Stocks

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

November 19, 2018 by Michael

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…

November 12, 2018November 12, 2018 by Michael

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.

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Wall Street Seems To Believe That Endless Gridlock And Political Turmoil Will Be Good For America

November 7, 2018November 7, 2018 by Michael

It is difficult not to admire the relentless optimism on Wall Street. A divided Congress is going to guarantee two years of gridlock and political turmoil in Washington, but many in the financial community are choosing to interpret the election results as a positive sign. They remember the “gridlock” during the Obama years, and they are hopeful that the next couple of years will be at least somewhat similar. The Dow Jones Industrial Average shot up 545 points on Wednesday, and that was the largest post-midterm rally that we have seen in 36 years. Stock prices normally go up the day after midterm elections, but Wednesday’s rally was definitely unusual…

Wednesday’s post-midterms rally was larger than the average gain that follows the contests. Goldman Sachs noted the S&P 500 has averaged a gain of 0.7 percent from the day before the elections to the day after midterms. Wednesday marked the biggest post-midterms gain for both the Dow and S&P 500 since the day after the 1982 contests, when the indexes surged 4.3 percent and 3.9 percent, respectively.

To a certain extent, it is likely that investors were greatly relieved that the worst case scenario did not play out. As I noted on Monday, a blue wave that would have resulted in Democrats taking control of both houses of Congress would have meant big trouble for Wall Street, and many are very thankful that we were able to avoid that outcome…

Investors also avoided the most-feared Wall Street outcome, a so-called “blue wave,” or Democratic sweep of both chambers of Congress. That could have put the president’s economic policies under assault and boosted the odds of a Democratic House pushing for Trump’s impeachment.

“Everything played out according to script,” Stephen Innes, head of Asia trading at Oanda, told USA TODAY. “The Trump agenda is not in serious jeopardy.”

But are Tuesday’s results actually good news for Wall Street?

The optimists are pointing to history as evidence that gridlock in Washington is typically good for investors…

Legislative gridlock has historically been good for financial markets. In fact, in years with a Republican president and a Republican-controlled Senate and Democrat-run House in place, the Standard & Poor’s 500 stock index has posted average gains of 10.8 percent, according to data from Strategas Research Partners.

“A split Congress means that gridlock is more likely, and that’s been fine for markets in the past,” says Kate Warne, investment strategist at Edward Jones.

Unfortunately, that is not a fair comparison.

The times that we are moving into are not going to be anything like the “gridlock” that we witnessed during the Reagan, Clinton and Obama presidencies.

During the Obama era, Republican leadership got along with the White House fairly well. And even though there was often some wrangling, Republicans almost always gave Obama most of what he wanted when it came to budget deals and other critical pieces of legislation.

Sadly, the next two years are going to be much different. It will be the political equivalent of trench warfare, and the carnage is going to be off the charts.

Top Democrats in the House are already threatening to hit the Trump administration with a wave of subpoenas, and Trump is warning that if that happens he will adopt a “war posture”. Throughout his career, Trump’s philosophy has always been that if somebody hits him he is going to hit them back even harder.

I want you to imagine the most graphic battle scene that you have ever watched on television, because that is what the coming years will be like. There will be an all-out attempt to take down Trump and everyone around him, and Trump will respond by going after everyone that he perceives to be an enemy. In the end, a lot of politicians are not going to make it, and our system of governance will be badly damaged.

And the truth is that we aren’t going to have to wait long for things to erupt. According to the Baltimore Sun, “political war” has already erupted…

Washington plunged into political war on Wednesday in the wake of a split decision by voters in the midterm elections, with President Donald Trump ousting his attorney general and threatening to retaliate against Democrats if they launch investigations into his personal conduct and possible corruption in the administration.

The rapid shift to battle stations signaled the start of what is likely to be two years of unremitting political combat as Trump positions himself for reelection. For the first time, Trump will be forced to navigate divided government as Democrats who won the House pledge to be a check on his power and face pressure from their liberal base to block him at every turn.

The left has been holding back for months so that they would not alienate any potential voters, but now that the midterm elections are over they are free to start causing chaos again.

If you do not believe that we are headed for great political conflict, I would like for you to consider what has already happened within the past 24 hours…

-Major progressive groups such as MoveOn.Org announced that they are organizing “response events” in 900 U.S. cities on Thursday to protest the firing of Attorney General Jeff Sessions.

-The White House pulled CNN reporter Jim Acosta’s press credentials.

-DC Antifa published the home addresses of Tucker Carlson, Ann Coulter, Sean Hannity and other prominent conservatives.

-A mob showed up outside Tucker Carlson’s home and warned him that they “know where you sleep at night” and ordered him to “leave town”.

As I have warned so many times, hatred and anger are growing to unprecedented levels in America.

Many had been hoping that the midterm elections would resolve much of the political tension in this country, but instead it looks like things are going to continue escalating quickly.

And it isn’t going to take very much at all to unleash major civil unrest. The left already hates Trump more than any other president in American history, and one really bad move could set off an explosion of anger unlike anything we have ever seen before.

My friends, these are dark times, and I have a feeling that they are about to get a whole lot darker.

The One Election Scenario That Would Be A “Disaster” For The Financial Markets

November 5, 2018November 5, 2018 by Michael

On Tuesday night all of the speculation about the midterm elections will mercifully be over, and there is one potential outcome that is being called a “disaster” for the financial markets. Over the past couple of years, stock prices have soared to unprecedented levels, and Wall Street has seemed to greatly appreciate the pro-business environment that President Trump has attempted to cultivate. Regulations have been rolled back, corporate taxes have been reduced significantly, and many corporate executives no longer fear that the federal government is out to get them. But after Tuesday, everything could be different.

The most likely outcome appears to be that the Democrats will take control of the House of Representatives and the Republicans will remain in control of the Senate. For what it is worth, Nate Silver is currently projecting that the Democrats have an 88 percent chance of winning the House and only a 19 percent chance of winning the Senate.

But of course he was also projecting a huge landslide victory for Hillary Clinton in 2016.

In any event, a divided Congress would create gridlock in Washington, and according to Wedbush Securities managing director Steve Massocca that would produce “some negative fallout” for the financial markets…

Steve Massocca, Wedbush Securities managing director said there could be some negative fallout from a split Congress, since Democrats would hold committee chairmen seats in the House. “To what extent are they able to disrupt the Trump agenda will weigh on peoples’ minds,” he said.

“Donald Trump, the agenda, is very good for the markets. Less regulation, lower taxes,” he said.

But in the end, such a scenario is not likely to move stock prices too substantially.

However, if the Democrats are able to take control of both houses of Congress on Tuesday, Massocca believes that would truly be a “disaster” for stock prices…

The least likely scenario—a Democratic sweep— is also seen as the most negative for stocks.

“Disaster,” said Massocca.

Normally by now we would have a really good idea of what is going to happen tomorrow, but at this point the polls are all over the place.

For example, the last generic poll conducted by CNN has Democrats up by 13 points, but the last generic poll conducted by Rasmussen has Republicans in the lead…

One day before Americans head to cast their ballots in the crucial midterm congressional elections, two final polls conducted by CNN and Rasmussen have predicted wildly different results.

The final generic poll conducted by left-leaning CNN has put Democrats 13 points ahead of Republicans. Meanwhile, a separate poll carried out by the more right-leaning Rasmussen agency has suggested that Republicans are leading, but by a much smaller margin of one point.

For the record, Rasmussen was more accurate back in 2016, and in only about 24 hours we will find out who was more accurate this time around.

There are some that are entirely convinced that Republicans will be able to maintain control of both houses of Congress, and needless to say that would almost certainly cause a huge surge on Wall Street. In fact, one Nevada lawyer is so sure that Republicans will maintain control of the House of Representatives that he just flew to London and bet $130,000 of his own money on that outcome…

A big political gambler I met in Las Vegas in 2016 is in London betting that the Republican Party will keep control of the U.S. Congress. Robert Barnes is essentially wagering that U.S. pollsters haven’t fixed any of the problems that led them astray during the 2016 presidential campaign.

Barnes, a trial lawyer, lives in Las Vegas, frequenting the city’s sportsbooks, but he has to travel to the British Isles to wager on U.S. politics since it’s not allowed in the U.S. On this side of the Atlantic, the bookies know him as a high roller; the political betting team at Ladbrokes even tweeted his photo to mark his arrival and his 100,000 pound ($130,000) bet on the Republicans’ House majority. Given that the entire U.S. primaries betting market is in the single millions in the U.K. and Ireland, that’s quite momentous.

$130,000 is an enormous amount of money, and so I hope that he knows what he is doing.

On the other side, Nancy Pelosi is so confident about the outcome that she has already declared victory on national television.

But of course many other leading Democrats are extremely nervous right now. They remember the election night debacle of 2016, and they are concerned that something like that might happen again.

Democratic pollster John Anzalone is describing what they are going through as “the bed-wetting phase”…

Haunted by memories of 2016, liberals around the country are riven with anxiety in the campaign’s homestretch. They’re suspicious of favorable polls and making election night contingency plans in case their worst fears come true. Some report literal nightmares about a Democratic wipeout.

“We’re kind of just in the bed-wetting phase now,” said Democratic pollster John Anzalone, a Hillary Clinton campaign alumnus who spent election night 2016 in Clinton’s Manhattan war room.

If the Democrats are unable to take the House, that will probably mean that a late “red wave” has saved the day for the Republicans and it will also probably mean that they will likely increase their Senate majority by a little bit.

In that scenario, we will see a lot more than “bed-wetting” from the left. Their hopes have been pinned on these midterm elections for nearly two years, and a crushing loss could set off a national temper tantrum of frightening proportions.

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

November 4, 2018 by Michael

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

Junk Bond Bubble Bursting

Equity Bubble Bursting

Italy

Tariffs

Brexit

Pensions

Housing

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.

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

October 31, 2018 by Michael

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.

The Stock Market Has Just Done Something That It Hasn’t Done Since 2009

October 29, 2018 by Michael

We continue to see extremely wild swings on Wall Street. On Monday, at one point the Dow Jones Industrial Average was up 352 points, and then later it was down 566 points. At the closing bell the Dow had officially lost 245 points, and all of this extreme volatility is making investors very nervous. Investors like markets that are predictable, because it is a whole lot easier to make money when things move in a predictable fashion. When things get crazy, a lot of investors pull their money out and wait until things settle down in the marketplace, and that definitely makes a lot of sense. Right now, there is a lot of uncertainty about where things are ultimately headed. Some experts believe that the bull market will resume after this “correction” is over, but others believe that a bear market has now begun. And as you will see below, the fact that the S&P 500 has now broken a major trendline that has not been broken since 2009 is strengthening the case of the latter group.

Many had anticipated that we may see a bounce on Monday, but instead we witnessed another very large decline. According to Zero Hedge, all of the major stock indexes are now officially in correction territory…

Dow -10.1%
S&P -10.8%
Nasdaq Composite -14.4%
Dow Transports -15.5%
Russell 2000 -15.5%

Tech stocks got hit harder than anything else on Monday, and at this point they are down 13.3 percent from the peak. Each one of the FANG stocks is now in bear market territory, and many on Wall Street are stunned that this has happened so quickly.

But as I have warned my readers many times, markets tend to go down a whole lot faster than they go up.

The main thing that rattled investors on Monday was news that the Trump administration might slap even more tariffs on Chinese imports…

President Donald Trump’s administration is prepared to announce tariffs on remaining Chinese imports if talks next month between Trump and Xi Jinping do not yield results, Bloomberg reported. Such a move is likely to prolong the standoff between the U.S. and China over trade and is expected to hurt the global economy.

Analysts are also blaming the stock market’s weakness in October on a variety of factors, including worries that U.S. corporate earnings growth has peaked and fears of a U.S. monetary policy misstep by the Federal Reserve.

The Chinese do not respond well to threats and intimidation, and our relations with China are the worst that they have been in decades. This is going to have huge implications for all of us, and this is a major storyline that we will want to revisit again and again in the months ahead.

Getting back to the market, we are starting to see things happen that we have not witnessed since the last financial crisis.

Specifically, the S&P 500 just broke the bull market trendline that had not been violated since the market bottomed out in early 2009. The following comes from Graham Summers…

That’s bad news. But unfortunately it gets worse from here. Stocks have violated the monthly trendline running back to the 2009 for the first time in this bull market.

So when we talk about the bull market ending… we’re not just talking about the 2016-2018 run… we’re talking about THE ENTIRE bull market running back to the 2009 bottom.

You can see the chart that he is referring to right here. The fact that this trendline has now been broken is a huge sell signal, and it is yet another indication that a new financial crisis has begun.

And it isn’t just the U.S. that is in trouble. In fact, the U.S. is still in much better shape than the rest of the world.

Right now, approximately 58 percent of the 2,767 stocks listed on MSCI’s global index are officially in bear market territory.

Things have deteriorated so rapidly that even Jim Cramer of CNBC is starting to talk like a bear…

There have only been four times in Jim Cramer’s career when the stock guru and former hedge fund manager sold out of his entire portfolio. And, scary as it sounds, the market action of the past few weeks reminds him of those chaotic moments.

“As much as it pains me to say this, the current situation combines … some of the worst characteristics of those four past breakdowns,” Cramer told investors on Monday as much of the stock market slid into correction territory.

Hopefully we will see a bounce on Tuesday and things will settle down on Wall Street for the rest of this week.

But whether that happens or not, this crisis is far from over.

Stock prices should have never gotten this high. The only reason they reached such absurd heights was due to unprecedented intervention by the Federal Reserve. And now the Federal Reserve seems determined to burst the bubble that they originally created, and that is going to cause immense pain for investors.

In order for valuations to return to their long-term averages, stock prices would still need to decline another 40 percent from current levels, but because our system is so leveraged a decline of that magnitude would be absolutely crippling for our financial system and would create the greatest credit crunch that any of us have ever seen.

And a credit crunch of that magnitude would instantly plunge the U.S. into an economic depression.

This financial bubble has lasted for much longer than it should have, but we desperately need it to continue, because the alternative is an economic horror show of unprecedented magnitude.

Unfortunately it appears that this bubble is now bursting, and that is extremely bad news for all of us.

A Perfect Storm Is Brewing

October 28, 2018 by Michael

Will we someday look back on October 2018 as the turning point? As the month began, people were generally feeling pretty good about things, and the U.S. stock market quickly set a new all-time high. But from that point on, the wheels fell off for Wall Street. We just witnessed the worst October for U.S. stocks since the financial crisis of 2008, and at this point more than 8 trillion dollars of global wealth has been completely wiped out. But it isn’t just the stock market that is being shaken. The horrific violence in Pittsburgh is just the latest in a string of events that have rattled the entire nation. Sometimes I feel like I am literally watching the fabric of our society come apart right in front of my eyes. It is almost as if there is a tangible presence of evil in the air, and it seems to be getting stronger over time. For quite a while I have been warning that levels of anger and frustration are rising to unprecedented levels, and all of that anger and frustration is leading people to do things that are absolutely unthinkable. And if people are this crazed now, how bad are things going to get once the economy really starts unraveling?

Let there be no doubt – if U.S. stocks crash really hard, it will cause a massive credit crunch, and that would absolutely strangle economic activity.

Yes, October was bad, but we can recover from what happened in October.

But if November and December are equally as bad or worse, we could have a nightmarish crisis on our hands very rapidly. And many experts believe that this market is ultimately going to decline much, much further.

For example, just consider what Wolf Richter is saying…

So it boils down to this: Some stocks have gotten crushed, but the market overall has barely been dented – though the fundamentals are rotten, shares are still ludicrously overpriced, enthusiasm is still exuberant except on bad days, and blind faith in annually rising stock prices still reigns. And the fact that stocks like Tesla [TSLA] or Netflix continue to levitate beyond all reality shows that this downturn has a long way, and years, to go.

And Chris Martenson expressed similar sentiments in his most recent article…

The recent market weakness seen over the past two weeks is nothing compared to what’s in store. As we’ve been carefully chronicling, bubbles burst from ‘the outside in’, starting at the weaker places at the periphery before progressing to the center.

Emerging market equities are now down -26% from their January highs and -18% year-to-date. China’s stock market is down -32%, even with substantial intervention by the government to prop things up.

The periphery has been weakening all year, and the contagion has now spead worldwide.

But when I talk about a “perfect storm”, I am not just talking about money.

For years, I have been warning that the thin veneer of civilization that we all take for granted on a daily basis is rapidly disappearing, and the events of this past week made this exceedingly clear…

Wednesday, a white man with a history of violence shot and killed two African-Americans, seemingly at random, at a Kentucky Kroger store following a failed attempt to barge into a black church.

After mail bombs were being sent to people who’d been criticized by the President, a suspect was arrested Friday — a man who had railed against Democrats and minorities with hate-filled messages online.

And Saturday morning, a man shouting anti-Semitic slurs opened fire at a Pittsburgh synagogue, killing 11 people attending Jewish services.

I will not ever be able to understand the kind of hate that we have been witnessing. I have always preached against racism, and I even included an entire chapter against racism in my latest book. There is absolutely no room for racism in America, but it just seems to keep growing.

We are facing overwhelming challenges as a society, and if we do not learn how to love one another there is no way that we are going to make it.

This is a time of great governmental shaking as well. On November 6th, some candidates will win and some candidates will lose, but the hatred being expressed on both sides will not go away. Sadly, the truth is that there are corrupt politicians all around us, and the American people have been rapidly losing faith in our system. If the corruption is not cleaned up and some way is found to restore faith in our system of government, it is only a matter of time before it collapses.

On top of everything else, we also live at a time of impending global conflict. A major regional war could erupt in the Middle East at any time, and Russia and China are openly warning that they are “preparing for war” with the United States. World War 3 is a lot closer than people realize, and the fact that our relationships with both Russia and China are rapidly going downhill is a major concern.

And of course the planet itself is increasingly becoming unstable. Earthquakes and volcanic eruptions appear to be growing in both size and intensity, and massive storms have been hammering communities all over the globe in recent months.

The giant rock that we all live on is rapidly changing, and many believe that the Earth changes that we are currently witnessing are going to escalate dramatically in the years ahead.

Many ordinary Americans seem unconcerned about everything that is going on, and perhaps that is because they are unaware of the bigger picture. But the elite are definitely freaking out. In fact, the New York Times just published an article about how demand for private security services is higher than ever…

At Pinkerton, a private security and detective agency founded in 1850, requests for executive security have increased 20 to 30 percent annually over the last five years, said its vice chairman, Tim Williams. And people are looking for safeguards in all areas of their lives that pose risks, experts say, including information technology and social media.

“People are scared right now,” Mr. Williams said.

And some among the elite even have plans to hop on private jets and leave the country completely when everything starts hitting the fan. For much more on this, please see my previous article entitled “Bankers And Tech Executives Know The Collapse Of Society Is Coming And Are Feverishly Prepping For It”.

We are entering a time that will cause many to have great fear, but now is not a time to be scared.

It is when times are the darkest that light is needed the most, and I believe that this coming “perfect storm” will be an absolutely thrilling time to be alive.

Yes, life is going to become a lot more uncomfortable for all of us, but it is during times of great challenge that we find out what is truly inside of us. This will be a time when some will show that they are great villains, but many will also emerge as great heroes.

We have reached a critical juncture in human history, and everything is about to change. I would encourage you to be a light in the darkness, because that is going to be greatly needed in the days ahead.

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