said.

In this day and age, we are trained to be optimistic, and that can be a good thing.

But there comes a point when blind optimism causes us to lose touch with reality, and many believe that we have already crossed that threshold.

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.

Experts Warn That The “Scariest” Stock Market Signals Are Flashing Red

So many top professionals in the financial industry are sounding the alarm about a coming stock market crash right now.  And there certainly have been rumblings in 2018 – not too long ago we had a three day stretch that was called “the tech bloodbath”, and during that time Facebook had the worst day for a single company in stock market history.  But we haven’t seen the really big “crash” yet.  Many have been waiting for it to happen for several years, and some people out there are convinced that it is never going to come at all.  Of course the truth is that we are in perhaps the largest stock market bubble that our nation has ever seen, and all other large stock market bubbles have always ended with a major price collapse.  So whether it happens immediately or it takes a little while longer, it is inevitable that stock prices will eventually return to their long-term averages.

Doug Ramsey, the chief investment officer at Leuthold Group, is one of those that is sounding the alarm.  Unlike price to earnings ratios, price to sales ratios are very hard to manipulate, and he has pointed out that price to sales ratios are higher than we have ever witnessed before.

In particular, when you look at the median stock price to sales ratio, it is the highest that it has ever been and it is twice as high as it was in February 2000

He also shared a chart which he claims is “unfit for a family-friendly publication” that shows how in terms of median price to sales ratio, the S&P 500 is twice as expensive as it was in 2000.

“Overvaluation in 2000 was highly concentrated; today it is pervasive, with the median S&P 500 Price/Sales ratio of 2.63 times more than double the 1.23 times prevailing in February 2000.

To me, that number is absolutely stunning, and it shows that we have a long, long way to fall.

As I have said before, stock prices need to fall by 40 or 50 percent just to get into a neighborhood where they will begin to make sense again.

And something else that Ramsey has pointed out is that in 2018 stocks are behaving very much like they did just before the dotcom bubble crashed

Ramsey admits that history isn’t the best guide for the future but the S&P 500’s performance since it touched its peak on Jan. 26 is closely mirroring what happened 18 years ago.

“In the earlier case, a volatile five-month upswing that began in mid-April ultimately fell just a half-percent short of the March 24th high by early September. This year, a similarly choppy, six-month rebound has taken the S&P 500 to within 1% of its January 26th high,” Ramsey said.

Another major indicator that is “flashing red” is correlation.

Just prior to the last two stock market crashes, stock prices began to wildly diverge.  While some stocks were still going up, others were cratering big time.  This lack of uniformity is often a sign that big trouble is on the horizon.  The following comes from CNBC

In January 2001, before tech went bust, stocks diverged as growth flourished. Everything named dotcom boomed, but old line industries puttered.

There hasn’t been such a divergence between stocks in the overall market since then, not even during the Great Recession.

Well, guess what is happening right now?

James Paulsen, also with the Leuthold Group, is warning that correlation “is at one of the lowest levels in the post-War era”

“Correlation is at one of the lowest levels in the post-War era,” said James Paulsen, chief investment strategist at Leuthold Group. “The combination is damaging. We now have record low correlation at the same time we have high valuations, and the combination is bad for the market.”

“When you have this situation of the lowest quintile correlation against the highest quintile valuation since 1952, you have 10 percent declines on average,” said Paulsen.

When the stock market finally crashes, a lot of people are going to complain that nobody warned them in advance that it was coming, but in reality anybody that cannot see it coming from a mile away must be blind.

There is no question that it is coming.  The only question is how soon it will get here.

And it certainly doesn’t help that a trade war has erupted which is greatly disrupting global commerce.

For example, a giant cargo ship carrying 20 million dollars worth of soybeans has been circling in the ocean off the coast of China for over a month because it missed the tariff deadline by just a few hours

The Peak Pegasus, which is owned by JPMorgan Asset Management, left Seattle on June 8 on a monthlong voyage to the northeastern Chinese city of Dalian. The trade war between the US and China was erupting just as it left, with President Donald Trump imposing tariffs on billions of dollars’ worth of Chinese imports.

The US ship was due to deliver its 70,000-tonne cargo on July 6, The Guardian reported, but missed the tariff deadline. The Peak Pegasus arrived about five hours after China imposed retaliatory tariffs on US goods including soybeans.

Somebody is going to lose a tremendous amount of money in that deal.

If you take an honest look at the numbers, there is no debate that we are in far worse shape than we were just before the financial crisis of 2008.  Our debt levels are much higher, stock prices are way more inflated, and financial institutions have become even more reckless.  None of the long-term problems that plagued us back in 2008 have been fixed.  Instead, the current system was patched up and all of the bubbles were re-inflated.  Unfortunately, our attention spans are so short these days, and for most people 2008 seems like ancient history at this point.

But without a doubt a much worse crisis than 2008 is on the way, and most people are going to be absolutely blind-sided by it.

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.