Why the Market Swoon May Become ‘Disorderly’

You’d think Wall Street analysts had other things to worry about these days. But no. A hype battle is brewing among them as to whether Apple or Google will be the first with a market capitalization of $1 trillion. In early 2000, the candidate was Cisco, before the very notion was obviated by events.
With the S&P 500 down only 6% from its September high, these analysts are not worried that Apple or Google would lose their footing like Cisco did in 2000. But beneath the surface, the bloodletting has been brutal. I received this note from an investor with decades of experience:
Subject: Holy Crap
In the past 5 days, I’ve hit 15 of my trailing stops. I just placed another batch of sell orders. All I have left is mostly cash, precious metals, and bonds. I had a lot of energy MLPs in my taxable account and they have been massacred – oil, gas, coal, midstream -everything. Buy-write funds ditto [funds that use a covered-call options strategy]. I have a few stocks left, but it’s pretty skimpy.
But one thing I’ve learned to never ignore: trailing stops despite fear of a whipsaw. I have always regretted waiting.
It wasn’t like this a week ago. On October 8, when the S&P 500 was just a good day below the magic level of 2000, UBS’s Intellectual Capital Blog explained it to the worried minions this way:

This post was published at Wolf Street on October 14, 2014.

Gold Daily and Silver Weekly Charts – The Almighty Dollar

Gold and silver tried to rally on the overnight but the US market sat on the precious metals throughout the day.
Stocks managed a dead cat bounce.
The action in the Comex, both in the delivery report and the warehouses was inconsequential. That might be a good label for the Comex going forward: the Inconsequential Index.
Oil is continuing to take it on the chin, with various theories about why it is plunging. Some say it is OPEC ‘putting the screws’ to the US producers who need the higher marginal prices, especially for shale production.
Others say it is the US and its allies hurting Putin’s Russia with de facto sanctions on Russia’s oil wealth.
Personally I think it is more of a slack in aggregate demand overall that is becoming a concerning trend to anyone who cares about the real economy, mixed with a squeezing out of speculative money due to the Banks being prohibited from engaging in wholesale speculation.
The precious metals story is now in EurAsia, and those who fails to recognize this really do not know what is going on.

This post was published at Jesses Crossroads Cafe on 14 OCTOBER 2014.

9 Ominous Signals Coming From The Financial Markets That We Have Not Seen In Years

Is the stock market about to crash? Hopefully not, and there definitely have been quite a few “false alarms” over the past few years. But without a doubt we have been living through one of the greatest financial bubbles in U. S. history, and the markets are absolutely primed for a full-blown crash. That doesn’t mean that one will happen now, but we are starting to see some ominous things happen in the financial world that we have not seen happen in a very long time. So many of the same patterns that we witnessed just prior to the bursting of the dotcom bubble and just prior to the 2008 financial crisis are repeating themselves again. Hopefully we still have at least a little bit more time before stocks completely crash, because when this market does implode it is going to be a doozy.
The following are 9 ominous signals coming from the financial markets that we have not seen in years…
#1 By the time the markets closed on Monday, we had witnessed the biggest three day decline for U. S. stocks since 2011.
#2 On Monday, the S&P 500 moved below its 200 day moving average for the first time in about two years. The last time this happened after such an extended streak of success, the S&P 500 ended up declining by a total of 22 percent.
#3 This week the put-call ratio actually moved higher than it was at any point during the collapse of Lehman Brothers in 2008. This is an indication that there is a tremendous amount of fear on Wall Street right now.
#4 Everybody is watching the VIX at the moment. According to the Economic Policy Journal, the VIX has now risen to the highest level that it has been since the heart of the European debt crisis. This is another indicator that there is extraordinary fear on Wall Street…

This post was published at The Economic Collapse Blog on October 14th, 2014.

Quote Of The Day: Central Bank Fairy Tale Edition

Markets have moved from fiction to pure fairy tale. As Bloomberg’s Simon Kennedy notes, in the last week we have seen Ed Yardeni cite “The Wizard of Oz”, International Monetary Fund Managing Director Christine Lagarde went with both ‘Alice in Wonderland’ and Harry Potter, and Stephen King – the HSBC chief economist, not the author – trolled the fantasy aisle. All with a similar message – that despite the current weakness in global stocks – there is more room to fall…
Via Bloomberg,
The reason is that just as global growth is weakening again, central bankers who sustained much of the expansion are running out of ammunition.

This post was published at Zero Hedge on 10/14/2014.

FBN Warns Not All Pullbacks Are Created Equal

In a secular rally, pullbacks will inevitably arise. Market participants, though, should not view all drops in the same light. In addition to the differences in the depth of the collapse, the magnitude of the changes of critical investor sentiment statistics may differ greatly. Hence, identifying a potential trough with the use of a nondiscretionary quantitative trigger may not prove reliable. Nevertheless, recognizing the amount of aggression contained within each selloff can be invaluable in forecasting a fortuitous buying opportunity.
I identified fourteen material declines for equities since July 2007. Traders did not have the ability to short a common stock prior to this date. I leveraged the following technical indicators for the study: average session range, range as a percentage of index level, average monthly NYSE closing TICK, average monthly NYSE intraday TICK, the number of TICK readings below -1,000, average miles driven, miles driven as a percentage of index level, ratio of miles driven to range, open interest in the futures over the past week, volumes in the E-Minis, notional value transacted in the E-Minis, and relative performance between the Russell 2000 and S&P 500.
Unsurprisingly, the drops associated with the financial crisis and the sovereign credit downgrade of U. S. debt ranked as the most violent over the period investigated. I actually assess the slide that climaxed in August 2011 as more extreme than the beating share prices received in the wake of Lehman’s bankruptcy albeit this distinction is nothing more than splitting hairs. While painful at the time, pullbacks such as the one that resulted from the fiscal cliff negotiations or the ‘taper tantrum’ were mild in comparison.

This post was published at Zero Hedge on 10/14/2014.

Straight Talk from Yogi Berra: 9 Ways to Retire Rich

‘In theory there is no difference between theory and practice. In practice there is.’ – Yogi Berra
It’s October, AKA the major league baseball postseason. As a lifelong baseball fan, I take the wisdom of Yogi Berra seriously. And when it comes to planning for the autumn of life, Yogi is spot on.
It seems as though every day an article titled ‘5 Tips for Retirement Saving’ or something similar hits my inbox. I scan for the author’s name, and I’m amazed by how often it’s distinctly contemporary – Jennifer, Brandon, or another name of that vintage. Jennifer’s title is something like ‘staff writer,’ and I immediately picture a fresh-faced young person with a newly minted journalism degree. After work, maybe she jumps in her starter BMW and heads to a local watering hole with her friends to gripe about student loan repayments.
‘Jennifer’ means well. After all, she’s just doing her job. She recommends setting financial goals, getting out of debt, living within your means, and saving from a young age. I won’t argue with those recommendations. Jennifer’s grandparents probably did just that. If you can pull off following that advice to a T, chances are you’ll accumulate a good deal of wealth.
However, once Jennifer has tried to put her advice to practice for a couple of decades, she might understand that it’s neither simple nor easy, despite how it might sound. Most people know what they should do, but it’s often tough and painful to execute in real life.
During my 74 years I’ve met a lot of successful and rich retired friends who sure didn’t go about it Jennifer’s way. How many baby boomers do you know who married young, raised a family, put their children through school, and consistently saved in their 20s, 30s or even 40s? There are a few, but many – if not most – young families lived through a decade or more of ‘Why is there is so much month left at the end of the money?’
Several times a month a 50- or 60-year-old Miller’s Money subscriber writes in asking for help with how to accomplish a last-ditch push to save. Truth be told, most of my friends never got serious about retirement until after they’d raised children. It doesn’t mean they were right; it’s just the way it was. Should they have started earlier? Of course. But they didn’t. Some didn’t know how, some were overwhelmed by day-to-day expenses, and some overspent on stuff, stuff, and more stuff. Many got serious in the nick of time, but they did it.
Retiring Rich When You’re Under the Wire
Whatever your age, fretting about what you didn’t do is futile. Start making the needed changes today.
The best place to begin is to define ‘rich.’ For our team, rich means having enough money to choose whether or not to work and enough money that you control your time. Rich means you live comfortably according to your personal standards. If you’ve lived a middle-class lifestyle, a rich retirement means you can maintain that same lifestyle without worry.
Ten days out of high school, I was on a train to Parris Island, South Carolina. One of the best teachers I ever had was SSgt. Thomas R. Phebus. He was an archetype – the ideal combination of common sense and straight talk. I’m going to take a page out of his book and share some straight talk on how to make a rich retirement your reality.
The 9-Step Program
#1 – Saving money is a bitch! When I entered the work force, every major company and most government agencies offered some sort of pension plan. The bottom line: come work for us at age 25, stay for 40 years, retire at 65, and we’ll continue to pay you until you die, normally another 20 years or so.
Pension plans are no longer the norm. Corporate America just couldn’t do it. Some filed for bankruptcy and broke their promises. Either way, in the private sector, 401(k)s are the new norm. They’re optional – no one makes you contribute.

This post was published at The Burning Platform on 14th October 2014.

French Nobel-Prize Winning Economist Slams “Big State” Socialism: “Not Enough Money To Pay For It”

One would think: i) French ii) economist iii) Nobel prize winner = the French version of Paul Krugman, which immediately means someone who exists in a permament state of eternal hubris and confused shock at the endless stupidity of all those others who (have a functioning frontal cortex and thus) fail to recognize his brilliance (hence, are capable of rational thought), whose only explanation for the failure of all his promoted policies is that not enough, never enough of them was attempted, and that, like a good socialist, the only thing better than a massive government apparatus is an infinite government apparatus, coupled with 10 Princeton economists sitting in a circle, chanting and micromanaging the world, the economy and the capital markets.
One would be wrong. Because hours after winning the economics Nobel Prize, speaking on France 24, French economist Jean Tirole advocated Scandinavian-style labour market policies and government reform as a way of preserving France’s social model. Wait, he said he believes in… less government? Sacre bleu, A French economist advocating less socialism? Was that Krugman’s head just exploding?
From France 24:

This post was published at Zero Hedge on 10/14/2014.

This Time Is Different – – For The First Time In 25-Years The Wall Street Gamblers Are Home Alone

The last time the stock market reached a fevered peak and began to wobble unexpectedly was August 2007. The proximate catalyst back then was the sudden recognition that the subprime mortgage problem was not contained at all, as Bernanke had proclaimed six months earlier. The evidence was the surprise announcement by the monster of the mortgage midway – – Countrywide Financial – -that it would be taking huge write-downs on its $200 billion balance sheet.
At the time, it had not quite invented the term ‘fortress balance sheet’ per JPMorgan’s later hyperbole, but the market overwhelmingly believed that the orange man – – Angelo Mozillo – -ran a tight ship; that the proponderant share of its business was in ‘safe’ Freddie/Fannie originations and guaranteed paper; and that any losses from the sketchier subprime mortgage business that it had recently entered would be covered by its loan loss reserves and the massive earnings on its GSE book of business. Only now do we know that Countrywide was a house of cards that has cost(so far) its reluctant suitor, Bank of America, upwards of $50 billion in write-offs, losses and settlements.
It is in the nature of bubble finance that markets do not recognize disasters lurking in plain sight. Prior to the August 2007 swoon, Countrywide still had a market cap of $15 billion. Indeed, at that point the combined market cap of Bear Stearns, Freddie Mac and Fannie Mae, Lehman Brothers, AIG and GM, just to name the obvious, was upwards of one quarter trillion dollars!
Markets were most definitely not in the classic ‘price discovery’ business. That is, they were not discovering information about the speculative rot under housing prices or the dealer lots bulging with unsold cars or freshly minted subdivisions where subprime residents were delinquent on both their mortgage and car loans or the adjacent strip malls that had no tenants and no customers.
Instead, the stock market had discovered the ‘goldilocks economy’ – – a pleasant place of subdued inflation, measured growth and perpetually rising stock and real estate prices. The most notable point was the belief that the Fed had delivered this salutary state of affairs owing to its enlightened management of the macro-economy, and that this condition could be sustained indefinitely.

This post was published at David Stockmans Contra Corner on October 14, 2014.

Washington State: Bill Gates is Coming for Your Guns

Everyone knows how former Mayor Michael Bloomberg supports a push towards confiscation of Americans’ guns. He’s literally thrown millions of dollars behind various campaigns, started organizations and even gotten politicians onboard with going after gunsacross America. Now, Microsoft founder Bill Gates and his wife Melinda have given $1 million to start the ball rolling on gun confiscation in Washington State.
CNN reports:
Previously, Microsoft (MSFT, Tech30) co-founder Paul Allen gave $500,000 to the group, while recently retired Microsoft CEO Steve Ballmer gave $250,000 and his wife Connie contributed $330,000.
It’s not just Microsoft billionaires throwing big bucks at the gun control campaign. Tech venture capitalist Nick Hanauer contributed an additional $1 million, according to the filing, on top of his earlier contributions of $335,000.
All of them are billionaires who can easily afford the six- and seven-figuredonations. Gates is therichest man in the world according to Forbes, with an estimated fortune worth $76 billion. Ballmer just paid a record $2 billion to buy the Los Angeles Clippers.
But the contributions by the tech billionaires make up a significant portion of the war chest the group has raised so far. It’s most recent report shows total contributions of $5.8 million.
These contributions are for pushing an initiative on the November ballot that claims it’closes this loophole in Washington State by requiring that private sales and transfers -including those at gun shows or on the internet – go through the same background checkprocess as sales through a licensed gun dealer.’
To break things down quickly, the process will not actually close a loophole. What Initiative 594 will do is force Washington residents to comply with an unconstitutional federal law called the federal Gun Control Act of 1968. Instead of allowing private sales between two law abiding citizens to remain private, it will force them into a gun dealer’s store for afederal background check and then record the sale. No doubt, the gun dealer will also charge a fee, something previously not charged in the sale.

This post was published at The Common Sense Show on Oct 14, 2014.

Cliff Asness Warns On QE-Blowback “Nothing Is Over Yet”, Slams “Mostly Dishonest” Krugman

Quantitative easing (QE) and other inventive forms of loose monetary policy have simply been less than hoped or feared. Some may declare Fed policy a great success as we’re not in a depression, but they can’t show any counter-factual, and given that this money has largely sat dormant, albeit presumably lowering risk premia (raising asset prices), it’s likely we’d have a similar record-weak recovery with or without it. How this is a victory for one side of the debate or another is beyond me, but obviously clear to Paul and his back-up singers. Of course, it’s also clear to Paul that the 2009 stimulus package saved us from this same second Great Depression (but more stimulus would of course have been much better). Yep, and if we traded good cash for just one more “clunker” we’d be growing at 5% per annum by now with a normal labor participation rate.

This post was published at Zero Hedge on 10/14/2014.

12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy

Most people that discuss the “economic collapse” focus on what is coming in the future. And without a doubt, we are on the verge of some incredibly hard times. But what often gets neglected is the immense permanent damage that has been done to the U. S. economy by the long-term economic collapse that we are already experiencing. In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago. The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed. In fact, many of them continue to get even worse year after year. But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems. They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead. Hopefully this article will be a wake up call. The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching.
#1 Employment
The mainstream media is constantly telling us about the “employment recovery” that is happening in the United States, but the truth is that it is just an illusion. As the chart below demonstrates, just prior to the last recession about 63 percent of all working age Americans had a job. During the last wave of the economic collapse, that number dropped to below 59 percent and stayed there for a very long time. In the past few months we have finally seen the employment-population ratio tick back up to 59 percent, but we are still far, far below where we used to be. To call the tiny little bump at the end of this chart a “recovery” is really an insult to our intelligence…

This post was published at The Economic Collapse Blog on October 13th, 2014.

Is The Money Printing Facade Cracking?

Yesterday I sent an email around to some colleagues in which I suggested that something nasty is going on behind the scenes in the financial system that is not yet apparent. The bond market was closed yesterday but Treasury futures opened in th early evening and the 10-yr traded down to 2.25%. This time last year the yield was 2.75%. Despite the jump in the SPX today, which always happens on POMO Tuesday, the 10-yr is now down to 2.23%.
The ‘improving economy/housing market’ does not hold up when the yield on the 10yr is collapsing like this. This is not a short-squeeze.
Something has the market incredibly spooked and I find it interesting that the U. S. Treasury Secretary and the UK’s equivalent will be running a big bank fail simulation test next week. The movement in 10-yr Treasury yields AND the blatant smashing of the gold price since mid-July is exactly what occurred in 2008 before Lehman collapsed.

This post was published at Investment Research Dynamics on October 14, 2014.

UNTIL DEBT DO US PART

At least I don’t live in Illinois. My household share of the gold plated pensions owed to PA government workers and teachers is $6,200. But it is only rising by $900 per year, or 16% annually. Think about that for a second. The economy has been barely growing by 2% over the last six years. Wage increases for taxpayers have been 2% annually. But, our obligation to pay government drone pensions is going up by 16% per year. None of these costs show up in the ‘balanced’ budgets passed every year. The feckless spine deficient corrupt politicians in these states don’t have the balls to tell the truth. There is absolutely no mathematical possibility that these pension obligations are honored. It’s just a matter of when all these states pull a Detroit and declare bankruptcy.
The fine people of Illinois each have a $19,000 obligation per household to pay the gold plated pensions of teachers and municipal workers. Message to America – don’t move to Illinois.

This post was published at The Burning Platform on Oct 14, 2014.

Trannies Surge, Industrials Purge As Oil Plunges Most In 2 Years

Yet again, early exuberance in stocks – which was entirely unsupported by credit and bonds – plunged back to reality late in the day. Intraday volatility in Russell and Trannies was unbelievable with 3-4% swings (Trannies best day in 14 months before the tumble – but managed to close back above its 200DMA). Since Friday, Treasury yields are 6-9bps lower and the dollar rallied back to unchanged today. The big story was the total collapse in oil prices into their close (accompanied by weakness in CAD and EUR, stocks, and bond strength) as it appears someone large got a serious tap on the shoulder to liquidate (WTI under $82 -4.4%, biggest drop in 2 years). Copper gained as gold and silver slipped modestly on the day. HY credit pushed back above 400bps (widest in 13 months) as VIX broke above 24.5 briefly in the last hour (from below 21.5 at its lows) highest since June 2012.

This post was published at Zero Hedge on 10/14/2014.

SP 500 and NDX Futures Daily Charts – Alibaba Rang the Bell

There was a dead cat bounce off key support that took the major stock indices back up to prior support.
But that rally faded into the afternoon. The bulls were able to slow the descent and avoid a late day plunge as we had seen yesterday.
Stocks managed to finish slightly higher, holding their key support levels.
So what next. CSX and INTC reported beats on earnings and revenues after the bell. Earning *might* help if they are overwhelmingly good.
We will be getting some macroeconomic news for the week starting tomorrow. The bulls need to bounce them here and hold on to the gains.

This post was published at Jesses Crossroads Cafe on 14 OCTOBER 2014.

French Government on Brink of Collapse

French President Franois Hollande has brought his country to ruin and threatens to bring down Euroland with him. His insane budget plans have been admitted cannot possibly meet EU rules before 2017 and even that assumes some recovery. Meanwhile, Hollande has lost his last government partner. The PRG chief Jean-Michel Baylet on Sunday evening on television, announced that his small center-left party PRG will terminate the alliance with the Socialists. Prime Minister Manuel Valls has stated that if the tax burden on the middle class in the draft budget 2015 is not reduced, the party will abandon the Socialists and withdraw its three ministers. Hollande’s term runs until 2017.
These people cannot grasp that raising taxes is not the way to stimulate an economy. They people should spend their own money – politicians only confiscate and then spend according to their self-interest. Sorry – it just does not work.

This post was published at Armstrong Economics on October 14th, 2014.

Bob Janjuah Targets S&P 1770, Says “Markets Are Now Collectively Reconsidering Reality”

It is time to update my last note (Bob’s World – Just mild indigestion then…, 8 September 2014). My forecast for the market set out in that note, whereby I was looking for a period of risk-off from mid-September through to early October, has proven accurate. Specifically, I was looking for this risk-off phase to take the S&P 500 from the low 2000s down 5% to the 1905 level. Credit spreads have widened and core bond yields fallen with the UST 10yr now trading closer to 2% than 2.5%. Being a core bond bull through 2014 has been a little lonely but rewarding, especially now that equity markets across the globe are broadly down year to date.
The drivers of this risk-off phase that I have highlighted repeatedly this year are global growth weakness, deflation, and concerns about policymakers in the eurozone, Japan, China and, importantly, the US. Broad markets have been looking for decent growth recoveries in Europe and Japan all year, and have been looking for the Fed to start its rate hike cycle. At the risk of being repetitive, I will state clearly in my view that we will not see strong sustained economic recoveries in the major global economies anytime soon, particularly in Europe and Japan. Global deflation should remain the dominant theme, and I repeat the message from my last note that I do not expect the Fed to be hiking rates for a long time – late 2016/2017 seems to me the earliest possible time that the Fed may hike.

This post was published at Zero Hedge on 10/14/2014.

Is This The Fed’s “Hidden” Buy Signal?

While today’s trading volume was better than in recent weeks (as it has been for the last 4 days of collapse), quote activity spiked to the 2nd highest ever on record. As Nanex’s Eric Hunsader notes, quote cancellations were higher than ever and are accelerating even as the overall market volume slides lower and lower. What is intriguing is that the last 3 times quote activity spiked this much corresponded with a ‘sudden’ v-shaped recovery from a significant market weakness – which extended notably for six months or more… is this time different?

This post was published at Zero Hedge on 10/14/2014.

Brussels Shuts Down Catalonia Referendum

Artur Mas Prime Minister of Catalonia, cancelled the planned independence referendum in the northeastern Spain region. At a meeting with the Catalan party leaders, the Prime Minister announced on Monday in Barcelona officially, that the legal basis for such a vote on November 9th does not exist bowing to pressure from Brussels. The Spanish Constitutional Court had the referendum prohibited by an action of the Madrid central government for the time being. The real pressure comes from Brussels fearing, as they did with Scotland, that the people should not be allowed to leave Euroland.

This post was published at Armstrong Economics on October 14, 2014.