Financial

The Mainstream Media Declares That This Is “The Worst Time In Decades To Make Money In The Markets”

It looks like the turmoil for the financial markets is going to continue to get worse, and the mainstream media is really starting to freak out.  Just a few months ago, they were continuously using the word “booming” to describe the state of the U.S. economy and they were assuring us that the stock market was going to continue to go up.  But after a couple of really bad months, there has been a dramatic psychological shift.  Instead of telling us that everything is going to be great, now the mainstream media is starting to sound just like The Economic Collapse Blog.  For example, Bloomberg just posted an article with this rather startling headline: “It’s the worst time in decades to make money in the markets”…

Market statisticians are falling over each other in 2018 to describe the pain being felt across asset classes. One venerable shop frames it this way: Things haven’t been this bad since Richard Nixon’s presidency.

Ned Davis Research puts markets into eight big asset classes — everything from bonds to U.S. and international stocks to commodities. And not a single one of them is on track to post a return this year of more than 5 percent, a phenomenon last observed in 1972, according to Ed Clissold, a strategist at the firm.

Usually there are at least a few asset classes that are making money, but in 2018 nothing is working.

And it appears that Wednesday is going to be another really tough day on Wall Street.  As I write this article, Dow futures are down more than 300 points, and that almost certainly means that the Dow will be pushed well below the 25,000 threshold.

As I have discussed before, 25,000 is a key psychological resistance barrier for the Dow.  If stock prices break through that barrier and don’t immediately bounce back, the rush for the exits could become a stampede.

The biggest piece of news that is rattling investors at the moment is the fact that Huawei CFO Wanzhou Meng was just arrested in Canada, and it looks like she will be extradited to the United States.  She is also the daughter of the founder of the company, and that makes her a very powerful woman in China.

Needless to say, the Chinese are very upset about this, and they are promising to “take all measures” to protect her “legitimate rights”.  The following comes from their official statement…

At the request of the US side, the Canadian side arrested a Chinese citizen not violating any American or Canadian law. The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim. The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou. We will closely follow the development of the issue and take all measures to resolutely protect the legitimate rights and interests of Chinese citizens.

Unless Meng is released, and that seems very doubtful at this point, you can absolutely forget about any sort of a “truce” between the United States and China.

Sadly, most Americans don’t really understand what is happening.  Most Americans are still entirely convinced that the U.S. and China are “friends”, but that was never really accurate.  At best, we were “frenemies”, but now relations have taken an extremely sour turn.

In the months ahead, relations between the United States and China will almost certainly continue to deteriorate, and the two largest economies on the entire planet will increasingly decouple from one another.  This will be a decidedly negative development for the entire global economy, but there is no going back at this point.

And we continue to get more confirmation that the global economic slowdown is starting to accelerate.  For example, Reuters just announced that it will be eliminating 3,200 jobs…

Thomson Reuters Corp said on Tuesday that it will cut its workforce by 12 percent in the next two years, axing 3,200 jobs, as part of a plan to streamline the business and reduce costs.

The news and information provider, which completed the sale of a 55-per cent stake in its Financial & Risk (F&R) unit to private equity firm Blackstone Group LP, announced the cuts during an investor day in Toronto, in which it outlined its future strategy and growth plans.

We have also gotten more evidence that consumer credit is really starting to tighten up.  The following numbers come from Business Insider…

Rejection rates for credit-card applicants came in at 20.8% in the October survey, up from 14.4% a year ago, while the rejection rate for credit-limit increases ticked up to 31.7%, compared with 24.9% a year ago.

Meanwhile, the proportion of respondents who had an account shut down by a lender reached its highest level since the Fed launched the “Credit Access Survey” in 2013. In October, 7.2% of surveyed consumers reported having an account involuntarily shut down in the previous 12 months, up from 5.7% last year and 4.2% in 2016.

The reason why rejection rates and account shutdowns are soaring is because credit card debt delinquency rates have been rising.

More Americans are getting behind on their credit card payments, and this is spooking a lot of financial institutions.  But if consumer credit really tightens up, that is going to cause economic activity to slow even further, and that will just make a very deep recession even more inevitable.

Sadly, debt bubbles do not last forever.  The big credit card companies can see what is happening, and they are trying to protect themselves.

On a national level, “the Everything Bubble” is now beginning to burst, and for many investors the goal has shifted from “maximizing returns” to “wealth preservation”.

Unfortunately just about every single asset class is doing poorly right now, and as Zero Hedge has noted, that means that “there’s nowhere to run”…

The inability of any single asset class to escape the dismal black hole supergravity of devastating losses in a brutal post-BTFD catharsis that has mutated into an equal-opportunity rout, crushing returns across all assets, has left investors reeling, shellshocked and paralyzed, and dreading what may come tomorrow let alone next year when both the US economy and corporate earnings are expected to see their supercharged recent growth rates come crashing back down to earth.

Such a uniform underperformance by all assets is unique in history, because when “something falls, something else gains. Amid the financial catastrophe of 2008, Treasuries rallied. In 1974, commodities were a bright spot. In 2002, it was REITs.” Yet, in 2018, there’s nowhere to run.

The bull market survived for much longer than many were anticipating, but now the party is over.

Nobody is quite sure exactly what is going to happen next, but there is a growing consensus that whatever is going to happen is likely to be very painful.

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

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

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

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

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

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

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

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

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

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

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

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

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

The following numbers come from Zero Hedge…

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

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

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

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

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

That would be enough money to buy McDonald’s.

Yes, I am talking about the entire company.

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

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

–“Worry Less About Inflation and More About Recession”

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

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

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

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

In fact, it is only just beginning.

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

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

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

Now Even Paul Krugman Of The New York Times Is Admitting That The Next Crisis Will Likely Be Worse Than 2008

There is a growing consensus that once the next economic crash finally arrives that it will be significantly worse than what we experienced in 2008.  This is something that I have been saying for a very long time, but now even mainstream economists such as Paul Krugman of the New York Times are admitting the reality of what we are facing.  And without a doubt, the stage is set for a historic collapse.  We are living at a time when everything is in a bubble – the current housing bubble is much larger than the one that collapsed in 2008, student loan debt has now surpassed the 1.5 trillion dollar mark, corporate debt has doubled since the last financial crisis, U.S. consumers are 13 trillion dollars in debt and the federal government is nearly 22 trillion dollars in debt.  And even though stock prices have fallen dramatically in recent weeks, the truth is that stocks are still wildly overpriced.  What goes up must eventually come down, and Paul Krugman insists that we “are poorly prepared to deal with the next shock” and that “there’s good reason to think it will be worse”…

“We are poorly prepared to deal with the next shock,” Krugman said. “Interest rates are still close to zero in the US and in most of the rest of the advanced world. The fiscal policy we did was badly handled in the aftermath of the 2008 crisis, and there’s no particular reason to think it will be better. In fact, there’s good reason to think it will be worse.”

Hmmm.

Where have I heard talk like that before?

You know that it is very late in the game when even Paul Krugman can see what is coming.

Meanwhile, a stunning new study that was just released came to the conclusion that the globe is heading for “a massive worldwide financial meltdown” that will be unlike anything that we have ever experienced before…

Previous crashes will appear as “minor stumbling blocks” in comparison to what nuclear scientists are predicting as a massive worldwide financial meltdown “such as never before” in the mid-2020s. Analysts from the Institute of Nuclear Physics of the Polish Academy of Sciences in Kraków are forecasting the future of the global economy as “extremely bleak” as “nervousness of the world market is growing all the time”. The academics’ “catastrophic” predictions come from “multi-fractal” analysis of financial markets published in the journal Complexity. The researchers looked at various economic measures, including Standard & Poor’s 500 index – the largest global stock market index including the largest 500 firms, largely of a worldwide nature – from January 1950 to December 2016.

Wow.

It seems like everyone is in a gloomy mood lately.  Just take a look at the latest GDP forecasts.  Virtually everyone is predicting that U.S. economic growth will be way down this quarter compared to the third quarter.

And we continue to get confirmation after confirmation that economic activity is definitely slowing down.

For example, Apple just reduced factory orders for their new iPhones a second time…

Demand for Apple’s latest iPhones may be worse than previously thought.

The tech giant has reportedly issued a second cutback on iPhone orders as a result of weaker-than-expected demand for the high-end devices, according to Taiwan-based news site Digitimes.

It follows earlier reports of production cuts for the iPhone XR and XS.

In addition, housing numbers from all over the nation are deeply troubling.  Just check out what has been happening in Seattle…

House prices in the Seattle metro dropped 1.3% in September from prior month, after having dropped 1.6% in August, and 0.5% in July, according to the Case-Shiller Home Price Index. Over those three months, the index dropped 3.5%, the sharpest such decline since December 2011, during Housing Bust 1. So home prices are beginning to unwind a historic spike. The index is now below where it had been in April. This confirms that the inflection point — when the direction changes — was in July and that conditions have deteriorated since.

For more key indicators such as this, please see my previous article entitled “11 Signs That The U.S. Economy Is Starting To Slow Down Dramatically”.

Yes, things are rapidly getting worse for the economy, but did General Motors really have to announce job cuts just before the holidays?  According to the Daily Mail, some workers were seen wiping away tears when the layoffs were announced…

Heart-wrenching photos show General Motors workers wiping tears away after the company laid more than 14,000 people off without warning and just before the holidays.

In a massive restructuring, the auto giant announced Monday that it will cut 15 percent of its workforce to save $6 billion and adapt to ‘changing market conditions’.

‘You’re going right into Christmas. You’re looking for celebration and that’s not there now,’ one GM worker told Today.

If the U.S. economy really was in good shape, this wouldn’t be happening.

For the last few years, America has experienced a time of relative economic stability, and many have been fooled into believing that this time of relative economic stability will last for a very long time.

But the truth is that all of the numbers are telling us that things have now shifted.  For instance, Mike Maloney believes that a decline in corporate tax receipts strongly indicates that another recession is imminent…

You might think that tax revenues would fall after a recession starts – but what the data show is that tax revenue in most cases has fallen before a recession.

As Mike shows, in 14 of the last 17 times that corporate tax receipts have begun to roll over and decline, a recession started not long after. In other words…

A drop in corporate tax receipts has frequently predicted a recession.

And guess what? Corporate tax revenue has started to fall.

Unfortunately, it appears that we are even less prepared for the next recession than we were for the last one.

For some reason we are never able to learn important lessons from what has happened in the past, and now even Paul Krugman is convinced that the next recession will be exceedingly painful indeed.

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

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

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

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

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

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

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

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

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

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

Could you imagine losing 42 billion dollars?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Just think about that for a moment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yes, you read that correctly.

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

That is an absolutely astounding number.

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

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

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

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

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

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

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

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

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

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

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

This Wasn’t Supposed To Happen…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

 

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