Tag Archives: stock market crash

A Stock Market Crash: A Matter Of “When,” Not “If”

Given group-think and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose, a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral.  –  Highly regarded hedge fund manager, Paul Singer, in his latest investor newsletter

Singer has apparently has unloaded $5 billion worth of stock, which is 15% of his funds management.

Anyone happen to notice that several market commentators have argued that Bitcoin is  a bubble but the same stock “experts” look the other way as the U.S. stock market becomes more overvalued by the day vs. the deteriorating underlying fundamentals? Bitcoin going “parabolic” triggers alarm bells but it’s okay if the stock price of AMZN is hurtling toward parity with the price of one ounce of gold. Tesla burns a billion per year in cash. It sold 76,000 cars last year vs. 10 million worldwide for General Motors. Yet Tesla’s market cap is $51.7 billion vs. $48.8 billion for GM.

This insanity is the surest sign that the stock market bubble is getting ready to pop. If you read between the lines of the the comments from certain Wall Street analysts, the only justification for current valuations is “Central Bank liquidity” and “Fed support of asset values.” This is the most dangerous stage of a market top because it draws in retail “mom & pop” investors who can’t stop themselves from missing out on the next “sure thing.” There will be millions of people who are permanently damaged financially when the Fed loses control of this market. Or, as legendary “vulture” investor Asher Edelman stated on CNBC, “I don’t want to be in the market because I don’t know when the plug is going to be pulled.”

A friend/colleague of mine is a point and figure chart aficionado. He sent me an email on Thursday in which he said even with the five horsemen (FANGs + AAPL) and the SPX and Dow up today (and the SPX setting a new all-time high), the bullish percent index (BPI) of the NYSE is negative which means there are more stocks generating a point and figure sell signal than a buy signal. This has been fairly consistent over the past couple of weeks. (Note: the bullish percent index is a breadth indicator based on the number of stocks on point & figure buy signals). When the BPI is negative over an extended period of time, it reflects the fact that a lot more stocks in the NYSE are trending lower than are trending higher. When a declining number of stocks are participating in the move higher of a stock index, it is a bearish signal.

As my friend says, “in reality this will continue until it doesn’t.” He goes on to say: ” what this shows me is that at this time it’s much better to be strategically short than broadly short. This will change too at some point…”

Picking out strategic shorts has been the focus of the Short Seller’s Journal. Not all of the ideas have worked and a couple back-fired – in defiance of the company’s underlying fundamentals – but many ideas are well below the price at which they were presented either the first time or presented again thereafter. One idea that has declined 39% (declined $42) since August 2016 is Ralph Lauren, which was presented on August 14, 2016 at $108.19. It closed Friday at $66.11, down 41 cents on a day when the SPX hit another all-time high. RL has closed lower on 12 of the last 13 days.

One subscriber emailed me earlier this week to let me know he had shorted 200 shares at $108 and covered 100 of it this week. He’s hanging on to the other 100 share short. I mentioned to him that my 12-18 month target was $50 and that he should hold the other 100 short at least until August because it’s only going to get worse for the consumer and retailers.

Currently there’s a a large percentage of stocks trading below their 50 and 200 day moving averages.  Many stocks are close or at 52-week lows.  Some stocks, like Sears Holdings (SHLD) are no-brainer shorts.  Sears is going to file for bankruptcy – it’s down 32% from April 2nd, when it was presented as a short idea in the Short Seller’s Journal.  Similar to the probability of a stock market crash, it’s  a matter of “when,” not “if.”

Trump Dump Coming To The Stock Market

The stock market shot up like a Roman candle for idiotic reasons after the election.    The candle may have reached its apex when the Dow hit 19,999.67 last week.   As I stated in my Short Seller’s Journal, I was “stunned that bank traders were unable to push the index up to the holy grail number of 20,000.   Of course, in and of itself, the “Dow 20k” watch was moronic.  Thirty stocks do not an economic system make.  Sorry Fox, CNBC, Bloomberg, CNN etc.

I also stated in my Short Seller’s Journal, in the issue two weeks ago,  and long before Zerohedge posted the comment from some guy named DeMark who predicted the Dow would never hit 20k, that 20k might not happen.  In fact, I titled the issue, “Is Dow 20,000 Now Out Of Reach?”

The “Dow 20,000” financial media promotion has bordered on vulgar.  Fox Business (which I keep on mute at all times) kept a “Dow 20,000 watch” banner at the bottom of its broadcast during the entire trading day for the last 2 weeks of 2016.  It disappeared last week.  In the context of the entire stock  market and the U.S. economy, it’s meaningless for the Dow to hit 20k other than as a powerful propaganda tool.

The housing market is one of the most important segments of the economy.  The DJ Home Construction Index is down 9.7% today from its 52-week high in July.  Retail spending may be even more critical to generating GDP than housing.  The XRT retail ETF is down 9% from hits 52-week on December 8th.    This stock index has literally tanked during a period of time that is supposed to be the best seasonal period of the year for retail sales.  There’s a serious message there.   THAT’S where the rubber meets the road – not from meaningless platitudes and soundbytes from a President-elect.

Essentially Trump promised on election night to spend trillions and cut taxes deeply and to pay for those  based on borrowing trillions. These are  policy proposals that are destined to fail from the moment the words left Trump’s mouth.  But the stock market went nuts to the upside, culminating in what I would argue – based on using “apples to apples” accounting comparisons – the most overvalued U.S. stock market in history.   Perhaps in the modern era only the Weimar German and Zimbabwe stock markets were more overvalued.  Stay tuned because I am very confident that the Fed is not done printing trillions.

This is not the kind of stock chart in which I would want to be invested:

Yes of course this stock market could break up or down. But since Christmas, every attempted assault on 20k has been rejected. And the Dow opens higher every morning only to sell off every afternoon into the close. Monday was a perfect example.

Today (Tuesday, January 11) it looked the Dow was going to make another assault on 20k. But during Trump’s highly anticipated press conference, the Dow sold down hard from 19,970 to 19,840.  That is a preview of what is likely coming in the months ahead, as the U.S. economic fundamentals continue deteriorate, notwithstanding the barrage of economic fake news coming from the Government and certain industry pimp associations.

If you like the analysis laid out above, you can get similar commentary with even more in-depth analysis and research by subscribing to my Short Seller’s Journal.   I also present at least two short sell ideas along with ideas for using options.

I am a subscriber to both of your journals. I just want to say “WOW” to this post on your site. Thank you for all your work. As a financial professional of 28 years’ experience, I can tell you why there is no churn in your journal subscriptions. Your work is extremely sound and well done even in a massively
manipulated environment. – subscriber “Kevin”

Is The U.S. Stock Market About To “Super Nova?”

ETF flows tend to be a good contrary indicator when they become extreme, so the buying frenzy doesn’t bode well for U.S. equities.  – David Santschi, CEO of TrimTabs

If the Federal Reserve were a private corporation and did not have a money tree, it would be technically insolvent – i.e. bankrupt. As of its latest balance sheet the Fed was reporting a book value (net worth) of $40.4 billion.   But the Fed does not have to mark to market its assets.   Given the recent 100+ basis point move in the 10-yr Treasury, if the Fed were forced to mark to market its $3.8 trillion Treasuries and mortgages, it would be forced to reduce the holding value by close to $400 billion, taking the Fed’s net worth to negative $360 billion.

This is the most conservative valuation scenario.   The Fed has other holdings, on and off balance sheet, that would likely take the Fed’s book value well past negative $400 billion if mark to market accounting were applied.

Think about this for a moment:   the U.S. dollar is backed by a Government and Central Bank, both of which are technically bankrupt.   The only difference between what happened to Greece and the U.S. is the U.S.’ ability to print money unfettered.

Just like water, markets eventually find their own level of balance.  At this point the U.S. stock market, is the most unbalanced financial market in the world.  A Trim-tabs report out yesterday revealed that the public threw $98 billion into U.S. stock ETFs between November 8th and December 5th.  Compare this to the $61.5 billion that went into stock ETFs over the entire year in 2015.   Currently the rate of cash flooding into stock ETFs for December is even higher than November.

Money from the public is literally flooding into the stock market, making this the most dangerous stock market I’ve witnessed in 30+ years as a financial markets professional.  If the GAAP accounting standards enforced in 1999 and 2007 were applied now to corporate earnings, this would prove to be the most overvalued stock market in history on an “apples to apples” accounting basis.

A supernova is an astronomical event that occurs during the last stellar evolutionary stages of a massive star’s life, whose dramatic and catastrophic destruction is marked by one final titanic explosion. For a short time, this causes the sudden appearance of a ‘new’ bright star, before slowly fading from sight over several weeks or months.  – Wikipedia

The U.S. financial markets, specifically the U.S. dollar and the stock market, can be likened to fiat currency-based financial markets “Super Nova.”  The public and the momentum-chasing hedge funds are desperately chasing the “appearance” of the stock market’s “bright new star.”   Unfortunately, it’s an illusion.  The stock market is headed for catastrophic destruction.

I don’t know if this final explosion will occur early in 2017 or if there will be on last “Weimar-like” push fueled by a round of money printing substantially larger than “QE 1 thru 4.”   Either way, the U.S. financial system is heading toward a period of unprecedented wealth destruction.

I’m not going to sit here and urge anyone who will listen to move their money into the safety of physical gold and silver because I have no idea how diabolically aggressive the Fed and the banks will be in exerting downward pressure on the price of gold and silver using fiat paper gold.  No one knows and anyone who proclaims to know is full of horse hooey.   I’m moving any money not needed for expenses into physical silver.  I know a sale when I see one and sovereign-minted silver bullion coins are on “fire sale” right now.

Unfortunately, the only chance you have to financially survive what is coming at us is to get your money out of all financial “assets.”  These are not “assets.” They are fiat paper liabilities issued by a Federal Reserve that is technically insolvent by at least $360 billion and likely multiples of that when off-balance-sheet considerations are factored in to the equation.  If you don’t want to buy precious metals, at least get your money out of the stock market.

While Wall Street shills and the financial media are busy seducing the public with their incessant “Dow 20,000” rally cry, corporate insiders are busy unloading their shares hand-over-fist.  Every company (other than mining stocks) I’ve analyzed over the last month has been characterized by extremely heavy insider selling.  The parabolic rise in the dollar is annihilating corporate revenues and profitability.   Follow the money here because insiders are broadcasting this fact loudly.

China is dumping Treasuries and corporate executives are dumping stocks.  Total U.S. debt outstanding hits new highs daily.   Once again “smart money” is unloading its paper “assets” on an unsuspecting public.  The delinquency and default rates in mortgage, auto and credit card debt are beginning to spike up, according to the latest reports made available and not disseminated through the mainstream media.

The U.S. markets are going Super Nova – don’t be left holding bag…

The Stock Market Is A Weapon Of Massive Wealth Destruction

The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic.  The GAAP accounting allowances have been liberalized beyond a Bernie Sanders wet dream over the last 20 years.   The p/e ratio at the peak of the tech bubble is completely different from the p/e ratio at the top of the 2007 stock bubble which is completely different then the p/e ratio now.

If 1999’s or 2007 GAAP standards were applied to today’s earnings, the P/E ratio on the S&P 500 would be at least as high as 65 p/e ratio registered in 2007.   By several other metrics, most notably market cap/sales ratio, the current stock market is by far the most overvalued in history.

And that does analysis does not incorporate any adjustments for the fraud component of contemporary corporate accounting.

The S&P 500 and Dow are hitting all-time highs this week.   This was triggered by the Ben Bernanke influenced Bank of Japan decision to engage in “helicopter money” activity in an attempt to stimulate economic activity.  Notwithstanding the fact that Bernanke is likely the most destructive Central Banker in history, Japan’s decision will end in destruction of its currency.  Maybe that’s what the NWO’ers are working toward achieving anyway.

Interestingly, the U.S. stock market reacted counter-intuitively to Japan’s move.  The yen and other Asian currencies plunged vs. the dollar, making U.S. manufactured exports to Japan/Asia more expensive and making Asian imports into the U.S. cheaper.   This in turn will further depress U.S. corporate revenues and earnings, which have dropped 5 quarters in a row – likely a 6th quarter when we get to see Q2 earnings reports.   To label this response by the U.S. stock markets “idiotic” is an insult to the word “idiotic.”

Beneath the glow of a stock market on fire, the U.S. economy is collapsing, especially the consumer.  I’ve detailed the decline in a key consumer spending metric, dining out, to demonstrate that middle class disposable income is shrinking quickly.  The Canadian brokerage firm, Canaccord, released a report this morning which stated that, “said the firm’s checks indicate a material decline in sales and traffic trends in casual dining restaurants was seen in June LINK.

June auto sales came in below expectations.  This is despite a new record in auto debt issuance.  The auto debt bubble is starting to look a lot like the housing mortgage bubble of 2005-2008.

The price of oil is starting to drop quickly again.  Refiners are cutting crude oil orders quickly as demand for refined products slips as another oversupply condition has accumulated:  LINK.   The Fed and the TBTF banks have been working hard to keep the price of oil propped up.  They know all too well that a big bank balance sheet disaster looms if too many junk-bond financed companies go tits up all at once.  That will happen anyway and for that we can soon expect Helicopter Money in this country.

Speaking of Helicopter Money, Cleveland Fed President, Loretta Mester, gave a speech in Australia in which she alluded the possibility of using “Helicopter Money” to stimulate economic activity.  Mester is a voting member of the FOMC. This tells us that the FOMC itself has been discussing the possibility of dropping bags of money on the population.

This reflects a Fed that is in a complete state of desperation about the collapsing economy.  $4 trillion in direct money printing plus several multiples of that amount of money injected into the system in the form of credit failed to stimulate real economic activity.  Why are they talking about even more?   Sure, housing and auto purchases using DEBT were stimulated, but that ship has sailed unless the Fed wants to give out money for down payments.

The Fed is even more desperate to keep the stock market elevated. If the stock market collapses, or just drops over 10% for an extended period of time – as in a few months – every single pension fund and insurance company in this U.S. will collapse.  It’s a simple as that.

In other words, the stock market is one big weapon of Mass Wealth Destruction.  You can protect yourself by unloading your non mining stock dollar-based “investments” and moving your money into physical gold and silver.

I am expecting a MONSTER move in the precious metals between now and the end of the year.  I will lay out an overview of my views later this week…I save details behind my analysis for subscribers to my Mining Stocks and Short Seller Journals…

 

Is The Financial System On The Brink Of Collapse Again?

Craig “Turd Ferguson” Hemke invited me on his podcast series for a discussion about somewhat hidden developments occurring behind the carefully crafted western propaganda facade.

For those who have at least been able to “blow the Orwellian smoke” away from the war on gold, you’ve noticed that the Fed/bullion banks are having a lot of trouble pushing gold lower.  In fact, the current line of battle is at $1300 and I believe that barrier will soon be breached decisively to the upside.

We also discussed the ongoing “controlled demolition” of Deutsche Bank, which currently poses perhaps the biggest threat to the western financial system.  You listen to our conversation in mp3 format with this LINK or by clicking on the graphic below:

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“Thanks for the heads up on LULU and SHW. Bought the SHW July 15 270 strike puts and did well on exit this morning before market reversal” – “Sal,”  Short Seller’s Journal subscriber

“The comparative pittance you charge for the MSJ has already paid off quite well for me and my younger brother.” – “Bill,”  Mining Stock Journal subscriber

FOMC No Rate Hike: Gold, Silver, Miners Pop – Stocks Drop

We’re very bullish on gold, which is the anti–paper money, of course, and is underowned by investors around the world.   – Paul Singer, Elliot Management Corp

Predictably, the Fed did not raise the Fed Funds rate by a piddly one-quarter of one percent today.  It’s not because the economy is crashing – which it is – but because the foundation of the massive, money-printing inflated asset bubble in the U.S. and globally rests on the teetering foundation of zero-percent interest rates.

Negative rates rates presents another dilemma:  a western financial system that is completely dysfunctional from over eight years of bombarding the western economies with ZIRP and money printing.  At least most of the eastern hemisphere countries have Central Bank lending rates well above zero.  China’s is 4.35%;  Russia’s is 10.5%.

This blog unequivocally said three weeks ago, when the usual Fed clowns began their routinized interest-rate hike threat that the FOMC would whiff again.  What the heck happened to today’s meeting be in “live,”  John (SF Fed’s John Williams)?  Now that the Fed balked once again at nudging rates 25 basis points closer to China’s overnight Central Bank lending rate, does that mean that today’s meeting was not “live?”

Interestingly, stocks were pushed higher overnight and gold was pushed lower.   When I saw it at 5:30 a.m. EST, gold was down $7 from where it opened the overnight CME Globex electroning session (6:00 p.m . EST).

After the “not live” meeting was over and the results hit the tape, both gold and the stock market popped.  But the stock market apparently saw through the transparency of Yellen’s smoke-blowing and interpreted another “dead” meeting to mean the economy is indeed dead.  While gold ramped up toward $1300, the S&P 500 plunged 11 points in the last 28 minutes of trading.

I have been suggesting to my Short Seller’s Journal subscribers that the S&P 500 is starting to tip over – finally.  I think there’s a better that 50/50 chance that the S&P 500 repeats the same kind of cliff dive it took in August 2015 and the beginning of 2016.

On the other hand, it seems that a lot of western money – wealthy individuals and smart hedge fund managers – are beginning to plow a lot of money into physical gold.  Why? Because the price-movement of paper gold relative to the size of the Comex open interest is running in higher in defiance.   This is something that has not occurred in the last 15 years and it’s caught a lot of market analysts wrong-footed.

The character of the market has changed.  I don’t know how much leverage the Fed/bullion banks have to push gold a lot lower at these levels.  We’ll find out as gold challenges $1300 again and we get closer to BREXIT.  The Fed/ECB/BOE are making it clear that they will do their best to manage the price of gold into this potential event.

For anyone interested in opportunities to profit from getting in on the early stage of this next leg of gold’s bull market, check out my Mining Stock Journal.  I present long term view ideas on high potential junior micro-cap mining stock ideas.

I present the views. My service is research-based, not trading-based. Everyone has to
buy/hold/sell according to their own risk/return preferences and tolerances.  I buy LONG term core positions in my ideas and trade in and out of maybe 20% of the position but not very often.  You don’t get rich trading the market. You get rich finding very undervalued ideas and holding them until they are overvalued. We are 90% away from juniors being overvalued.   You can subscribe using this link:  Mining Stock Journal.  You will start with the current issue plus get all of the back-issues (it’s bi-monthly).

 

SoT Market Update: Gold, Silver And The End Of The Biggest Ponzi Scheme In History

The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation – which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion, and thus bring about the crisis. The depression follows in both instances – Ludwig Von Mises

I re-watched the movie “The Big Short” this past weekend.  It’s worth watching twice if you are interested in learning about how corrupt the entire U.S. financial system is.  Now, my guess is that a lot of viewers left the theatre after watching the movie thoroughly horrified by what was presented in understandable form to the typical “main street” American.

However, most are likely unaware that the original sources of corruption and fraud were never addressed.  In fact, if anything, legislative “reforms” like Dodd-Frank did nothing more than enable the big banks to continue using derivatives and Ponzi-scheme financial structures as mechanisms to continue sucking wealth out of the system.  Perhaps what’s most humiliating about this is that Obama Government and Congress blindly let former Goldman Sachs CEO, Henry Paulson, in his capacity as Secretary of Treasury give these banks an $800 billion blank check from the Taxpayers to continue on with their criminality.

The credit and derivatives problems are, in reality, are worse now than they were in the period leading up to the financial market collapse.   The legislative “reforms” served two purposes:  1) allow the banks to continue their ways under the illusion that the problems were fixed;  2) provide the banks with accounting tools which enable them to better hide the fraud.

It was reported today that the Central States Pension Fund, which handles the retirement benefit programs for Teamster truck driver unions across several large States, has formally filed an application to cut benefits up to 60%.  It stated that the fund would be empty by 2025 if the application is denied.

This reflects how catastrophically underfunded this pension fund was in the first place. And make no mistake, if you are covered by a large institutionalized pension fund, public or private, your fund is equally as underfunded – it just has not yet been affected but it will be sooner or later.

This begs the question:   with the stock market at near-record levels and Treasury bond prices at all-time highs, how is it at all possible that these pension funds are still underfunded to this extent?

The truth lies in the fact that the entire U.S. financial system is one gigantic Ponzi scheme. The Shadow Truth podcast show presents another Market Update in which we discuss the fact that the U.S. financial system is a giant mirage that has been fabricated by the Federal Reserve and the U.S. Government. It’s not a question of IF the next financial market collapse will occur – it’s a question of WHEN:

Gold: Something Is Melting Down In The Global Financial System

Deutsche Bank is the financial system’s “Hurt Locker”  – Investment Research Dynamics/Kranzler Research

It’s been well documented that the $/yen has been the “lever” by which the Federal Reserve and the U.S. Treasury ( via its Working Group on Financial Markets) has been manipulating the stock market higher and keeping a cap on the price of gold.  Craig Hemke of TFMetalsReport.com has done a brilliant job documenting and commenting on this dynamic:  It’s All About The Yen.  I would recommend looking at his archives to see the historical context of his work.

The yen has been depreciating vs the dollar at a rapid rate since October 2012.  NotUntitled coincidentally the SPX embarked on a nearly uninterrupted upward move that took it from 1099 in early October to its all time high of 2130 in May 2015.  The Untitleddirectional correlation between the USD/YEN and the SPX was highly conspicuous, if not an outright signal of official market market intervention.

Starting in early August, however, the $/yen began to break down technically, as the yen began to appreciate vs. the dollar – primarily in big “waterfall” chunks.  Not coincidentally, the SPX began to “tip over” at about the same time.  Yesterday the $/yen plunged briefly below the key 110 level, closing at 109.78.

Untitled1Today (Wed, April 7th) the dollar crashed another 1.4% the yen.  For clarification, a 1% move in a currency is considered to be a huge move.  As you can see from the 1yr $/yen graph to the left, the $USD has depreciated in value quite rapidly vs. the yen.   There has not been any event-Untitledspecific news that would be causing the rapid depreciation of the dollar vs. the yen.  In fact, the current narrative from the Fed, White House and media is that the U.S economy is doing well and the Fed intends to hike interest rates at twice in 2016.  Conversely, Japan’s economy is contracting and Bank of Japan continues to flood the system with liquidity.  If anything, the dollar should be rapidly appreciating vs. the yen.

The only conclusion we can draw from this is that something has blown up in the global financial system which caused unpredictable instability in – and loss of control over – the Fed’s manipulation mechanisms.

I believe the likely culprit is Deutsche Bank.   As I have commented on several times previously, Deutsche Bank’s balance sheet is a ticking financial nuclear time bomb.  It’s theUntitled financial system’s “Hurt Locker.”  Since March 11,  Deutsche Bank stock is down 25% despite the inexorable move higher by the S&P 500.  DB is down 9% in four trading days this week.  Despite the Fed’s attempts to monetize DB’s derivatives (I will document in another blog post), DB’s stock is telling us that DB’s financial condition is melting down.

This is likely the reason that gold has been a stellar performer for the past three weeks despite the general expectation that the bullion banks were in a position to smash the precious metals once again.  But every attempted downward manipulative hit has been met with aggressive buying.   What makes the trading action in gold all the more remarkable is the fact that India’s gold importing activities have ground to halt since the country’s jewelers went on strike March 1st.

This is an unmistakable message from the market that something potentially devastating has occurred behind the western Central Banking “curtain.”

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The Economy And Stocks: Someone Is Smoking Crack

Privately compiled and reported economic indicators started rolling over in 2012, which is why the Fed continued to “re-up” its money printing. With most S&P 500 companies having now reported Q4 2015 earnings, there’s been four consecutive years of declining net income – both GAAP and “non-GAAP.” If I had told you two years ago that the S&P 500 revenues and earnings would decline but that stock prices would continue higher, you would have asked me if I was smoking crack.  –  Short Seller’s Journal

A big driver of the economy for the last four years has been the auto and housing markets. While it may not be evident in some areas yet, both sectors of the economy are starting to seize up.

Auto sales in February missed analysts’ forecasts and were down from January.  Not mentioned in the still-bullish reports was the fact that GM’s and VW’s sales declined, while Ford’s jump in sales was driven by a big bulge in rental fleet sales.  Note to crackheads: rental fleet sales are not the best measure of the demand for autos.  At the same time, new car inventories at dealers soared to a 14-year high.    With subprime auto loan delinquencies beginning to spike up, along with repo rates, on whom will the dealer/lending syndicate unload all this inventory?

Similarly, the housing market in previously red-hot areas is starting to fizzle, led by a rapid escalation in listings in the higher end of the market.  Housing market expert Mark Hanson describes the popping bubble in Silicon Valley:  Tech-Head Housing Cities Seizing Up.  This article describes the collapsing Houston housing market:  Oil crash is crushing Houston’s housing market.   The virus popping Houston’s real estate bubble is now spreading throughout Texas.   Miami’s market was white hot for a few years.  Of course, as is par for the course, Miami is now perilously overbuilt:  Miami’s Epic Condo Boom Turns Into Glut. That same market condition is hitting the southwest coast of Florida, as a flood of existing home listings are helping the continuous  “price reduced” notices chase the market lower.

The same scene is now starting to play out in many major MSA’s – NYC, Washington DC/northern Virginia, etc.  While the lower end of the market is still somewhat firm in many areas because the Government is proliferating the availability of low credit rating subprime nuclear mortgages to first-time buyers who can barely afford a pot to piss in, the upper-middle and high end of the housing market is being perilously flooded with listings. In one high-end enclave south of Denver that is averaging at least one listing over $800k per block, a friend of mine who lives near there asks:  “who is going to buy these homes?”

Not only is the stock market not even remotely discounting the underlying economic reality, but the S&P 500 spent the last four weeks clawing back 78% of the 249 point (12%) drop that occurred just after New Year’s despite the continued plethora of increasingly negative economic reports.

At some point the Fed is going to lose its ability to jump-start the stock market with its monetary defibrillator.  There is a lot of money to be made taking the other side of NewSSJ Graphicwhomever is chasing stocks higher right now.   The Short Seller’s Journal will help you take advantage of the highly overvalued stock market with weekly ideas for shorting stocks.  Each issue includes exclusive market commentary, a minimum of two short-sell ideas plus strategies for using puts and calls.  Subscribers will also have free access to all future IRD short-sell research reports plus a discount to the Mining Stock Journal.   You can subscribe by clicking HERE or on the image to the right.

It’s Been A Seven-Year Bull Market In Fraud, Corruption And Insanity

Like everything else in our financial system, applying the term “bull market” to the stock market is a fraud. It hasn’t really been a bull market it’s been more like a b.s. market…what’s going to happen to this stock market is going to be far worse than what we saw in 2008.  –  per my conversation with Kerry Lutz on his Financial Survival Network show

Every day the U.S. stock market drops, the Propaganda Ministry in the U.S. blames China. Of course, it has nothing to do with the fact that the U.S. stock market is at least as insanely overvalued as China’s.   And underlying the U.S. stock market is an unprecedented degree of fraud and corruption.  Untitled

This graph to the right shows that China’s economic weakness is tied directly to a collapse in its exports to the U.S., the EU and Japan.  The E.U. and the U.S. are China’s two largest export markets.  Is it really China’s fault that the amount of goods being imported by these two markets has plummeted?

Obviously, the plunge in China’s exports can only be attributable to a steep decline in economic activity in the three countries represented in the graph above.  This is especially true given the relative strength of the U.S. dollar, which makes Chinese good cheaper in dollar terms.

The truth is that the “bull market” in U.S. stocks is nothing more than bull market in money printing, credit creation, an unprecedented level of Central Bank intervention and extreme fraud.   Because of the ongoing and continuous market manipulation, predicting the timing on the next stock market collapse is impossible.

But as the Fed’s stock market “high-wire juggling act” continues, the valuation of the stock market becomes increasingly dislocated from the underlying economic and financial market fundamentals.  At some point the “gravity” from reality will engulf the stock market and “pull” it quickly back to earth.

You can hear my discussion with Kerry Lutz on his Financial Survival Network by clicking on this link:   Financial Survival Network

For ideas on how to take advantage of this highly overvalued stock market, click on the banner below (a Paypal account is not required):

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