Reality is finally settling in. Natural laws of supply and demand are back in action. Stocks are sliding, banks are finally slimming down, and oil’s getting crushed.
The market at large has proved its innate vulnerability despite the Fed’s best efforts to distort the real macroeconomic picture at play.
Economists are (finally) admitting that central bankers have run out of ammunition to sustain the illusion of the Fed as our knight in shining armor.
It’s incredible how many traditional fairytale parallels have been cited when referring to a very real financial experiment gone very wrong.
Ed Yardeni cited “The Wizard of Oz.” International Monetary Fund Managing Director Christine Lagarde went with both “Alice in Wonderland” and Harry Potter. Stephen King — the HSBC Holdings Plc chief economist, not the author — trolled the fantasy aisle.
- CHINA & RUSSIA HAVE BEEN DUMPING U.S. DOLLARS SINCE 2010: TAKES SEVERAL YEARS FOR IMPACT ~ ITS NOW 2014.
Their message for investors: Even after the MSCI World Index’s lurch to its lowest since February, sentiment risks souring for a while longer. The reason is that just as global growth is weakening again, central bankers who sustained much of the expansion are running out of ammunition.
Further signs of the Fed’s failed attempts at stimulus include the fact that retail sales in the U.S. slipped more than economists forecast — 0.3% in September — shortly after China reported weaker-than-estimated consumer inflation.
The Dow has plummeted by the thousands and Europe is on the brink or an overtly shrinking economy. This is going to have a direct impact on the U.S. and the U.S. dollar…
Sobering Truth Meets Silver Lining:
Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion, said there is a grave concern that “weakness in Europe and Asia is going to be exported to the U.S. and our economy is going to be negatively impacted.”
Meanwhile, Saudi Arabia is ready to accept a price of $80 a barrel of oil for the next two years as oil plummeted down to four-year lows. In fact, Brent crude has dropped by a staggering 27% since its peak in June. Consequently, energy shares are tumbling too.
On the plus side, I paid $2.73 per gallon of gas (with my Kroger discount!) as I filled up before leaving my hometown of Roanoke, VA the other day.
There’s always a silver lining:
Truthfully, that’s great news for a majority of American consumers who are more directly and detrimentally impacted by inflation than they are stock market fluctuation — many of whom have seen their incomes go down instead of up over the past few years.
As Jason pointed out last week, we’re actually making less money than we did in 1999. When you factor in inflation, this is wildly disappointing at best.
In this case, deflation wouldn’t necessarily be a bad thing. In fact, deflation might be our only shot for a happy ending after the Fed’s failed attempts to control inflation and avoid deflation.
And isn’t that what we’re all looking for? A happy ending in the midst of all the madness?
…Especially all those disgruntled investors who fell for the whole fracking/shale-boom Ponzi scheme. Frackers and their share prices are getting crushed but the perk is that cheap(er) oil may actually now be a bit of a boon for U.S. families.
As the world at large awakens from the hazy daydream we’ve been stuck in since 2011ish, it feels like a great unraveling has finally begun.
The institutions of old are transforming before our very eyes. Our nation’s banks are even becoming closer to what they should be — actual shelters from financial catastrophe as opposed to catalysts for future crises.
Don’t get me wrong, we’ve got a long road ahead of us in order to get middle class America back on track, but there is real merit in the cliché that it’s always darkest before the dawn.
And it’s definitely looking pretty gloomy out there. Headlines from today and yesterday certainly strike a dissonant chord with panicky investors:
- U.S. Stocks, Dollar Sink As Global Growth Woes Multiply
Hedge-Fund Favorites Tumble With Average Stock Loss 16%
European, Asian stocks plunge again on global economic fears, Greece; US seen opening lower
World Stock Market Sell-Off Deepens
Open interest drop signaled short-covering in U.S. bond market
Fortunately, if you’ve been following us, you’re prepared. All summer we harped on the looming autumn market crash. And we told you that precious metals prices were severely undervalued in light of the shale ponzi scheme I just talked about.
And we were right:
The Dow has dropped nearly 2,000 points in a month’s time. And small caps and tech stocks have taken an even bigger beating…
And now oil stock holders are in the same boat. Fracking has left us completely inundated with cheap natural gas. It’s no surprise we haven’t seen an upside in years.
Don Pittis with CBC News hits the nail on the head: “The oil industry should have seen it coming. Prices are falling, and if history repeats itself, there is no reason they can’t fall much further yet.”
Speaking of a lack of an upside, perhaps you read Jimmy’s article last week articulating exactly why silver was getting murdered while the dollar soared to new heights in lieu of a lack of fundamental forces at play – but fairy tales will always take a backseat to fundamentals… eventually.
Mark my words, silver and gold will rise from the ashes.
This has been the weakest recovery on record, the rest of the world economies are slowing, and the Fed’s QE money printing program is winding down. Goldman has already slashed Q3/Q4 GDP… indeed the official GDP downgrades are in full swing.
There’s not a chance this market crash is over. Consequently, silver and gold will finally get a long overdue boost.
Time to Sell?
Manipulation schemes are only successful for so long; you can’t keep the masses in the dark forever. And for the 2.9 million Americans that have been jobless for 27 weeks or more five years into this ill-touted “recovery”, the overwhelming sense helplessness is all too real.
So when over half of America has no money in the stock market, it’s safe to say that the market is pretty easily controlled by the wealthiest amongst us. And of those insiders, 7,181 recently bought their own stocks while 23,323 sold off their shares.
Rich insiders are banking on a massive market crash; this is only the beginning. If I were you, I’d pay close attention. They’re the ones in control now that we know the Fed’s got no fairy godmother.
Companies with the highest hedge-fund ownership are leading the U.S. market selloff, with stocks from Ally Financial Inc. (ALLY) to Zynga Inc. (ZNGA) retreating twice as fast as other shares over the last month.
The 10 companies in the Russell 1000 Index (RIY) in which hedge funds own the biggest stakes are down an average of 16 percent since the gauge’s all-time high on Sept. 18 through yesterday, according to data compiled by Bloomberg. The full index has lost 7 percent over the stretch.
As this artificially inflated market continues its downward death-spiral, precious metals have no choice but to rebound. But hedge yourself accordingly, the market is likely to swing back and forth a bit more with the potential for another dip in silver and gold prices… but a historic ascent is in store in our silver and gold forecasts for 2015.
One of London’s most accurate gold forecasters for 15 years, Sharps Pixley CEO Ross Norman is warning of single digit gains only for the yellow metal this year, though he has not lost his sights on ‘very much higher prices’ in 2015-16.
Although this year-end market crash is expected to have an initial negative effect on gold and silver prices as a deflationary force in commodity markets, analysts still see gold and silver bouncing back quickly.
Make sure your savings are backed by something substantive instead of whimsical IOUs and bonds that require new debt issued to cover when redeemed… tangible investments with intrinsic value.
Betting on land, homes, and precious metals is your best shot right now.
Farewell for now,
- DEAD BANKERS & YOU: THE COUP AGAINST THE UNITED STATES OF AMERICA!
- CENTRAL BANKERS & US GOVERNMENT NOW PREPARING FOR DODD FRANK BASEL III BAIL-INS.
- POPE TO MAFIA: “CHANGE, YOU STILL HAVE TIME TO NOT END UP IN HELL. THAT IS WHAT AWAITS YOU, IF YOU CONTINUE DOWN THIS PATH.”
- CLINTON’S PLEASURE ISLAND THE NEXT HOUSING CRASH: ROTHSCHILD FED’S MAGICAL THINKING AND FOSTERED ILLUSIONS OF PHANTOM WEALTH AND SECURITY
- U.S. CITIZENS STUCK WITH BILLIONS IN OBAMA ORCHESTRATED TARP LOSSES: STATES MUST NULLIFY THE PRINTED PAPER BAILOUT ~ TARP CEILING WAS RAISED 117 TIMES FROM $787 BILLION TO A HIDDEN $12.8 TRILLION!