It looks like the SEC is finally ready to put a stop to accounting shenanigans.
Over 76% of the time, this resulted in stocks losing at least 20%.
Another week of volatility, but with no real resolution to the burning question of “where do we go next?”
What goes up, must come down... is a correction in the cards for gold?
Looking at previous gold bull markets, a pullback normally occurs four months into a full fledged rally.
Are we seeing the beginnings of one right now? The chart below provides compelling evidence for an imminent correction, but an even more compelling reason to hold on and weather the storm.
New accounting rules show Chicago has understated its pension liabilities by $11.5 billion. At the end of 2015 the stated liability was $7.1 billion. Today it’s $18.6 billion. That’s a jump in net liabilities of 168%. Mayor Rahm Emanuel has hopes pinned on union concessions and help from the state legislature. Neither is likely. Let’s stop pretending there is another solution, because there isn’t.
"We are net short of equities here in our account, although we are not materially so. We’ve only a few positions on: we are long of gold in EUR and Yen terms via GEUR and GYEN; we are long of a small bullish derivative of gold in US dollar terms and we are “short” of the market via derivatives positions. There are only two things that bother us..."
"We were fully, completely and totally wrong. There is no reason to mince words; there are no excuses to be made, nor should there be. We were wrong… obviously and utterly and we shall do well and our best to simply acknowledge that fact... Does this mean then that we shall turn bullish of equities? Shall we cast aside our beliefs that the highs made one year ago in broad, catholic terms are suddenly to be thought of as within reach and likely to be taken out? Of course not."
While there is currently a plethora of commentary strongly suggesting that the U.S. economy is nowhere near recession, it should be remembered the economy has NEVER been in a recession until future negative data revisions revealed it to be the case. Unfortunately, for investors, by the time a recession is widely recognized and accepted by the mainstream media and analysts, it will be far too late to do anything about it.
One recurring question over the past few weeks has been "who is buying" stocks in a world in which not only the smart money, but everyone else too is selling. The latest Lipper data will not provide the answer because as BofA reports, in the latest week there was another $7.4bn in outflows (the 5th straight week) driven by $4.8bn in mutual fund outflows and $2.7bn ETF outflows, leading to a $44bn equity exodus past 5 weeks, which as Michael Hartnett points out is the "largest redemption period since Aug’11", or when the US downgrade sent US stocks into a bear market tailspin.
"I think we're at the cusp of a bear market in both stocks and bonds that will last up to thirty years. This is on a real basis, not on a nominal basis, inflation adjusted basis."
Following last week's Sohn Conference, where the overarching theme was one of prevailing bearishness topped by Stanley Druckenmiller's near-apocalyptic forecast that only gold will be left standing after all confidence evaporates in the "magic people" known as central bankers, yesterday some 1,800 hedge fund industry executives gathered in Las Vegas at the SkyBridge Alternatives Conference or SALT, where the prevalent concern about the future of the world continued, driven primarily by worries about China.
"My fear is that central banks are now taking this too far through negative interest rates in particular and that they’re going to literally destroy their own banking systems. If they’re actually successful in generating higher inflation, then they’re going to destroy their own bond markets... our government officials, and I will include the Federal Reserve in that, have failed the American people."
Central bankers have been waging a war against savers. What those central bankers want you to do is either (1) spend money to increase demand, or (2) buy stocks to increase capital. Well, it sure looks like American consumers are not doing the former...
With the collapse of China's smoke-and-mirrors commodity bubble comes the post-mortem as the horde of Chinese gamblers flood from one government-appointed market to another as the American dream of get-rich-quick schemes appears to have been adopted by the burgeoning middle classes now disillusioned with real work. As Bloomberg reports so shockingly, from the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors; but rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016..."you have far too much credit, money sloshing about, money looking for higher returns."