October

Global Markets Continue To Fall As Bloomberg Warns “The Next Financial Crisis Is Staring Us In The Face”…

October 14, 2018October 14, 2018 by Michael

It looks like it could be another tough week for global financial markets. As the week began, markets were down all over the world, and relations between the United States and Saudi Arabia have taken a sudden turn for the worse. That could potentially mean much, much higher oil prices, and needless to say that would be a very bad thing for the U.S. economy. It has really surprised many of us how dramatically events have begun to accelerate here in the month of October, and the mood on Wall Street has taken a decidedly negative turn. Yes, U.S. stocks did bounce back a bit on Friday (as I correctly anticipated), but it was much less of a bounce than many investors were hoping for. And this week got off to a rough start with all of the major markets in Asia down significantly…

In the Greater China region, the Hang Seng index in Hong Kong fell by around 0.9 percent in early trade. The Shanghai composite also slipped by 0.33 percent while the Shenzhen composite bucked the overall trend to edge up by 0.4 percent.

In Japan, the Nikkei 225 fell by 1.48 percent in morning trade, while the Topix index slipped by 1.17 percent, with most sectors trending lower.

But what happened in Asia was nothing compared to what we witnessed in Saudi Arabia.

At one point the stock market in Saudi Arabia had plummeted 7 percent after news broke that President Trump warned that the Saudis could face “severe punishment” for the disappearance of journalist Jamal Khashoggi.

The Saudis are denying doing anything wrong, but everyone agrees that he is missing, and everyone agrees that he was last spotted entering the Saudi Consulate in Istanbul on October 2nd.

And it is being reported that U.S. intelligence had previously intercepted communications which indicated that the Saudis planned to abduct Khashoggi.

It is believed that Khashoggi was dismembered after being abducted by the Saudis, and all of the major western powers have expressed major concern about his fate. But the Saudis insist that they didn’t have anything to do with his disappearance, and they are threatening “greater action” if any sanctions are imposed upon them. The following comes from USA Today…

Saudi Arabia denied any involvement in the disappearance of Washington Post contributing journalist Jamal Khashoggi and warned Sunday that any sanctions against the oil-rich kingdom would be met with “greater action” and possibly exploding oil prices.

“The kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures or repeating false accusations,” the government said in a statement released to Saudi media. “The Kingdom also affirms that if it receives any action, it will respond with greater action.”

So what might that “greater action” look like?

Well, one Saudi official is warning that the price of oil could rise to “$100, or $200, or even double that figure”…

In a column published just after the SPA statement, Saudi-owned Al Arabiya channel’s General Manager Turki Aldakhil warned that imposing sanctions on the world’s largest oil exporter could spark global economic disaster.

“It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure,” he wrote.

If the price of oil did shoot up to $200 a barrel, that would be absolutely crippling for the U.S. economy.

You see, it wouldn’t just cost a whole lot more to fill up your gas tank. Virtually everything that we buy has to be transported vast distances, and so the price of gasoline must be factored into all of those products.

The price of food is already ridiculously high, and so I don’t even want to imagine what a trip to the grocery store might look like if the Saudis follow through on their threats.

Meanwhile, warnings from the mainstream media of a new crisis on Wall Street continue to become even more dramatic. For example, the following comes from a Bloomberg article entitled “The Next Financial Crisis Is Staring Us in the Face”…

The financial crisis ripped through Wall Street 10 years ago, pushing the global economy to the edge of the abyss. One might think those searing experiences would have created a learning opportunity — for managing risk better, understanding structural imbalances in the financial markets, even learning a bit about how our own cognitive processes malfunction.

Instead, we have little new wisdom or self-awareness to show for that traumatic event.

And this is how that Bloomberg article ended…

As memories of the crisis fade as the economy recovers, we find the seeds of the next crisis are already being planted. They are the exact same issues of debt and mismanaging risk and not understanding our own limitations. Failing to learn from our prior experiences, we seem doomed to repeat them. We only have ourselves to blame.

That sounds like it could have been ripped right out of The Economic Collapse Blog.

Of course the author of that Bloomberg article is right on the money. We never learned the very hard lessons that we should have learned from the crisis of 2008. Instead, we simply reinflated all of the old bubbles and made them bigger than ever before.

Now America is 68 trillion dollars in debt, and our day of reckoning is so close that even the mainstream media is sounding the alarm.

It should be another very interesting week. Monday may set the tone for the entire week, and so hopefully U.S. markets will bounce back some more. If they don’t, it could set off another round of panic…

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.

October Horror On Wall Street: Investors Nervously Watch To See If The S&P 500 Will Bounce Back Above Its 200-Day Moving Average

October 12, 2018October 12, 2018 by Michael

Is this going to be another October to remember for Wall Street? As I have explained previously, the month of October has historically been the worst month by far for the U.S. stock market, and it has also been the month when our most famous stock market crashes have taken place. The stock market crash that started the Great Depression in 1929 happened in October. The largest single day percentage decline in stock market history happened in October 1987. And most of us still remember what happened in October 2008. So will we be adding October 2018 to that list? Well, so far things are certainly moving in that direction. Between Wednesday and Thursday, the Dow Jones Industrial Average plunged a total of 1,378 points. And the S&P 500 has now broken below the all-important 200-day moving average. If the S&P 500 bounces back above the 200-day moving average on Friday, that will be a sign that things have stabilized at least for the moment. If that doesn’t happen, all hell might break loose next week.

Personally, I believe that the S&P 500 will bounce back on Friday, but that doesn’t mean that the crisis is over. Remember, some of the best days in stock market history happened right in the middle of the financial crisis of 2008. During market panics, we should expect to see dramatic ups and downs. When markets are calm, that is good news for stocks, but when markets start swinging wildly that is usually a sign to start heading for the exits.

And without a doubt, we have witnessed quite a bit of volatility over the past two days…

-The Dow Jones Industrial Average is now down almost 2000 points from the all-time high that was established just last week.

-The S&P 500 has now fallen for six trading sessions in a row. That is the longest streak since the 2016 presidential election.

-The Nasdaq is having its worst month since November 2008.

-The Russell 2000 is now down 11.2 percent from the 52-week high, which means that it is officially in correction territory.

-Netflix has fallen 11 percent in just the past week.

-Facebook has lost of whopping 30 percent of its value since July.

-Only 1.5 percent of S&P 500 tech stocks are currently above their 50 day moving averages.

-Wednesday’s decline was the third largest single day stock market point crash in all of U.S. history.

-On Thursday, gold futures shot up by the most that we have seen since Brexit.

-European stocks just hit 20-month lows.

-Italian stocks have officially entered bear market territory.

When markets begin to fall precipitously, often forced selling can accelerate that process.

The following is how Andrew Zatlin described this in his most recent article…

You get a call: your $1M stock is now worth only $950K. The lender can only allow you to have a loan of $475K, and your loan is for $500K. Problem part 2: that $500K loan also dropped 5% and you are down to $475K.

The lender feels very sorry for you, sends you a ghost hug emoji (it’s a hug that you can’t feel but you know is there). Unfortunately, you have 1 day to pay back the $25K. It’s the law and if you don’t get them money by close of business, they will liquidate your stock until they get the $25K

You’ve had paper gains and paper losses, depending on the ebb and flow of the market. But now your paper loss is going to be a real loss.

You aren’t allowed to ride out the loss: the loan is due in part TODAY.

You have what retail investors know as a margin call.

The term for this situation – extending your market position by borrowing against your existing liquid value – is called leverage. And the recent drop in the market means that investors are now over-leveraged.

Forced selling is the meme for the day. Fire sales will be underway.

Right now, Wall Street is more leveraged that it has ever been before.

As long as stocks have been going up, that hasn’t been a problem and everyone has been making money.

But when stocks start to go down, suddenly that becomes a massive problem.

And it looks like we may have had some dramatic “forced selling” in the market on Wednesday. At one point in the afternoon, the market was suddenly flooded with sell orders…

Today was different, because shortly after 2:40pm when a massive selling program emerged as if out of nowhere and sent the Dow Jones plummeting by over 600 points in a manner of minutes, the selling volume was indeed one for the ages.

According to the NYSE TICK, or uptick minus downtick, index, at precisely 2:43pm, the selling order flood was so big it not only surpassed the acute liquidation that was observed around 3PM on Wednesday, but the -1,793 print was one that had not been seen for 8 years: as Bay Crest Partners technical analyst Jonathan Krinsky wrote, the sudden and violent surge in selling as measured by the TICK index, when downtick volume overpowered upticks, was the lowest reading since the May 6, 2010 “flash crash” when liquidity dried up in markets, sending the market plummeting for a few minutes, as HFT briefly went haywire (or when a spoofer outsmarted the algos, depending on what version of events one believes).

In any case, “someone” was in a massive hurry to get out of the market and was willing to hit literally any and every bid in doing so.

But now that the panic selling seems to have subsided, many “experts” are urging investors to use this as a “buying opportunity”…

“We look at this as a buying opportunity,” said Dryden Pence, chief investment officer at Pence Wealth Management. “I would have my shopping cart out here.”

And even CNBC’s Jim Cramer is encouraging everyone to buy stocks on Friday…

Friday is the time to start buying stocks again, Jim Cramer said during a CNBC special show on Thursday evening.

Is this really a good idea?

We shall see.

As I noted above, a lot of people are watching the S&P 500 to see if it will bounce back above the 200-day moving average. The following comes from CNBC…

Wall Street’s anxieties took a new turn Thursday after the stock market broke below a key technical level that has supported the market for the past three years.

The S&P 500 index finished the day below its 200-day moving average, one of the most popular technical indicators used by investors to help analyze price trends. Sell-offs earlier this year — occurring in February, March and April — all had bottomed at that level.

Ultimately, if there is a going to be a full-blown collapse of the stock market right now, we would need some sort of “kick off event” in order to make that happen. It would have to be something on the scale of another 9/11, the collapse of Lehman Brothers, an unprecedented natural disaster, the start of a major war or something else along those lines.

Yes, conditions are definitely ripe for a “perfect storm” to develop, but it is going to take a little bit of a push to get us there.

So keep your eyes open, because our world is becoming more unstable with each passing day, and it won’t take much to push us into complete and utter economic chaos.

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

September 26, 2018 by Michael

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.

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

September 26, 2018September 26, 2018 by Michael

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.

Winds Of War: Is Russia Conducting A Massive Mobilization Of Troops For An Invasion Of Ukraine?

August 30, 2016August 30, 2016 by Michael

The drumbeats of war are growing louder. Fighting in eastern Ukraine between separatists and pro-government forces has risen to an intensity not seen in well over a year, and the Russians claim that they recently foiled a “Ukrainian plot” to conduct terror attacks in Crimea. As tensions in the region have increased, the Russians have used the cover of “military drills” to move massive amounts of troops and military equipment up to the border with Ukraine. This is something that I wrote about a couple of weeks ago, but things have intensified since then, and a huge military exercise is planned for September. Needless to say, the Ukrainians are quite alarmed by this, and Ukrainian President Petro Poroshenko is warning that a full scale mobilization of the Ukrainian military may be needed. If something is going to happen, it is likely to happen soon. As you will see below, once we get into October it will become much less likely that we would see a Russian invasion of Ukraine.

We aren’t hearing much about this conflict in the U.S. media, but over in Europe this is a very big deal. Just consider the following excerpt from an article in the Independent entitled “Russia is teetering on the brink of ‘all out war’ with Ukraine“…

Ukraine is holding a major military parade in Kiev today to mark its 25th anniversary as an independent state. But, at a time that should otherwise be a moment of national celebration, a serious crisis with Moscow is flaring up. So serious, in fact, that on Tuesday the Russian President Vladimir Putin, German Chancellor Angela Merkel and French President Francois Hollande were forced to hold a three-way phone call to try to de-escalate the situation.

Ukrainian President Petro Poroshenko has even warned that there is growing risk of a “full scale Russian invasion along all fronts,” ratcheting up what is already the bloodiest European conflict since the wars over the former Yugoslavia in the 1990s.

And the truth is that Ukrainian President Petro Poroshenko has some very good reasons to be concerned. As the Washington Post has pointed out, the Russians have used military exercises as an excuse to stage forces for military action in the past…

As violence in the east heats up, Ukrainian officials have suggested that Russia may use the upcoming military drills, called Kavkaz (Caucasus) 2016, as cover for military action against Ukraine. The drills are the first to integrate the Crimean Peninsula, which was annexed by Russia in 2014, into the country’s military planning, and thousands of Russian troops will be brought in for air, land and sea exercises.

Ukrainian government analysts have recalled that exercises served as staging grounds for troop incursions in 2014, as did Russian military exercises held shortly before the Georgian war of 2008. Ukraine’s ambassador to the United Nations suggested that Russia may have “bad intentions,” while the West has also said it would like observers to be present.

If there is going to be a Russian invasion of Ukraine in September, Kavkaz 2016 will likely be used as cover for invasion preparations. It is a yearly exercise, but in 2016 it looks like it will be much bigger than ever before, and some analysts have pointed out that the Russians have not conducted a mobilization on this scale since the invasion of Czechoslovakia in 1968. Here is more on Kavkaz 2016 from the Daily Signal…

In September, Russia has plans for a large-scale strategic military exercise called Kavkaz-2016. The exercise, which is an annual event, will include units deployed near the borders of Ukraine, Georgia, and Azerbaijan—including two Russian military districts in the Southern and Northern Caucasus, the Russian Black Sea Fleet (headquartered in occupied Crimea), and the Caspian Flotilla.

It is not immediately clear the exact size of this year’s exercise, but last year it comprised 95,000 troops, 7,000 vehicles, and 150 aircraft, according to a report by IHS Markit, a U.K.-based intelligence and analysis firm.

If the Russians are going to do something, they need to do it soon, because the weather turns very bad during the month of October. Here is one how one analyst assessed the situation…

“But will there be a war – we’ll see, no much time for guessing left… In this situation, the main thing for Russia is to achieve strategic and tactical surprise. And if she does not start now – then it will be too late. One would need to turn off full-scale operations in October because of the rains and the next draft to Russian army (it would mean the demobilization of current wave of conscripts and training the new ones – UT).”

A Russian invasion of Ukraine would mean that Russian relations with the U.S. and with Europe would immediately plunge to Cold War levels. Of course some would argue that we are already there. In any event, a Russian invasion would force the U.S. and NATO to make some very uncomfortable decisions.

Would the U.S. and NATO just stand by and do nothing while Ukraine is overrun by the Russians?

Maybe.

But if the U.S. and NATO responded with military force, that would risk a full scale nuclear confrontation with Russia.

Right now, a war with Russia is about the last thing that most Americans are thinking about, but the truth is that we are not that far away from such a scenario.

Over in Russia, the mindset is totally different. The following is from a Newsweek article entitled “In Europe and Russia, There’s Talk of War“…

Recently, I grabbed a taxi in Moscow. When the driver asked me where I was from, I told him the United States. “I went there once,” he said, “to Chicago. I really liked it.”

“But tell me something,” he added. “When are we going to war?”

The question, put so starkly, so honestly, shocked me. “Well, I hope never,” I replied. “No one wants war.”

At the office, I ask a Russian employee about the mood in his working class Moscow neighborhood. The old people are buying salt, matches and gretchka [buckwheat], he tells me—the time-worn refuge for Russians stocking up on essentials in case of war.

In the past two months, I’ve traveled to the Baltic region, to Georgia, and to Russia. Talk of war is everywhere.

Most Americans don’t realize that Russians already view the United States more negatively than they did even during the height of the Cold War. On Russian television they openly talk about the inevitability of a war between the United States and Russia, and the Russian military has feverishly been preparing for such a future conflict.

If we can get to October, we can probably breathe a bit of a sigh of relief because the Russians are not likely to conduct an invasion once the weather turns bad.

But for now there are very good reasons to be concerned, and we shall see what happens over the coming weeks…

The Calm Before The Storm

October 26, 2015October 26, 2015 by Michael

Have you noticed that things have gotten eerily quiet in the month of October? After the chaos of late August and early September, many had anticipated that we would be dealing with a full-blown financial collapse by now, but instead we have entered a period of “dead calm” in which things have become exceedingly quiet in almost every way that you can possibly imagine. Other “watchmen” that I highly respect have made the exact same observation. Even though the economic numbers are screaming that we have entered a global recession, they aren’t really make any headline news. A whole host of major financial institutions around the planet are currently in danger of collapsing and creating the next “Lehman Brothers moment”, but none of them has imploded just yet. And of course Barack Obama seems bound and determined to start World War III. On Monday, it was announced that he is sending a guided missile destroyer into Chinese waters in the South China Sea. The Chinese have already stated that they might just start shooting if this happens, but Barack Obama doesn’t seem to care. But until the shooting actually begins, that is not likely to upset the current tranquility that we are enjoying either.

To me, what we are experiencing at the moment would best be described as “the calm before the storm”. If you are not familiar with this concept, this is how it is defined by How Stuff Works…

Have you ever spent an afternoon in the backyard, maybe grilling or enjoying a game of croquet, when suddenly you notice that everything goes quiet? The air seems still and calm — even the birds stop singing and quickly return to their nests.

After a few minutes, you feel a change in the air, and suddenly a line of clouds ominously appears on the horizon — clouds with a look that tells you they aren’t fooling around. You quickly dash in the house and narrowly miss the first fat raindrops that fall right before the downpour. At this moment, you might stop and ask yourself, “Why was it so calm and peaceful right before the storm hit?”

Like so many others, I believe that a great storm is coming, and yet right at this moment things seem so peaceful.

Unfortunately, this period of peace and quiet is not going to last for long, and most Americans know deep down that something is seriously wrong with our nation. In fact, a new WND/Clout poll has found that 85.3 percent of all likely voters in the United States believe that our country is going in the wrong direction…

The poll found 92.6 percent of those who identified themselves as conservative believe the nation is on the wrong track. Among those who call themselves liberal, 90.9 percent said it is going the wrong direction.

When asked what they think of the American economy after seven years of Obama’s leadership and economic policies, nearly 80 percent described it as “very fragile” or “somewhat fragile.”

Self-identified Democrats, Republicans, liberals and conservatives were in general agreement, with about 75 percent to 80 percent describing the economy as “somewhat fragile” or “very fragile.”

But even though we are steamrolling in the wrong direction, we haven’t suffered any incredibly serious consequences for it yet.

For the moment, this is allowing the mockers to have a field day. They are fully confident that Barack Obama and the Federal Reserve knew what they were doing after all, and they are gleefully taunting those of us that have been warning of the great disaster that is heading our way.

However, those that are wise are getting prepared.

I think that we could all learn some lessons from what Overstock.com Chairman Jonathan Johnson is doing. The following is an extended excerpt from a recent Zero Hedge article…

*****

One week ago Johnson, who is also candidate for Utah governor, spoke at the United Precious Metals Association, or UPMA, which we first profiled a month ago, and which takes advantage of Utah’s special status allowing the it to use gold as legal tender, offering gold and silver-backed accounts. As a reminder, the UPMA takes Federal Reserve Notes (or paper dollars) which it then translates into golden dollars (or silver). The golden dollars are based off the $50 one ounce gold coins produced by the Treasury of The United States. They are legal tender under the law and are protected as such.

What did Johnson tell the UPMA? Here are some choice quotes:

We are not big fans of Wall Street and we don’t trust them. We foresaw the financial crisis, we fought against the financial crisis that happened in 2008; we don’t trust the banks still and we foresee that with QE3, and QE4 and QE n that at some point there is going to be another significant financial crisis.

So what do we do as a business so that we would be prepared when that happens. One thing that we do that is fairly unique: we have about $10 million in gold, mostly the small button-sized coins, that we keep outside of the banking system. We expect that when there is a financial crisis there will be a banking holiday. I don’t know if it will be 2 days, or 2 weeks, or 2 months. We have $10 million in gold and silver in denominations small enough that we can use for payroll. We want to be able to keep our employees paid, safe and our site up and running during a financial crisis.

We also happen to have three months of food supply for every employee that we can live on.

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Why would such a seemingly intelligent and successful CEO of a large Internet company do such things?

It is because he can see the writing on the wall.

This period of calm will not last. A great storm is coming, and when it does arrive those that have not prepared for it are going to suffer tremendously.

Most people have no idea just how fragile our system really is. Today, some of these “too big to fail” banks supposedly have trillions of dollars in assets, but if you want to withdraw $10,000 or more in cash you have got to give them 24 hours notice to get enough money…

This is just the beginning. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks will TRILLIONS of dollars worth of assets on their books.

And with each passing day we see even more signs of the global economic slowdown that is emerging all around us. For example, we just learned that the China Containerized Freight Index has dropped to the lowest level ever recorded. China accounts for more global trade than anyone else, and so this is a very clear sign that global economic activity is slowing down dramatically…

By early July, the index dropped below 800 for the first time in its history, which started in 1998 when the index was set at 1,000. It soon recovered to about 850. And just when bouts of hope were rising that the worst was over, it plunged again and hit even lower levels.

The latest weekly reading dropped another 1.7% from the prior week to 752.21, the worst level ever. The CCFI is now 30% below where it had been in February this year and 25% below where it had been 17 years ago at its inception.

But for those that don’t want to believe that hard times are on the way, they can take comfort in the eerie period of calm that we are experiencing right now.

What they don’t realize is that this truly is “the calm before the storm”, and the global economic crisis that is ahead of us is going to be far beyond what most people ever dared to imagine was possible.

Stock Market Crash October 2015? 9 Of The 16 Largest Crashes In History Have Come This Month

October 4, 2015October 5, 2015 by Michael

The worst stock market crashes in U.S. history have come during the month of October. There is just something about this time of the year that seems to be conducive to financial panic. For example, on October 28th, 1929 the biggest stock market crash in U.S. history up until that time helped usher in the Great Depression of the 1930s. And the largest percentage crash in the history of the Dow Jones Industrial Average by a very wide margin happened on October 19th, 1987. Overall, 9 of the 16 largest single day percentage crashes that we have ever seen happened during the month of October. Of course that does not mean that something will happen this October, but after what we just witnessed in September we should all be on alert.

Clearly, there is a tremendous amount of momentum toward the downside right now. As you can see from the chart below, all of the gains for the Dow since the end of the 2013 calendar year have already been wiped out…

And as I wrote about just the other day, last quarter we witnessed the loss of 11 trillion dollars in “paper wealth” on stock markets all over the planet. The following comes from Justin Spittler…

The S&P 500 fell 8%… and so did the Dow and the NASDAQ. It was the worst quarter for U.S. stocks since 2011.

Stocks around the world dropped too. The MSCI All-Country World Index, which tracks 85% of global stocks, also had its worst quarter since 2011. The STOXX Europe 600 Index, which tracks 600 of Europe’s largest companies, fell 10%. It was the worst quarter for European stocks since 2011 as well.

China’s Shanghai Composite fell 28% last quarter, its largest quarterly decline in seven years. The MSCI Emerging Markets Index fell 19%. It was the worst quarterly decline for emerging market stocks in four years.

In total, last quarter’s selloff erased nearly $11 trillion in value from stocks around the world.

Sadly, the mainstream media is assuring everyone that things are going to be just fine, and a lot of people on the Internet seem to have the attitude that “nothing is happening“. Just like in 1929, a brief period of stabilization after the initial fall has lulled many into a false sense of security. The following comes from Zero Hedge…

Just as in 1929, the market was performing fantastic and the continuous wealth increase seemed to be unstoppable. A short 10% correction was seen as ‘healthy’ and soon a new uptrend was starting (the green line). This is exactly the same scenario we saw in the past few weeks. Market commenters said the 10% drop in the Dow Jones was a ‘healthy correction’ and we’re on our way to the next uptrend and Christmas rally.

Most people seem to assume that since I run a website called “The Economic Collapse Blog” that I must be rooting for a stock market collapse and an economic implosion, but that is not true at all. The longer that the financial markets can hold together, the longer all of our lives can stay quiet, peaceful and “normal”. Once the chaos begins, all of our lives will change dramatically. No matter how much any of us have prepared, what is coming is going to deeply affect all of us at least to a certain degree.

It would be far better for me, my extended family and my friends if I am wrong about an imminent financial collapse. Most of the people that I personally know are not even close to ready for what is coming. And during the coming credit crunch it is inevitable that people that I personally know will lose jobs and suffer business setbacks.

Sadly, the truth is that life in America is never going to be any better than it is right now. At some point, this stock market bubble will fully implode. At some point, our debt-fueled prosperity will disappear. At some point, the extraordinary recklessness of the big banks will catch up with them in a major way.

As we witnessed in 2008, our financial system is not designed to handle a severe bear market. We should have learned some very hard lessons from the last time around, but we didn’t. Instead, our financial system is even more vulnerable to a crisis today than it was back then. A huge turn down by the financial markets will rip many of our top financial companies to shreds. So a bear market would be extremely bad news, but unfortunately many prominent analysts seem to believe that this is precisely what we are now facing…

Jim Cramer, the ex-hedge fund manager and host of CNBC’s show “Mad Money,” has been vocal recently on air, saying repeatedly that he doesn’t like the market now, and last week said “we have a first-class bear market going.” Similarly, Gary Kaltbaum, president of Kaltbaum Capital Management, has been sending out notes to clients and this newspaper for weeks, saying the poor price action of the stock market and many hard-hit sectors, such as energy and the recently clobbered biotech sector, has all the earmarks of a bear market. Over the weekend, Kaltbaum said: “We remain in a worldwide bear market for stocks.”

On the way up, all of the extreme risk-taking didn’t seem to matter much because everyone was making a lot of money.

But on the way down, all of the extreme risk-taking is just going to accelerate the collapse.

Personally, I do not know exactly what will happen over the next few weeks, but without a doubt I have a very bad feeling about the rest of this year.

What about you?

What do you think will happen?

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

12 Signs That An Imminent Global Financial Crash Has Become Even More Likely

August 11, 2015August 11, 2015 by Michael

Did you see what just happened? The devaluation of the yuan by China triggered the largest one day drop for that currency in the modern era. This caused other global currencies to crash relative to the U.S. dollar, the price of oil hit a six year low, and stock markets all over the world were rattled. The Dow fell 212 points on Tuesday, and Apple stock plummeted another 5 percent. As we hurtle toward the absolutely critical months of September and October, the unraveling of the global financial system is beginning to accelerate. At this point, it is not going to take very much to push us into a full-blown worldwide financial crisis. The following are 12 signs that indicate that a global financial crash has become even more likely after the events of the past few days…

#1 The devaluation of the yuan on Tuesday took virtually the entire planet by surprise (and not in a good way). The following comes from Reuters…

China’s 2 percent devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth.

#2 One of the big reasons why China devalued the yuan was to try to boost exports. China’s exports declined 8.3 percent in July, and global trade overall is falling at a pace that we haven’t seen since the last recession.

#3 Now that the Chinese have devalued their currency, other nations that rely on exports are indicating that they might do the same thing. If you scan the big financial news sites, it seems like the term “currency war” is now being bandied about quite a bit.

#4 This is the very first time that the 50 day moving average for the Dow has moved below the 200 day moving average in the last four years. This is known as a “death cross”, and it is a very troubling sign. We are just about at the point where all of the most common technical signals that investors typically use to make investment decisions will be screaming “sell”.

#5 The price of oil just closed at a brand new six year low. When the price of oil started to decline back in late 2014, a whole lot of people were proclaiming that this would be a good thing for the U.S. economy. Now we can see just how wrong they were.

At this point, the price of oil has already fallen to a level that is going to be absolutely nightmarish for the global economy if it stays here. Just consider what Jeff Gundlach had to say about this in December…

And back in December 2014, “Bond King” Jeff Gundlach had a serious warning for the world if oil prices got to $40 a barrel.

“I hope it does not go to $40,” Gundlach said in a presentation, “because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be — to put it bluntly — terrifying.”

#6 This week we learned that OPEC has been pumping more oil than we thought, and it is being projected that this could cause the price of oil to plunge into the 30s…

Increased pumping by OPEC as Chinese demand appears to be slackening could drive oil to the lowest prices since the peak of the financial crisis.

West Texas Intermediate crude futures skidded through the year’s lows and looked set to break into the $30s-per-barrel range after the Organization of the Petroleum Exporting Countries admitted to more pumping and China devalued its currency, sending ripples through global markets.

#7 In a recent article, I explained that the collapse in commodity prices that we are witnessing right now is eerily similar to what we witnessed just before the stock market crash of 2008. On Tuesday, things got even worse for commodities as the price of copper closed at a brand new six year low.

#8 The South American debt crisis of 2015 continues to intensify. Brazil’s government bonds have been downgraded to just one level above junk status, and the approval rating of Brazil’s president has fallen into the single digits.

#9 Just before the financial crisis of 2008, a surging U.S. dollar put an extraordinary amount of stress on emerging markets. Now that is happening again. Emerging market stocks just hit a brand new four year low on Tuesday thanks to the stunt that China just pulled.

#10 Things are not so great in the United States either. The ratio of wholesale inventories to sales in the United States just hit the highest level since the last recession. What that means is that there is a whole lot of stuff sitting in warehouses out there that is waiting to be sold in an economy that is rapidly slowing down.

#11 Speaking of slowing down, the growth of consumer spending in the United States has just plummeted to multi-year lows.

#12 Deep inside, most of us can feel what is coming. According to Gallup, the number of Americans that believe that the economy is getting worse is almost 50 percent higher than the number of Americans that believe that the economy is getting better.

Things are lining up perfectly for a global financial crisis and a major recession beginning in the fall and winter of 2015.

But just because things look like they will happen a certain way does not necessarily mean that they will. All it takes is a single “event” of some sort to change everything.

So what do you believe will happen in the months ahead?

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

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