Stock Market Crash 2016: This Is The Worst Start To A Year For Stocks Ever

Stock Market Collapse 2016We have never had a year start the way that 2016 has started.  In the U.S., the Dow Jones Industrial Average and the S&P 500 have both posted their worst four-day starts to a year ever.  Canadian stocks are now down 21 percent since September, and it has been an absolute bloodbath in Europe over the past four days.  Of course the primary catalyst for all of this is what has been going on in China.  There has been an emergency suspension of trading in China two times within the past four days, and nobody is quite certain what is going to happen next.  Eventually this wave of panic selling will settle down, but that won’t mean that this crisis will be over.  In fact, what is coming is going to be much worse than what we have already seen.

On Thursday I was doing a show with some friends, and we were amazed that stocks just seemed to keep falling and falling and falling.  The Dow closed down 392 points, and the NASDAQ got absolutely slammed.  At this point, the Dow and the NASDAQ are both officially in “correction territory”, and some of the talking heads on television are warning that this could be the beginning of a “bear market”.  But of course some of the other “experts” are insisting that this is just a temporary bump in the road.

But what everyone can agree on is that we have never seen a start to a year like this one.  The following comes from CNN

The global market freakout of 2016 just got worse.

The latest scare came on Thursday as China’s stock market crashed 7% overnight and crude oil plummeted to the lowest level in more than 12 years.

The Dow dropped 392 points on Thursday. The S&P 500 fell 2.4%, while the Nasdaq tumbled 3%.

The wave of selling has knocked the Dow down 911 points, or more than 5% so far this year. That’s the worst four-day percentage loss to start a year on record, according to FactSet stats that go back to 1897.

When CNN starts sounding like The Economic Collapse Blog, you know that things are really bad.  I particularly like their use of the phrase “global market freakout”.  I might have to borrow that one.

Even some of the biggest and most trusted stocks are plummeting.  For instance, Apple dropped to $96.45 on Thursday.  It is now down a total of 28 percent since hitting a record high of more than 134 dollars a share back in April.

So that means that if someone put all of their retirement money into Apple stock last April (which may have seemed like a really good idea at that time), by now more than one-fourth of that money is gone.

For months, I have been warning that the exact same patterns that we witnessed just prior to the great stock market crash of 2008 were happening again.  To me, the parallels between 2008 and 2015/2016 were just uncanny.  And now other very prominent names are making similar comparisons.  According to the Washington Post, George Soros says that the way this new crisis is unfolding “reminds me of the crisis we had in 2008″…

Influential investor George Soros said that China had a “major adjustment problem” on its hands. “I would say it amounts to a crisis,” he told an economic forum in Sri Lanka, according to Bloomberg News. “When I look at the financial markets, there is a serious challenge which reminds me of the crisis we had in 2008.”

Don’t get me wrong – I am certainly not a supporter of George Soros.  My point is that we are starting to hear a lot of really ominous talk from a lot of different directions.  All over the world, people are starting to understand that the next great financial crisis is already here.

As I write this tonight, I just feel quite a bit of sadness.  A lot of hard working people are going to lose a lot of money this year, and that includes people that I know personally.  I wish that my voice had been clearer and louder.  I wish that I could have done more to get people to understand what was coming.  I wish that my warnings could have made more of a difference.

I just think about how I would feel if everything that I had worked for all my life was suddenly wiped out.  And that is what is going to end up happening to some of these people.  When you lose everything, it can be absolutely debilitating.

You only make money in the markets if you get out in time.  And unfortunately, most of the general population will be like deer in the headlights and won’t know which way to move.

There will be up days for the markets in our near future.  But don’t be fooled by them.  It is important to remember that some of the greatest up days in U.S. stock market history were right in the middle of the stock market crash of 2008.  So don’t let a rally fool you into thinking that the crisis is over.

The financial crisis that began in the second half of 2015 is now accelerating, and everything that we have witnessed over the past few days is just a natural extension of what has already been happening.

Personally, I am just really looking forward to this weekend when I will hopefully get caught up on some rest.  Plus, my Washington Redskins will be hosting a playoff game on Sunday, and if they find a way to win that game that will put me in a particularly positive mood.

It is good to enjoy these simple pleasures while we still can.  Unprecedented chaos is coming this year, and we are all going to need strength and courage for what is ahead.

7 Percent Crash Causes Emergency Shutdown Of Stock Markets In China For The 2nd Time In 4 Days

Panic ButtonDid you see what just happened in China?  For the second time in four days, a massive stock market crash has caused an emergency shutdown of the markets in China.  On both Monday and Thursday, trading was suspended for 15 minutes when the CSI 300 fell 5 percent, and on both days the total decline very rapidly escalated to 7 percent once trading was reopened.  Once a 7 percent drop happens, trading is automatically suspended for the rest of the day.  I guess that is one way to keep the stock market from crashing – you just don’t let anyone trade.  And of course the panic in China is causing other markets to go haywire as well.  As I write this, the Nikkei is down 324 points and Hong Kong is down 572 points.

The amazing thing is that trading was only open in China for about 15 total minutes tonight.  Here is how CNBC described what just happened…

China’s stocks were suspended from all trade on Thursday after the CSI300 tumbled more than 7 percent in early trade, triggering the market’s circuit breaker for a second time this week.

That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China’s economic slowdown and its depreciating currency as well as falling oil prices.

On the mainland, the Shanghai Composite tumbled 7.32 percent by at the time of the halt, while the Shenzhen Composite plummeted 8.34 percent. The CSI300, the benchmark index against which China’s new circuit breakers are set, plunged 7.21 percent. If that index rises or falls 5 percent, the market halts all trade for 15 minutes. If it moves 7 percent, trading will be suspended for the rest of the day. In total Thursday, China shares only traded around 15 minutes.

How will European and U.S. markets respond to the chaos in Asia when they open?

That is a very good question.  I think that everybody will be watching.

Already, the Dow Jones Industrial Average is down about 500 points for the year.  The financial crisis that began in the second half of 2015 is now accelerating as we enter 2016, and nobody is quite sure what is going to happen next.

One key to watch is what happens with the S&P 500.

2000 is kind of like a giant line in the sand on the S&P 500.  On Wednesday we saw the market hover around that psychologically-important number, and there is a whole lot of resistance right there.  If we break solidly through 2000 and start plunging toward 1900, that is going to break things wide open.

The primary reason for the stock market crash in China on Thursday was another stunning devaluation of the yuan.  This explanation from Zero Hedge is very helpful…

Following the collapse of offshore Yuan to 5 year lows and decompression to record spreads to onshore Yuan, The PBOC has stepped in and dramatically devalued the Yuan fix by 0.5% to 6.5646. This is the biggest devaluation since the August collapse. Offshore Yuan has erased what modest bounce gains it achieved intraday and is heading significantly lower once again. Dow futures are down 100 points on the news.

PBOC fixes Yuan at its weakest since March 2011… with the biggest devaluation since August

Yuan Devaluation

A massive devaluation of the yuan was also one of the primary reasons for the market turmoil that we saw back in August.  The Chinese are playing games with their currency, and this is causing havoc in the global marketplace.

Meanwhile, we have received some other very troubling news about the global economy over the past few days…

-The price of oil continues to collapse.  As I write this, the price of U.S. oil is down to $33.26 a barrel.  Those that follow my writing regularly already know that this is a really bad sign for the global economy.

-The Baltic Dry Index just hit another brand new all-time record low.  Global trade is absolutely imploding, and this is having a devastating impact on China and other major exporting nations.

-U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession.  This is precisely what we would expect to see during the early stages of a new crisis.

-U.S. manufacturing imports are also contracting at the fastest pace that we have seen since the last recession.  It appears that “the almighty U.S. consumer” is not going to save the global economy after all.

In 2015, trillions of dollars of stock market wealth was wiped out globally.  Now this new global financial crisis is picking up speed, and many of the “experts” seem absolutely stunned by what is happening.

But most of my readers are not surprised.  That is because I have been breaking down the signs that have been warning us of this new crisis in excruciating detail for months.  The financial carnage that we have witnessed around the globe this week is simply a logical progression of what has already been happening.

To be honest, though, even I have been stunned by what has happened in China this week.  I can’t say that I expected an emergency shutdown of the Chinese markets two times within the first four trading days of the year.

Panic and fear are beginning to grip the global marketplace, and once that starts to happen events become very difficult to predict.

Let us hope that things settle down soon, but I wouldn’t count on it.

As I have said before, 2016 is the year when everything changes, and we are going to see things take place over the next 12 months that are going to shock the world.

What In The World Just Happened To The New York Stock Exchange?

New York Stock Exchange - Public DomainDo you believe that the New York Stock Exchange shut down because of a “technical glitch” on Wednesday?  At 11:32 AM on Wednesday morning, trading on the New York Stock Exchange was halted due to “internal technical issues”, and it did not resume until 3:10 PM.  Officials insist that there is no evidence that a cyberattack caused the technical problems even though hactivists had hinted that something may happen the night before.  Adding to the suspicion is the fact that United Airlines and the Wall Street Journal also experienced very serious “technical glitches” on Wednesday.  Others found it very curious that trading on the NYSE was halted just after Chinese stocks had absolutely plummeted the night before.  In fact, Hong Kong’s Hang Seng Index experienced the largest one day decline that we have witnessed since November 2008.  So is there more going on here than meets the eye?

Overall, the Dow was down 261 points on Wednesday, and the Dow and the S&P 500 both closed below their 200 day moving averages.  Iron ore had its biggest daily price drop ever, and the price of oil continued to decline.  But it was the stunning shut down of the New York Stock Exchange that made headlines all over the world

The New York Stock Exchange, United Airlines and the Wall Street Journal have all fallen victim to a series of massive technical glitches within hours of each other.

NYSE halted all trading for ‘technical reasons’ at 11:32am and only reopened at 3:10pm – but says the problem is an internal one and not the result of a cyberattack.

It comes as tens of thousands of United Airlines passengers were stranded at U.S. airports on Wednesday morning after all of the carrier’s flights were grounded nationwide due to a computer system glitch.

The Wall Street Journal was also left unable to publish after its systems came under attack and has been forced to switch to an alternative site design.

In response to the shut down, the following photo began circulating on Twitter…

But was it really just a “technical glitch”?

Of course they probably would never admit it publicly if it was a cyberattack.  We live at a time when the authorities are much more concerned with keeping everyone calm than they are about telling us the truth.  So in the end all we can really do is speculate about what really happened.

But what we do know is that the stock market crash in China got even worse the night before this shutdown.  The Shanghai Composite Index and the Hang Seng Index both declined by almost six percent overnight.  Overall, the Shanghai Composite Index is now down by more than 30 percent in less than a month, and the Chinese version of the NASDAQ is down by more than 40 percent

In just three weeks, stocks listed on mainland China’s most prominent exchange have fallen by more than 30% from their seven-year highs. The even more speculative ChiNext Index has lost 42% of its value over the 21 days.

Government regulators have now banned, for six months, Chinese executives from selling stock in their own companies. This is only one of a number moves made by panicked officials.

At this point, trading for approximately 45 percent of all stocks on the Shanghai and Shenzhen exchanges has been suspended.  So as a result the selling has bled over to the Hang Seng Index in Hong Kong, and this has caused tremendous chaos

Hong Kong’s benchmark stock gauge plunged the most since the global financial crisis as an equity rout in mainland China rippled across Asia.

The Hang Seng Index fell 5.8 percent to 23,516.56 at the close today, the biggest drop since November 2008, after slumping as much as 8.6 percent.

Even though the Chinese have been trying all sorts of crazy things to stop the crash, nothing has worked.  Instead, the selling restrictions have only seemed to fuel the panic even more…

Investors are disappointed and afraid that the Chinese policy makers lost control of the market,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. “With no end in sight to the plunge, sentiment has turned cold. With liquidity drying up in the mainland, the Hong Kong market is being sold instead –- the only thing it can do is just quietly take the storm.”

Meanwhile, things over in Europe have become more ominous as well.  As I wrote about yesterday, EU officials have declared this week to be “the final deadline” for making a deal with Greece.  On Wednesday, Greece applied for a new three year emergency loan, and European officials have said that they will consider it

A race to save Greece from bankruptcy and keep it in the euro gathered pace on Wednesday when Athens formally applied for a three-year loan and European authorities launched an accelerated review of the request.

Greek Prime Minister Alexis Tsipras called in a speech to the European Parliament for a fair deal, acknowledging Greece’s historic responsibility for its plight, after EU leaders gave him five days to come up with convincing reforms.

The government submitted a request to the European Stability Mechanism bailout fund to lend an unspecified amount “to meet Greece’s debt obligations and to ensure stability of the financial system”. It promised to begin implementing tax and pension measures sought by creditors as early as Monday.

But there is still a tremendous amount of skepticism about whether a deal can be reached.  The Greeks want debt relief, but the Germans have completely ruled out any sort of a debt haircut.  Most of the rest of the EU nations are siding with the Germans, and unless the Greek government caves in at the last moment it appears that a “Grexit” is quite likely.

For most people, the events of 2008 have long since faded from their memories.  After years of soaring stock prices, many in the financial world have become extremely comfortable.  But as we are seeing in China, what goes up must eventually come down.

And the shut down of the New York Stock Exchange today should be a huge wake up call for all of us.  We have become extraordinarily dependent on computers and technology, and this makes us exceedingly vulnerable.  Someday, we might just experience a cyberattack that causes a tremendous amount of permanent damage that cannot be undone.

What will we do then?

Our world is becoming increasingly unstable, and events are beginning to accelerate as we enter the second half of 2015.

So what comes next?  Please feel free to share what you think by posting a comment below…

The Economic Collapse