Bank Of America Analyst: A ‘Flash Crash’ In Early 2018 ‘Seems Quite Likely’

Is the stock market bubble about to burst? I know that I have been touching on this theme over and over and over again in recent weeks, but I can’t help it. Red flags are popping up all over the place, and the last time so many respected experts were warning about an imminent stock market crash was just before the last major financial crisis. Of course nobody can guarantee that global central banks won’t find a way to prolong this bubble just a little bit longer, but at this point they are all removing the artificial support from the markets in coordinated fashion. Without that artificial support, it is inevitable that financial markets will experience a correction, and the only real question is what the exact timing will be.
For example, Bank of America’s Michael Hartnett originally thought that the coming correction would come a bit sooner, but now he is warning of a ‘flash crash’ during the first half of 2018…
Having predicted back in July that the ‘most dangerous moment for markets will come in 3 or 4 months’, i.e., now, BofA’s Michael Hartnett was – in retrospect – wrong (unless of course the S&P plunges in the next few days). However, having stuck to his underlying logic – which was as sound then as it is now – Hartnett has not given up on his ‘bad cop’ forecast (not to be mistaken with the S&P target to be unveiled shortly by BofA’s equity team and which will probably be around 2,800), and in a note released overnight, the Chief Investment Strategist not only once again dares to time his market peak forecast, which he now thinks will take place in the first half of 2018, but goes so far as to predict that there will be a flash crash ‘a la 1987/1994/1998’ in just a few months.

This post was published at The Economic Collapse Blog on November 20th, 2017.

Learning From The ’80s: The Power And Irony Of “MDuh”

Authored by Daniel Nevins via FFWiley.com,
Forget about big hair, Ray-Bans, and Donkey Kong. Don’t even think about Live-Aid, Thriller, and E. T. Above all else, the 1980s were the gravy days of the money supply aggregates.
Beginning in late 1979, the Fed built its policy approach around the aggregates – primarily M1 but occasionally M2, and policy makers also monitored M3 while experimenting with M1B and, later, MZM. But those were just the ‘official’ figures. Economists and pundits debated the Fed’s preferred measures while concocting their own home-brewed variations.
Notably, the Fed allowed interest rates to fluctuate as much as necessary to achieve its money growth targets. Fluctuate they did – rates soared and dipped wildly as a direct result of the Fed’s policy. The world, meanwhile, watched the action as attentively as a Yorkie watches breakfast, studying every wiggle in every M. Missing one wiggle could have meant the difference between exploiting the volatility that the Fed unleashed or being sunk by that same volatility.
And to make sense of it all, the world looked to the most famous economist of his day, Milton Friedman. By converting a large swath of his profession to his strict brand of Monetarism, Friedman more than anyone else had triggered the monetary frenzy.
But then, almost as quickly as the frenzy blew in, it blew right back out. With none of the Ms living up to their billings as economic indicators, the Monetarists drifted from view. Not in five minutes but in five years, give or take a couple, their period of fame was over. Friedman’s reputation as an economics savant fell particularly hard – his highly publicized forecasts proved inaccurate in each year from 1983 to 1986. And the Fed once again redesigned its approach, first deemphasizing and eventually dropping its money growth targets.

This post was published at Zero Hedge on Nov 20, 2017.

This Flat Yield Curve Is No Greenspan Conundrum (Low Inflation Prevails)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Fed Study Says San Francisco Fed research blames low inflation, neutral rate There’s some risk that term premium could rise abruptly (Bloomberg) – This isn’t Alan Greenspan’s yield curve.
The gap between short and longer-term interest rates has been narrowing even as the Federal Reserve raises its policy rate, a trend that echoes the so-called ‘flattening’ of the curve between June 2004 and December 2005. Then-Fed Chairman Greenspan called the mid-2000s episode a ‘conundrum,’ but the leveling out is no mystery this time around, Federal Reserve Bank of San Francisco researcher Michael Bauer writes in a note called the Economic Letter. Low inflation and neutral interest rates as well as political uncertainty are all weighing on longer-dated bond yields, keeping them low even as the Fed boosts the cost of borrowing in the near-term, Bauer writes. That’s important, because it means that if price pressures pick up quickly, investors could begin to demand better compensation for holding longer-dated securities – reversing the flattening and potentially dinging stock market valuations, which are based partly on the low level of yields in the bond market.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ November 20, 2017.

What Happened To Cash Flow Growth: The Red Flag In Q3 Earnings

Listening to Wall Street analysts, or their financial press cheerleaders, one would be left with the impression that earnings season has been gangbusters, and the recent 2-3 quarters of growth are sure to lay the basis for a new golden age in which EPS rises at double-digit rates for years to come. There are just a few problems with this wildly incorrect conclusion. First, after a year of earnings recession and a year in which earnings went nowehere, 2017 is finally catching up to where analysts said earnings would be two years ago, and that only due to a record liquidity and credit injection by the “developed” central banks and China.
Meanwhile, even as recent EPS growth has been strong, it was only due to a “base effect” as a result of a plunge in year ago earnings following tumbling Energy profits. As for the future, good luck to those double-digit gains in 2018.
There is another problem: as we discussed yesterday, despite the so-called coordinated global recovery, the difference between GAAP and non-GAAP continues to be 10% or higher.

This post was published at Zero Hedge on Nov 20, 2017.

“Alexa, This Is Going To Hurt”: These Companies Will Be Destroyed By Amazon Next

From Morgan Stanley overnight:

The reason the S&P healthcare sector is lower on the day…
… with distribution names getting hammered, is because in a report published overnight, Morgan Stanley analysts predicted that the sector, and severeal specific names, are most in danger of being targets of Amazon’s unstoppable monopoly juggernaut, soon to be scheduled for Bezosian eradication.
As MS explains, it has identified “attractive subsectors and profit pools that Amazon could drain to fund disruption.” MS assumes a 5% hit to prices when Amazon enters a sector, estimate the EPS impact on healthcare companies, and look at what the stocks are pricing in after the recent sell-off.

This post was published at Zero Hedge on Nov 20, 2017.

Buy Into An Asset Bubble Before It Becomes A Bubble

Let’s face it, the trillions of fiat currency printed by Central Banks globally, which has been compounded by an even greater amount of debt issuance derived from the printed currency, has fomented multiple assets bubbles of historic proportions. Bitcoin is a bubble. The FANG stocks plus Tesla, among dozens of other daytrader and hedge fund momentum darlings, are bubbles. Novo Resources, for now, is a bubble.


This post was published at Investment Research Dynamics on November 20, 2017.

Yellen Confirms She Will Step Down When New Fed Chair Sworn In

Federal Reserve Chair Janet Yellen says she will step down once her successor is sworn into the office, resolving a key question as to whether she would stay on in a diminished role.
Yellen could technically stay on as a governor even after stepping down as the institution’s leader, because her term as governor does not end until January 31, 2024.
Her decision to leave will give Trump an additional spot to fill on the Fed’s seven-person Board of Governors in Washington, which already has three openings.
Yellen resignation letter – notably proclaiming everything is awesome…
Economy ‘is close to achieving the Federal Reserve’s statutory objectives of maximum employment and price stability,’Yellen says in letter.

This post was published at Zero Hedge on Nov 20, 2017.

Operation Twist By Another Name and Method?

The TIP/IEF ‘inflation gauge’ is still motoring upward after breaking above the SMA 200. If this turns the 200 up along with the MA 50 it could indicate a mini hysteria about inflation.
The problem lately has been that the longest duration bonds have been relatively strong, putting a cap on yields and inflationary signaling, if not indicating deflationary pressure. TIP/TLT has not nearly kept up as 30yr yields have been a big drag over the last couple of weeks (this could still turn out to be a bottoming pattern though).
Of course the Tin Foil Hat wearer in me wonders where some of this pressure might be coming from. Political and monetary authorities who have an interest in keeping long-term rates capped, maybe? Macro Tourist checks in with some details (last part of the article) about potential political shenanigans in the long-term Treasury bond market.

This post was published at GoldSeek on 20 November 2017.

The Approaching Silicon Valley Meltdown

To say that we are living through precarious times seems to be an understatement. Whether one lives in the so moniker’d ‘developed world, emerging, or frontier’ there seems to be one constant currently: No one seems to be able to accurately ponder what tomorrow may bring, whether its political, economical, social, or combination there of.
The only thing constant right now is one of two things: Either, further instability is on the horizon. Or, complete and utter chaos is already knocking on the door. (See Kim Jong-un or Robert Mugabe for clues.)
Stability, the once deemed word for progress throughout civilized society now seems, to have devolved to mean, at what point of the instability around them they’re currently coping with. i.e., If you’re currently muddling through economically while dodging being a statistic, as the term goes, that currently means you, or your situation, is currently ‘stable.’
This now applies to not only people, but business, as well as politics worldwide. If you think I’m exaggerating? Hint: Hollywood. Need I say more?
However, there has been one outlier, for the most part, which seemed to skirt around all the current chaos, relatively unscathed. That would be Silicon Valley and all its ancillary provinces aka ‘Disruptive Tech.’
So far the coveted group known collectively as ‘FAANG’ (e.g., Facebook™, Apple™, Amazon™, Netflix™, Google™) seems to have held the ‘barbarians at the gates’ known as investors relatively at bay, or ‘stable’ in their positions, if you will. What has been, anything but, is their cohort of IPO brethren that were supposed to have joined them.

This post was published at Zero Hedge on Nov 20, 2017.

UK Cabinet Poised To Increase Brexit Divorce Payment By Another 20 Billion Euros

Theresa’s May’s government is poised to concede an improved Brexit settlement offer to gain EU approval to move the negotiations on to the next stage.
May reportedly has the backing of senior ministers ahead of a critical cabinet meeting on Monday afternoon. The list of senior ministers is thought to include chancellor, Philip Hammond, Brexit secretary, David Davis, environment secretary, Michael Gove and weakened foreign secretary, Boris Johnson, who famously said in July that the EU could ‘go whistle’ over a divorce settlement. Hammond said at the weekend ‘we’ve always been clear it won’t be easy to work out that number, but whatever is due, we will pay’. Press reports suggest that the UK will formally offer about 40 billion Euros, versus the previous 20 billion. The news caused Sterling to rise more than half a percent to a two and a half week high of 1.3272, its strongest level since 2 November 2017. According to Bloomberg.
The U. K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December. Members of Prime Minister Theresa May’s divided cabinet will consider Britain’s divorce from the EU at a meeting Monday afternoon of the Brexit sub-committee that could be key to unlocking the most controversial matter in the negotiations — money. Britain is ‘on the brink of making some serious movement forward’ and starting to break the ‘logjam,’ Chancellor of the Exchequer Philip Hammond told the BBC on Sunday. While Hammond is among the most pro-European members of cabinet, his suggestion follows Brexit Secretary David Davis’s hint from Berlin on Friday that more details on a financial settlement would be presented within weeks. With businesses clamoring for clarity and the departure just 16 months away, pressure is mounting to break the impasse.

This post was published at Zero Hedge on Nov 20, 2017.

Nebraska Regulators Approve Keystone Pipeline Route Days After South Dakota Leak, Shutdown

TransCanada received its final required pipeline route approval, winning Nebraska’s permission to build its long-delayed Keystone XL crude oil pipeline across the state… just days after a 5,000 barrel spill in South Dakota shut the pipeline.
The decision will almost certainly be challenged in court.
Just a few short days after 210,000 gallons of crude oil spilled in South Dakota, Bloomberg reports that Nebraska’s Public Service Commission voted three to two Monday, removing one of the last hurdles to the Calgary-based company’s construction of the $8 billion, 1,179-mile conduit (1,897-kilometer), which has been on its drawing boards since 2008.
For those who aren’t familiar with the project, the pipeline links Canada’s Alberta oil sands to U. S. refineries. While a portion of the pipeline has been operating, part of it had still not been approved by state regulators… until today’s decision by Nebraska.

This post was published at Zero Hedge on Nov 20, 2017.

Bank Insurance Clarification – A contagion eliminates all Rules!

The entire banking insurance schemes created during the aftermath of the Great Depression, are predicated upon an ASSUMPTION that a bank failure is a single isolated event. The contingency plan for a wide-scale banking collapse will default to a ‘per person’ basis despite what anyone else says. I have been in meetings and that is the stated fallback position. The closest example was the S&L Crisis of the late 1980s caused by Congress raising taxes changing the tax credits for real estate which led to a sell-only market.
The S&L institutions were insured by the Federal Savings and Loan Insurance Corporation (FSLIC) which was established to provide insurance for individuals depositing funds into S&Ls. When S&L banks failed, the FSLIC was left holding a $20 billion check. They inevitably left the FSLIC corporation bankrupt. The Federal Deposit Insurance Corporation (FDIC) that oversees and ensures banking deposits today is what also comes into play. During the S&L crisis, the deposits of some 500 banks and financial institutions were backed by state-run funds. The collapse of these banks cost at least $185 million and destroyed the concept of state-run bank insurance funds since they could not cover the losses.

This post was published at Armstrong Economics on Nov 20, 2017.

100 billion reasons to have non-reportable assets

In early March 1938 in a dusty corner of the Arabian desert, Max Steineke finally had the breakthrough he was hoping for.
Steineke was the chief geologist for the California Arabian Standard Oil Company (CASOC), a venture owned by what we know today as Chevron.
And he hadn’t had a lot of success despite years of effort.
Steinke was convinced that massive oil reserves were beneath the sands. He just couldn’t find any.
His prized oil well, what was called Dammam #7, had been riddled with mishaps, accidents, and delays, and it was costing the company a LOT of money.
Steinke was about to be shut down when, finally, on March 4, the well started gushing. And Saudi Arabia was never the same.

This post was published at Sovereign Man on November 20, 2017.

Second Woman Accuses Al Franken Of Groping Her

Things just went from bad to worse for embattled Minnesota Senator Al “Frankenstein” Franken.
In an explosive new allegation, a Texa woman has told CNN that Franken grabbing her butt while the two were taking a photo together at the Minnesota State Fair, a story that several members of her family who were present at the time corroborated in separate interviews. The accusation is particularly troubling for Franken because the incident in question occurred in 201, two years after he had been elected to the Senate. Previously, former Playboy Playmate and sports broadcaster Leeann Tweeden accused Franken of “kissing and groping” her during a USO tour in 2006. To support her claims, Tweeden supplied a photo depicting Franken groping her breasts while she was sleeping with a wide grin spread across his face.
Over the weekend, Saturday Night Live, where Franken made his name as a comedy writer, included a few jokes bashing the alumus, currently a sitting Democratic senator, during its “Weekend Update” segment.
Lindsay Menz, a 33-year-old woman who now lives in Frisco, Texas, reached out to CNN on Thursday hours after Tweeden made her story public saying she wanted to share an “uncomfortable” interaction with Franken that left her feeling “gross.”

This post was published at Zero Hedge on Nov 20, 2017.

In Dramatic Rebound, Euro, DAX Recover All Losses; “Is Strong Government Overrated?” SocGen Asks

Having tumbled 80 pips to a one week low in kneejerk response to the late Sunday news that Angela Merkel had failed to form a government following the collapse of the “Jamaica Coalition” talks – when the Free Democratic Party walked out, saying the differences with the Green party were too great to bridge – both the Euro and European stocks have staged an impressive rebound, and the entire gap lower in the FX pair has now been, well, pared.

Alongside the rebound in the EURSD, the German DAX, which earlier fell as much as 0.5% at the open (and whose futures at one point overnight looked set for a 1% drop), trims early losses and briefly even turns positive, on what some have speculated was another round of central bank intervention.
As Bloomberg notes, while analysts contemplated possible scenarios of Merkel setting up a minority government headed by her Christian Democratic-led bloc or asking President Frank-Walter Steinmeier to order a fresh national election, “leveraged and interbank names were quick to fade the euro’s dip that stretched as much as 0.6% to 1.1722.”

This post was published at Zero Hedge on Nov 20, 2017.

Saying Goodbye to Richard Cordray at CFPB Is Hard to Do

Last Wednesday, Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB), announced he would be stepping down from his post at the end of this month. Cordray is the former Attorney General of Ohio and there are rumors he may make a run for Governor there.
The CFPB, a Federal agency, was created under the Dodd-Frank financial reform legislation of 2010. The legislation resulted from the greatest fraudulent wealth transfer from the middle class to the 1 percent since the Wall Street frauds of the late 1920s. Both periods ended in an epic financial crash that left the U. S. economy on life support. Since the financial crash of 2008, the U. S. economy has grown at an anemic 2 percent or less per year despite massive fiscal stimulus and unprecedented bond purchases (quantitative easing) by the Federal Reserve.
Despite the desperate need for the CFPB, Republicans fought against its creation and then refused to confirm Cordray for his post as Director for two years. Cordray was finally sworn in on July 17, 2013 after having served in the post for 18 months under a recess appointment by President Obama. Republicans have continued to battle Cordray and attempt to derail his work in protecting vulnerable consumers from credit card, student loan and mortgage frauds.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Bitcoin Blasts Through $8,000… and In Zimbabwe Tops $13,500 As Mugabe Regime Crumbles Again

Bitcoin has just blasted to another new all-time high of $8,055!
***
But, that is the US dollar price.
Bitcoin often trades at higher prices in relation to other currencies, but none so much lately as the Zimbabwean ‘New Zim dollar.’
Here’s a little tip. If you have already run one of your fiat currencies into the ground, putting adjectives like ‘Strong’, as in Venezuela’s ‘Strong Bolivar’ or ‘New’ as in the Zimbabwe ‘New Zim dollar’ in front of the name doesn’t make it automatically better.
In fact, if you have the same corrupt, criminal, communists running the country you will very quickly end up with wheelbarrow money again.

This post was published at Dollar Vigilante on November 20, 2017.

Is Tesla On The Verge of Bankruptcy?

If you want one of their alleged “Super-Roadsters” you need to ante up $5,000 now plus $245,000 more within 10 days by wire transfer.
Note that the car will not be “ready” and “deliverable” for three years according to Master Touter Musk.
What happens if “three years” turns into “never”?
You flushed $250,000 down the toilet.
May I remind you that Tesla is a money-losing enterprise and has been since it was founded. It has never made a profit, it has zero in retained earnings and you will be an unsecured, back-of-the-line creditor with your “reservation” — which they will spend the minute it comes in the door.
If the “Reservation” was a modest amount of money this might be defensible. $5,000 as a punt on a “supercar”? Sure, why not.
When it’s a quarter of a million bucks it not only is indefensible in my opinion the solicitation of same borders on criminal fraud since the company has absolutely no reasonable reason to believe it will be able to ever deliver said car.

This post was published at Market-Ticker on 2017-11-19.

The Yield Curve Has Not Been This Flat In 10 Years, And Many Believe This Is A Sign That A Recession Is Imminent

Whenever we see an inverted yield curve, a recession almost always follows, and that is why many analysts are deeply concerned that the yield curve is currently the flattest that it has been in about a decade. In other words, according to one of the most reliable indicators that we have, we are closer to another recession than we have been at any point since the last financial crisis. And when you combine this with all of the other indicators that are screaming that a new crisis is on the horizon, a very troubling picture emerges. Hopefully this will turn out to be a false alarm, but it is looking more and more like big economic trouble is coming in 2018.
The professionals on Wall Street take the yield curve very, very seriously, and the fact that it has gotten so flat has many of them extremely concerned. The following comes from Business Insider…
In the past, including before the Great Recession of 2007-2009, an inverted yield curve, where long-term interest rates fall below their short-term counterparts, has been a reliable predictor of recessions. The bond market is not there yet, but a sharp recent flattening of the yield curve has many in the markets watchful and concerned.
The US yield curve is now at its flattest in about 10 years – in other words, since around the time a major credit crunch of was gaining steam. The gap between two-year note yields and their 10-year counterparts has shrunk to just 0.63 percentage point, the narrowest since November 2007.

This post was published at The Economic Collapse Blog on November 19th, 2017.