Global Financial Markets

U.S. Accused Of “A Declaration Of War” Against China As The Stock Market Teeters On The Precipice Of Disaster

Things are sure getting wild on Wall Street.  On Thursday, the Dow Jones Industrial Average plummeted almost 800 points before roaring back and recovering nearly all of those losses.  The Dow closed just 79 points lower for the day, and if you only looked at the final number you would be tempted to believe that there is not much reason for concern.  But these wild swings up and down are precisely what we witnessed back in 2008, and they are a sign that the stock market is literally teetering on the precipice of disaster.  And it almost certainly would have been a historically bad day for stocks on Thursday if not for a very well-timed article in the Wall Street Journal.  Once news broke that the Federal Reserve is considering “a wait-and-see approach to rate hikes”, stock prices immediately began to rebound…

Stocks closed well off their session lows on Thursday after news broke that the Federal Reserve could tighten monetary policy at a slower pace than previously expected.

The Wall Street Journal reported the central bank is considering whether to signal a wait-and-see approach to rate hikes at its upcoming meeting this month. The report said Fed officials do not know what their next move on rates will be after December.

This just shows the immense power that the Federal Reserve possesses.

As I have discussed so many times previously, the Federal Reserve has far more power over the U.S. economy than anyone else does, and that includes the president of the United States.  Just the mere suggestion that the Fed may slow down the pace of rate hikes was enough to send Wall Street into a feeding frenzy.  Nothing that President Trump could have possibly said could have had that sort of a positive impact.

And this is a perfect example of how fundamentally flawed our system is.  Personally, I believe in free markets, and so it deeply, deeply offends me that we have an unelected, unaccountable panel of central bankers setting our interest rates for us.  As I have repeatedly proposed, we need to shut down the Federal Reserve and return to a system where interest rates are determined by the marketplace.

I’ll get off my soapbox for now.  As I noted yesterday, stocks originally began plunging when news broke that Huawei CFO Meng Wanzhou had been arrested in Canada and would be extradited to the United States…

Trade fears ratcheted up after news broke Wednesday that Huawei CFO Meng Wanzhou was arrested by Canadian authorities in Vancouver, where she faces extradition to the U.S. The arrest — which took place Dec. 1 — decreases the likelihood that a permanent U.S.-China trade deal will be reached. Huawei is one of the largest mobile phone makers in the world.

Meng Wanzhou is also the daughter of the founder of the company, and her arrest apparently has something to do with the Justice Department’s investigation into whether Huawei has violated U.S. sanctions on Iran.

To most U.S. citizens, this is rather meaningless news, but in China there has been a massive explosion of outrage.  The Chinese are demanding her immediate release, and the editor in chief of the Global Times is calling her arrest “a declaration of war”…

Hu Xijin, the editor in chief of the Global Times, described the arrest as a “declaration of war” against China, according to the New York Times.  The Global Times is a state-run newspaper whose views are thought to reflect the ruling communist party in China. Hu’s comments were made on Weibo, a Twitter-like service, the New York Times reported.

“Without any solid evidence, the Canadian and US governments trampled on international law by basically ‘kidnapping’ Chinese citizen Meng,” an official with the Chinese Ministry of Commerce said in a Global Times op-ed. “The China-US trade row could become a protracted war.”

Nothing is done or said at the Global Times without the approval of the Communist Party, and if Hu Xijin was out of line he would be immediately fired.

But he wasn’t fired, because he was simply expressing what most Chinese are feeling at this moment.  In China, the consensus is that relations between the U.S. and China have “gone nuclear”, and at this point the only thing that is going to soothe things is the immediate release of Meng Wanzhou.

Meanwhile, we just got more evidence that our trade war with China is not going very well at all.  Today we learned that the U.S. trade deficit shot up to a 10 year high during the month of October…

The U.S. trade deficit jumped to a 10-year high in October as soybean exports continued to fall and imports of consumer goods rose to a record high, suggesting the Trump administration’s tariff-related measures to shrink the trade gap likely have been ineffective.

The Commerce Department said on Thursday the trade deficit increased 1.7 percent to $55.5 billion, the highest level since October 2008. The trade gap has now widened for a five straight months.

And we also just got more evidence that the U.S. economy is slowing down.  Last month, factory orders declined at the fastest pace that we have seen in more than a year…

New orders for U.S.-made goods recorded their biggest drop in more than a year in October and business spending on equipment appeared to be softening, suggesting a slowdown in activity in the manufacturing sector.

Factory goods orders fell 2.1 percent amid a decline in demand for a range of goods, the Commerce Department said on Thursday. That was the largest decrease in orders since July 2017.

Economic conditions really are deteriorating, and our financial markets really are headed for big trouble.

But some people out there still refuse to accept reality.  For example, an article that was just posted by USA Today is strongly urging people “to buy the dip”…

If you have the courage, now might be a time to step in to buy stocks when they are beaten down and on sale, says Thorne Perkin, president of Papamarkou Wellner Asset Management.

The worst reaction is to panic and sell, as there’s a good chance you could miss a stock rebound in this environment, he says.

Sadly, a lot of people will take this advice and will watch their retirement savings go up in smoke.

We have reached a critical turning point, and things are really starting to heat up.  Unfortunately, most people out there still don’t seem to realize what is happening…

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.

Somebody Pressed The Panic Button On Wall Street – Bank Stocks And Tech Stocks Crash As The Yield Curve Inverts

Stocks aren’t supposed to crash in December.  Most of the time we see a nice “Santa Claus rally” to close out the year, and so what happened on Tuesday is definitely extremely unusual.  The Dow Jones Industrial Average fell 799 points, which was the fourth largest single day point decline in stock market history.  In fact, there was not a single day during the entire financial crisis of 2008 when the Dow dropped by as many points as it did on Tuesday.  Many believed that this “stock market correction” would be limited to October, but then it stretched into November, and now it has extended into the “safe month” of December.  What in the world is going on out there?

It would be difficult to overstate the carnage that we just witnessed.  The Russell 2000 had its worst day in seven years, financial stocks plunged 4.4 percent, and as you will see below FAANG stocks lost enough money to literally buy McDonald’s.

There are many factors that are influencing the markets right now, but the biggest thing that spooked investors on Tuesday was an inversion of the yield curve…

Just when it looked like the battered bull was healing, the Dow Jones Industrial Average suffered a drop of nearly 800 points Tuesday when the bond market sent an ominous signal: The yield on the two-year U.S. government bond rose above the interest rate paid out by five-year notes.

Why the pessimism over that obscure-sounding shift? Historically, when short-term rates rise above longer rates – which is dubbed an “inversion of the yield curve” – it signals an economic slowdown is coming.

However, it should be noted that the yield on two year bonds has not yet risen above the yield on 10 year bonds, and until that happens many investors will still not consider the yield curve to have “officially” inverted yet.

But any way that you want to look at it, what has been happening in the bond market is really bad news for the big banks, because it is going to eat into their profits.  In an article posted on Tuesday, CNN explained how this works…

The flattening yield curve also affects the income banks collect from lending, since banks pay interest on short-term rates and lend at long-term rates. They make money off the difference.

Once the yield on two year bonds fell below the yield on five year bonds, investors took that as a sign of big trouble for the financial sector, and they started dumping bank stocks like crazy…

The flattening yield curve caused investors to bail on bank stocks on concern the phenomenon may hurt their lending margins. The SPDR S&P Bank ETF (KBE) dropped 5.3 percent. Shares of J.P. Morgan Chase, Citigroup and Bank of America all declined more than 4 percent. Citigroup and Morgan Stanley both reached 52-week lows along with Regionals Financial, Citizens Financial and Capital One.

Of course this is just a continuation of a trend that has been building for quite some time, and at this point the damage that has been done is immense.

The following numbers come from Zero Hedge…

  • Global Systemically Important Banks are down 30% from 52-week highs.
  • US Financials down 14.5% from 52-week highs.
  • Goldman Sachs is down 33% from 52-week highs.

We haven’t seen anything like this since 2008, and we will want to watch the “too big to fail” banks very carefully during the weeks ahead.

Meanwhile, the FAANG stocks have been getting monkey-hammered as well.

By the end of the day on Tuesday, those stocks had combined to lose more than 140 billion dollars in market value…

  • Facebook fell 2.2 percent, losing $7.6 billion in implied market value
  • Amazon fell 5.9 percent, losing $50.8 billion in implied market value
  • Apple fell 4.4 percent, losing $38.5 billion in implied market value
  • Netflix fell 5.2 percent, losing $6.5 billion in implied market value
  • Alphabet fell 4.8 percent, losing $37.5 billion in implied market value

That would be enough money to buy McDonald’s.

Yes, I am talking about the entire company.

Yesterday, I talked about the psychological shift that we have been witnessing.  Instead of endlessly promoting the idea that the U.S. economy is “booming”, the mainstream media is now using phrases such as “economic slowdown”, “the next recession” and “market crash”.  Here are just a few examples…

–“Dow plunges nearly 800 points on rising fears of an economic slowdown”

–“Worry Less About Inflation and More About Recession”

–“The years of easy money in the stock market are coming to an end”

Normally, the markets get very sleepy during the time period between Thanksgiving and Christmas, but that has not happened this year.

The markets will be closed on Wednesday due to the passing of former president George H.W. Bush, and perhaps this “time out” will have soothed a lot of nerves by the time the markets reopen on Thursday.

But as I have warned before, this crisis is not even close to being over.

In fact, it is only just beginning.

We have been waiting for a long time for the largest financial bubble in American history to burst, and now it is starting to happen.  It is being called “the Everything Bubble”, and as it implodes we are going to see things happen that we have never seen before.

When historians look back on this time of history someday, the crisis of 2008 will be just a footnote compared to what is coming.  It has taken decades of very foolish decisions to get us to this point, and the consequences for our unwise choices are going to be far more painful than most people would dare to imagine.

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.

George Soros Sold Huge Amounts Of Facebook And Netflix Just Before Tech Stocks Crashed

George Soros avoided a loss of more than 17 million dollars by dumping shares of Facebook, Netflix and Goldman Sachs just before the big crash started happening.  In other words, he made out like a bandit by selling at the peak of the market.  Is he smarter than all the rest of us, did he have some inside information, or was he simply lucky?  In recent months, tech stocks have lost approximately a trillion dollars in value, and many investors have been absolutely devastated.  But not George Soros.  According to the most recent filing with the SEC, Soros Fund Management was able to dump shares in Facebook and Netflix just in time…

Soros Fund Management, which Soros founded and chairs, exited social-network giant Facebook (FB) completely in the third quarter, while also slashing positions in Netflix stock (NFLX) and Goldman Sachs Group stock (GS). Those three stocks have tumbled in the fourth quarter so far, with Facebook and Goldman setting new lows Tuesday. They are down almost 20% and 15%, respectively, so far this quarter. Highflying streaming-content giant Netflix has tumbled almost 29% since the end of September.

Soros saved a chunk of cash by selling: Barron’s estimates that, had he maintained positions in those stocks, he would have unrealized losses of about $17.7 million so far in the fourth quarter.

Perhaps we will never know what prompted those moves, but with George Soros these strange “coincidences” have happened again and again throughout his career.

Unfortunately, the top executives at the major tech companies were not as prescient, and so some of them have literally lost billions of dollars…

Amazon CEO Jeff Bezos has lost a stunning $42 billion since early September, according to the Bloomberg Billionaires Index, as the e-commerce giant’s stock has dropped more than 25 percent.

Embattled Facebook CEO Mark Zuckerberg has also taken a beating as reports indicate he’s lost some $34 billion since late July and is now worth $52 billion – ranking as the seventh-richest person in the world.

Google chiefs Larry Page and Sergey Brin have lost a combined $20 billion from their peak wealth in July as the search engine’s stock has dropped 20 percent and closed in a bear market on Monday for the first time since 2011.

Could you imagine losing 42 billion dollars?

If I lose 42 dollars I get upset.  So I couldn’t even imagine how I would feel if I lost $42,000,000,000.

The atmosphere on Wall Street has completely shifted over the last couple of months.  Not too long ago those of us that were calling for a bear market were being mocked, but nobody is mocking anymore.

One of the big things that has been propping up the stock market in recent years has been corporate buybacks.  In fact, I wrote a major article about this not too long ago that you can find right here.  Big corporations have literally been spending hundreds of billions of dollars to prop up their own stock prices, and many of these corporations have been going into tremendous amounts of debt in order to do this.

For a long time General Electric was one of the biggest offenders.  They borrowed billions upon billions of dollars for stock repurchases, and it worked for a while.  But now GE shares have been absolutely tanking, and they can’t keep the game going anymore because they are drowning in about 100 billion dollars of debt.  The following comes from an excellent Marketwatch article…

GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.

Even more important, GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion. As the new CEO Larry Culp told CNBC last Monday: “We have no higher priority right now than bringing those leverage levels down.”

GE was once one of the greatest corporations on the entire planet, but now they stand on the precipice of collapse because they were addicted to borrowing money for stock buybacks.

Of course GE is far from alone.  Other corporations that have gone into serious amounts of debt in order to fund share repurchases are also now paying a very great price for doing so.  Ultimately, it was a giant Ponzi scheme of epic proportions, but now the game is collapsing.

In my first novel, there is a stock market collapse that begins in the fall, and things begin to deteriorate very rapidly in this country thereafter.  Unfortunately, we are starting to watch a very similar scenario play out right in front of our eyes.  In recent years a booming stock market has been a big point of pride for a lot of Americans, but now that bubble is bursting.

For many people, money is more important than anything else in life.  In fact, a recent survey discovered that Americans find more meaning and purpose in life from “career” and “money” than they do from “faith”.

But when “the god of money” fails, how are most Americans going to respond?

I do not believe that the United States is going to handle another economic meltdown very well.  We are already a deeply angry and divided nation, but at least our debt-fueled “prosperity” has kept things relatively calm.

If that “prosperity” completely disappears, we are going to have a complete and utter national nightmare on our hands.

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 Market Crash: The Dow Has Fallen Nearly 2,500 Points And FAANG Stocks Have Lost A TRILLION Dollars In Value

Thanksgiving week was not supposed to be like this.  Normally things are slow in the days leading up to Thanksgiving as investors prepare to gorge themselves with turkey and stuffing as they gather with family and friends.  But this year the stock market is crashing, and Wall Street is in panic mode.  On Tuesday, the Dow Jones Industrial Average closed at 24,465.64, which is nearly 2,500 points lower than the all-time high of 26,951.81 that was set in early October.  But as I noted yesterday, what has been happening to tech stocks is even more dramatic.  Each one of the FAANG stocks is now down by more than 20 percent, and they have combined to lose more than a trillion dollars in value.  We haven’t seen anything like this since the financial crisis of 2008, and at this point all of Wall Street’s gains for 2018 have been completely wiped out.

Fear is a very powerful motivator, and right now a lot of investors are feverishly getting out of the market because they are afraid of losing their paper profits.

One analyst is describing what is going on as a rush for the exits…

“The highways will be crowded this evening as the Thanksgiving rush will begin in earnest, but this morning investors are rushing for the exits,” Paul Hickey, co-founder of Bespoke Investment Group, wrote to clients on Tuesday.

But for many tech investors, the truth is that the cattle have already left the barn.

Just check out how much market capitalization the “big five” have already lost.  The following numbers come from CNBC…

  • Facebook: $253 billion
  • Amazon: $280 billion
  • Apple: $253 billion
  • Netflix: $67 billion
  • Alphabet: $164 billion

When you add those figures together, you get a grand total of 1.02 trillion dollars.

If you were alive when Jesus was born, and you spent a million dollars every day since then, you still would not have spent a trillion dollars by now.

A trillion dollars is an amount of money so vast that it is difficult to comprehend, and those that hesitated to sell at the peak of the market mania are never going to get that money back.

And many believe that the tech losses are just beginning because several of these companies have now entered “death cross” territory…

This could be the final nail in the coffin for the FANG trade.

Three of the companies within the big-tech quartet have entered into death crosses, with Facebook, Netflix and Google parent Alphabet seeing their 50-day moving averages cross below their 200-day moving averages.

We shall see what happens in the days ahead, but right now things do not look good.

Apple was supposed to be the strongest and most profitable of the FANG companies, but slowing sales have suddenly changed everything.  In fact, Goldman Sachs just cut their price target for the stock…

Goldman Sachs slashed its Apple price target on Tuesday. The firm said in a note there is a “weakness in demand for Apple’s products in China and other emerging markets,” as well as a disappointing reception for the iPhone XR model.

As the trade war intensifies, many in China have been encouraging a boycott of American goods.

Could this be one of the reasons why Apple phone sales are slowing over there?

The trade war is also being singled out as one of the reasons why the stock market as a whole is falling.  The following comes from CNN…

The losses have been sparked by a flurry of concerns about everything from higher interest rates and crashing oil prices to the US-China trade war. But the overarching theme is that investors are bracing for the end of the fantastic economic and profit growth that marked the past year. Analysts expect a deceleration in 2019 driven by tariffs, the fading impact of the tax cuts and higher borrowing costs caused by the Federal Reserve.

“Put simply, stocks have already started to price in the risk of an economic slowdown,” Goldman Sachs chief US equity strategist David Kostin wrote to clients on Tuesday.

Ultimately, people buy stocks because they believe in the future.  If investors believe that they will get more money back than they are originally investing, they will buy stocks.  But if they don’t believe that will be the case, they won’t buy stocks.

For a long time, there was a tremendous amount of optimism about the future on Wall Street, but now that has disappeared.  Without that relentless optimism, it is inevitable that stock ratios will return to their long-term averages, and the S&P 500 sales to price ratio is telling us that stock prices still have a very long way to fall.

But our system will not be able to handle a decline of that magnitude.  There is more leverage on Wall Street today than ever before, and a huge decline in stock prices would lead to a meltdown unlike anything we have ever witnessed.

If we break 20,000 on the Dow, the panic on Wall Street will be off the charts, and the flow of credit will be absolutely strangled. As a result, economic activity would crash at a pace that would make 2008 look like a Sunday picnic.

Our economy is more dependent on Wall Street than ever, and it is absolutely imperative that we have a healthy financial system.  Now that the financial system is starting to crumble, a lot of people are becoming highly alarmed.

But according to Larry Kudlow, we have absolutely nothing to worry about…

‘Corrections come and go,’ he told reporters at the White House, saying that the economy is strong overall.

‘I’m reading some of the weirdest stuff how a recession is in the future,’ Kudlow said. ‘Nonsense.’

‘Recession is so far in the distance I can’t see it,’ he said after appearing in a Fox Business Network interview.

It would be wonderful if Kudlow turns out to be correct.  But in “Get Prepared Now”, I warned about what can happen when we allow others to do our thinking for us.  What is happening on Wall Street should be obvious to everyone, and no amount of optimistic chatter is going to change that.

And the truth is that even the mainstream media is starting to acknowledge the reality of what we are now facing.  CNBC just took a poll of global finance executives, and they discovered that more than half of them believe that the Dow will fall below 23,000…

More than half of the members of the CNBC Global CFO Council think the Dow Jones Industrial Average will fall below 23,000 — roughly 2,000 points from its current level — before the stock market barometer is ever able to top the 27,000 level. The 23,000 level would equate to another 8 percent in decline among the Dow group of stocks before the selling stops.

Ultimately the Dow is going to go much lower than 23,000, and it will shake Wall Street to the core.

But for now, hopefully everyone can have a happy Thanksgiving, because it is likely that there won’t be many happy days for investors after that as this financial meltdown accelerates.

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.

All The FANG Stocks Are Now In A Bear Market And Facebook Investors Have Already Lost 39 Percent Of Their Paper Wealth

These large stock market declines are starting to become a regular thing, and tech stocks are getting hit particularly hard.  But we have been in a bull market for such a long time that many investors are having a difficult time comprehending what is happening.  Many just keep believing that their beloved tech stocks will eventually bounce back because they just can’t accept the fact that the party is over.  At this point, all of the “FANG stocks” have officially entered bear market territory.  Facebook is down 39.5 percent from their 52 week high, Amazon is down 25.4 percent, Netflix is down 35.6 percent and Google is down 20.3 percent.  And since many throw in Apple to make the acronym “FAANG”, we should also note that Apple’s stock price is now down more than 20 percent from the peak.  The tech stock crash that so many have been waiting for has arrived, and many analysts believe that it is going to get a whole lot worse.

The combined market value of Facebook, Amazon, Netflix and Google has fallen by 610 billion dollars so far.

Just think about that for a moment.

Most Americans don’t even realize that tech stocks have been crashing, and many of them simply assume that their investments are safe.

And at one time Facebook was considered to be a very safe investment, but now 39.5 percent of the value of Facebook has already been completely wiped out.

It looks like November will be Facebook’s third month in a row in the red, and that will be the longest monthly losing streak that it has ever had.

A lot of people are shocked that this is happening so rapidly.  But really the only surprise is that it has taken this long for these massively overvalued stocks to crash and burn.

The truth is that these companies have been priced beyond perfection.  So when even the smallest piece of bad news comes along, investors can start to panic.

For example, one of the big reasons why Apple has declined so much is because production orders for all three of the new iPhones that were unveiled in September have been slashed.  It looks like iPhone sales are not going to be at quite the level everyone had anticipated, and Wall Street responded by throwing a huge temper tantrum.

And things look even more ominous for Facebook.  As Joel Kulina of Wedbush recently noted, the number of people that are using Facebook on a daily basis in North America is falling…

Joel Kulina of Wedbush says problems in the company have been evident longer than this month. “If you go back to that earnings report back in July, they missed across the board and what really jumps out at me is that we’re seeing declining daily and monthly active users in North America or stalling active user metrics in North America, declining in Europe and the only regions that are seeing growth is in Asia where the average revenue per user is much lower than the Western world,” Kulina said.

When Facebook decided to start censoring people for their political views on a massive basis, that was the beginning of the end for the company.  At this point they have alienated millions upon millions of users that were once addicted to the service, and that is damage that will never be repaired.

And it is inevitable that something newer, better and more engaging will eventually come along.  Not too long ago, MySpace was the unbeatable giant in social media, but then Facebook came along and crushed them.  Now it is clear that Facebook has peaked, and the void that is being created as Facebook declines will certainly be filled by someone else.

But what we are witnessing in the financial marketplace is not just about tech stocks.  This is a broad-based global decline, and it has been going on for quite some time.

In fact, just check out the following tidbit from Simon Black…

Deutsche Bank says 89% of all asset classes it tracks are negative this year – the worst year since 1901.

This is often how a big downturn begins: gradually, then suddenly. Asset prices stew and fester, slowly grinding downward for months while people maintain hope that prices will recover.

Yes, you read that correctly.

89 percent of all the asset classes that they track are down in 2018.

That is an absolutely astounding number.

We haven’t seen anything like this since the last financial crisis.  Most people seem to assume that the problems that caused the last financial crisis have been fixed, but that is not the case at all.  Instead, things were patched together and the global financial bubble was made even bigger.  Here is more from Simon Black…

Instead of giving million-dollar mortgages to unemployed borrowers with a history of default, investors are loaning billions of dollars to money-losing zombie businesses, or to governments that are already in debt up to their eyeballs, all while pretending these are safe, credible investments.

Total global debt back in 2008 was about $173 trillion, worth about 280% of GDP.

Today total global debt is $250 trillion, worth about 320% of GDP. It’s only gotten worse.

Now the “Bubble To End All Bubbles” is starting to burst, and great chaos is ahead.  What we experienced in 2008 and 2009 is nothing compared to what is in front of us, and most Americans have absolutely no idea what is coming.

At the moment, one key thing to keep a close eye on is the high yield bond market.

High yield bonds (also known as “junk bonds”) crashed really hard just before the financial crisis of 2008 erupted, and now it is happening again.

Even if high yield bonds didn’t go down any further, they have already dropped to a level that indicates that stocks still have a lot more room to fall.

But if high yield bonds do continue to plummet like this, it is a clear indication that it is time to put your crash helmet on.

These are interesting times, and I have a feeling that they are about to get a whole lot more interesting.

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.

This Wasn’t Supposed To Happen…

We have definitely deviated from the script.  According to virtually all of the “experts”, the stock market was not supposed to keep plummeting in November.  This was supposed to be the month when the market calmed down and things returned to normal.  But instead, November is starting to look a whole lot like October, and many investors are really starting to freak out.  U.S. stocks declined for a third day in a row on Monday, and all post-election gains have now been completely wiped out.  The Dow Jones Industrial Average lost another 602 points, and all of these large daily losses are really starting to add up.  It may still be a bit too early to call this a “major financial crisis”, but if stock prices keep plunging like this it won’t be too long before all hell starts breaking loose on Wall Street.

Goldman Sachs, GE and California utility stocks were some of the biggest losers on Monday, but it was Apple that made the biggest news…

Investors grew concerned after Wells Fargo analysts identified Apple as the unnamed customer that optical communications company Lumentum Holdings said was significantly reducing orders. The news sent Apple’s stock down 5 percent for the day. Lumentum shares plunged almost 33 percent.

Shares in other major tech stocks fell. Advanced Micro Devices gave up 9.51 percent, while Nvidia fell 7.84 percent. Micron Technology lost 4.27 percent. Banks and consumer-focused companies, and media and communications stocks also took heavy losses.

All along, tech stocks had been leading the bull market on the way up, but now things have completely shifted.

In recent weeks tech stocks have been absolutely cratering, and several of the biggest names are now officially in bear market territory.  The following summary comes from Wolf Richter…

  • Facebook [FB] dropped 2.4% today, to $141.55 and is down 35% from its peak in July.
  • Amazon [AMZN] dropped 4.4% to $1,636.85 a share and is down nearly 20%, from the peak on September 5, when shares nearly kissed for the briefest moment $1 trillion.
  • Alphabet [GOOG] dropped 2.6%. At $1,038.63, shares are down 18% from the peak in July.
  • NVIDIA [NVDA] plunged 7.8% today to $189.54 and is down 34.5% over the past six weeks and down 11% from a year ago.
  • Netflix [NFLX] dropped 3.1% today to $294.07 and has plunged 30% from its high in early July.
  • Microsoft [MSFT] fell 2.4% today to $106.87 and is down 7.5% from its peak at the beginning of October.

The environment on Wall Street is radically different than it was even six months ago.  Today, there are concerns about what a divided Congress will mean for the next two years.  Certainly there will be no more tax cuts, and many investors are bummed about that.  There are also concerns that the trade war between the United States and China will continue to escalate.  In addition, interest rates continue to rise, housing numbers continue to get worse, and we continue to get more evidence that the global economy is really starting to slow down.

And one thing that is really spooking investors right now is the surging U.S. dollar…

Stocks investors are spooked about a lot of things, and the strong dollar biting into earnings growth is now one of them.

The dollar index, which measures the greenback versus a basket of other currencies, jumped 0.7 percent on Monday to 97.58, a 17-month high. As the dollar rose, the Dow Jones Industrial Average lost 602 points to 25,387, and the S&P 500 was down nearly 2 percent to 2,726.

You may be tempted to think that a strong dollar would be a good thing, but in this financial climate it is definitely not.  As I have discussed previously, many emerging market countries binged on debt during the boom years, and much of that debt was denominated in U.S. dollars.  Now that the dollar is surging, that is making it much, much more difficult to service and pay back those loans.

Meanwhile, the price of oil continues to fall precipitously.  At this point, oil has now fallen for 11 days in a row…

Crude has now lost ground for 11 consecutive days, the longest slide since oil futures trading was introduced on the NYMEX in March 1983. The historic slump knocked oil into a bear market — barely a month after it hit four-year highs. Selling accelerated in extended trading, with crude breaking below $59 a barrel.

Monday’s drop signals skepticism from investors that Saudi Arabia will be able to quickly mop up a glut of supply that has suddenly emerged.

If you will remember, the price of oil also spiked dramatically and then fell like a rock just prior to the financial crisis of 2008.

Could it be possible that a similar scenario is playing out again?

In “Get Prepared Now”, I talked about what the coming financial crisis would mean for all of us, and I noted that many prepare for such a crisis by investing in precious metals.  So it is quite interesting to note that global central banks were voraciously buying gold during the third quarter of this year…

Gold is particularly attractive to central banks looking for safe, liquid assets. Central bank purchases of gold increased by 22% during the third quarter. That’s the fastest pace since the fourth quarter of 2015, according to Natalie Dempster, managing director for central banks and public policy at the World Gold Council.

Could this be a sign that the central bankers believe that a new crisis is looming?

Of course there are many of us that are stunned that things have already deteriorated so rapidly.  I expected that October would be bad, but I didn’t think that it would be that bad.

And many of us had anticipated that things would calm down a bit in November, and so a 602 point decline on Monday definitely came as a surprise.

Ultimately, it is just a matter of time before we witness a stock market crash far greater than we saw in 2008, but we can certainly hope that it will be put off for as long as possible.

However, the truth is that nobody can outrun the relentless march of time indefinitely, and time is most certainly running out for Wall Street.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

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

Global Stocks Plunge Again And A Former Reagan Administration Official Is Warning Of A “40% Crash”

Stocks are falling again, and many believe that this new crisis is only just beginning.  After a disappointing end to last week, a lot of investors were hoping for a bounce to start this week, but so far that has not materialized.  As I write this article, all the big markets in Asia are down, and it looks like it is going be be a rough morning for Wall Street.  Of course we probably won’t see too much movement as global markets wait to see what happens on Tuesday, and those results could potentially move things up or down substantially.  Ultimately, I have a feeling that Wall Street will not be too happy if control of Congress is divided, because that would almost certainly mean that very little will get accomplished in Washington for the next two years.  Instead, we will likely see even more bickering and fighting than we are seeing now.

But no matter what happens in the short-term, a lot of experts are convinced that the big market crash that everyone has been waiting for is finally here.

One of those experts is David Stockman.

Stockman is a former member of Congress, and he was the Director of the Office of Management and Budget under President Ronald Reagan.  These days he is a frequent contributor on CNBC, and he recently told the network that there will be “a 40 percent stock market plunge”…

David Stockman warns a 40 percent stock market plunge is closing in on Wall Street.

Stockman, who served as President Reagan’s Office of Management and Budget director, has long warned of a deep downturn that would shake Wall Street’s most bullish investors. He believes the early rumblings of that epic downturn is finally here.

Because our financial system is even more leveraged today than it was in 2008, a plunge of that magnitude would be absolutely disastrous.  Virtually everyone would need a “bailout” at that point, and economic activity would decline dramatically as the flow of credit dried up almost completely.

Needless to say, we would find ourselves in a very harsh recession very rapidly, and that is another thing that Stockman is anticipating…

“We’re going to be in a recession, and we’re going to have another market correction which will be pretty brutal,” Stockman said.

Of course Stockman is far from alone.  Another economic expert that is warning of an imminent crisis is Mish Shedlock…

In the last 10 years not a single fundamental economic flaw has been fixed in the US, Europe, Japan, or China. The Fed was behind the curve for years contributing to the bubble. Massive rounds of QE in the US, EU, and Japan created extreme equity and junk bond bubbles. Trump’s tariffs are ill-founded as is Congressional spending wasted on war.

Potential Catalysts

  1. Junk Bond Bubble Bursting
  2. Equity Bubble Bursting
  3. Italy
  4. Tariffs
  5. Brexit
  6. Pensions
  7. Housing
  8. China

Many will blame the Fed. The Fed is surely to blame, but it is prior bubble-blowing policy, not rate hikes now that are the problem.

Shedlock has correctly identified a number of factors that could act as “catalysts” for this crisis.  The truth is that signs of trouble are all around us, and it is only going to take a very small nudge to push us off of a very steep cliff.

Instead of fixing our long-term problems in 2008, our leaders patched up the current system and started reinflating the bubble.

Now we have created the largest financial bubble in all of human history, and the only way to keep it from imploding is to inflate it even more.

On some level, just about everyone knows that this story is going to end badly, and that a horrifying economic downturn is ahead of us.

Just look at what General Motors is doing.  Even though the U.S. economy has supposedly been “doing well”, they just offered a buyout to 18,000 of their employees because they want “to act ahead of the next economic downturn”…

And yet, despite its strong position, Automotive News reports that GM plans to offer about 18,000 employees a voluntary buyout. The offer will only be extended to salaried employees who have worked at the company for at least 12 years, and eligible employees have until November 19 to decide whether to accept or not.

But why would GM reduce its workforce when it’s doing so well? With sales in the U.S. and China slowing down, hybrid and electric vehicles growing increasingly popular, and automated driving technology finding its way to more vehicles, GM sees a lot of change on the horizon. It’s also worried about the potential for another recession, and it wants to act ahead of the next economic downturn.

Earlier today, I received an email from one of my readers that really made me think.

He expressed his belief that a great economic crisis is rapidly approaching, and he wanted to know how he could help warn people about what is coming.

I wasn’t sure what to tell him.

At this point, the elite know what is coming and they are feverishly preparing for it.  The “smart money” is pulling out of stocks at an unprecedented pace, and the ingredients for a “perfect storm” are definitely coming together.

But most ordinary Americans have bought into the false narrative that everything is going to be okay somehow.

Sadly, everything is not going to be okay, and a lot of people are going to be completely overwhelmed by the very painful times that are coming.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

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

“Red October”: We Just Witnessed The Worst Month For The S&P 500 In 7 Years

This was an October that many of us will never forget.  The month of October is typically the most volatile month of the year for stocks, and that was definitely the case in 2018.  It was the worst month for the S&P 500 in 7 years, and it was the worst month for the Nasdaq in almost 10 years.  But the damage could have been much worse if we had not seen a bounce the last two trading days of the month.  On Wednesday, the Dow Jones Industrial Average was up 241 points, and investors are hoping that this is a sign that things are starting to settle down a bit.  And hopefully things will be calmer in November, because things were so chaotic in October that the month has already been branded “Red October” by the mainstream media…

Wall Street finally bid good riddance to what one professional stock investor dubbed “Red October.”

In a tumultuous month marked by big price swings, rising fear levels and emerging risks, the U.S. stock market suffered its biggest October decline since the 2008 financial crisis, prompting shaken investors to reassess the staying power of a bull run that began more than nine years ago.

When we go back and look at the month as a whole, the damage is breathtaking.

Here is a summary of the carnage that we witnessed…

-October was the worst month for the S&P 500 since September 2011.

-October was the worst month for the Nasdaq since November 2008.

–Nearly 2 trillion dollars in U.S. stock market wealth was wiped out.

-Overall, approximately 8 trillion dollars in global stock market wealth was wiped out.

-October was the worst month ever for the “FANG” stocks.

-Facebook was down 7.7 percent.

-Alphabet (the parent company of Google) was down 9.7 percent.

-Netflix was down 19.3 percent.

-Amazon was down 20.2 percent.

-Global systemically important bank stocks were down more than 10 percent.

To me, one of the most noteworthy things that happened in October was the huge movement that we saw in the junk bond market.

Usually junk bonds start to rapidly decline just before a major stock market crash happens, and October was the worst month for junk bonds since 2008.

That is a major league red flag, but not a lot of people are talking about it.

But without a doubt there is a lot of anxiety on Wall Street right now, and even many long-time bulls are turning into bears.

For example, just consider what Ralph Acampora is saying…

The so-called “Godfather” of market chart analysis said that the damage already done to the stock market is much worse than most people are talking about. Ralph Acampora, a prominent market technician, says the stock market is in bad shape and it’s worse than many Wall Street investors appreciate.

“From a technical perspective, the damage that has been done technically to the stock market is much, much worse than people are talking about,” he told MarketWatch in a phone interview on Tuesday. Acampora also said that the technical damage that has resulted in the Dow Jones Industrial Average and the S&P 500 index erasing all of their gains for 2018, and the Nasdaq Composite Index falling into correction territory (which is usually characterized as a decline of at least 10% from a recent peak) will take months to repair.

Acampora had been a bull for a very long time, and while many other analysts are calling this decline a “correction”, he believes that “this is something different”…

“I’ve been a bull for a long, long time and like everyone, I was waiting for a correction but this is something different,” said Acampora. “All the leadership is getting crushed,” he said. He added that he feels that the entire market will go into bear territory soon.

“Honestly, I don’t see the low being put in yet and I think we’re going to go into a bear market,” he said according to MarketWatch.

We’ll see what happens in November.

Stocks will definitely move next week after the election results come in.  I would think that a divided result (Republicans keep the Senate but Democrats take the House) would be interpreted by investors as a negative sign because that will produce gridlock in Washington.

However, that will only move the needle for a day or two.

Ultimately, I still believe that some sort of “trigger event” will be necessary in order for a full-blown stock market crash to happen.

But the smart money is already behaving as if a stock market crash is a certainty.  Just consider the following chart from Zero Hedge…

Meanwhile, the number of Americans that expect the stock market to decline over the next year is at the lowest level in over a decade.

That seems quite odd.

As you can see from the chart, the smart money has correctly anticipated the overall direction of the market all the way back to 1990.

Do you think that the smart money will be wrong this time?

We have never seen the smart money get out of stocks at such a rapid pace.  Despite the bounce of the last couple of days, there is definitely an atmosphere of gloom on Wall Street.

The ingredients for a “perfect storm” are definitely coming together.  It may not be today or tomorrow, but at some point a “trigger event” will happen, and then all hell will break loose in the financial markets.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

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

 

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