Market Crash

News That Matters

Following the recent broad market selloff which has taken all US stock indices into the red for 2015 and in some cases, red for the past 52 weeks, the real question traders should be asking themselves now that the power and potentcy of central bank intervention is increasingly questioned is whether stocks are now fundamentally cheap or at least, "fairly" valued. The answer, as SocGen's Andy Lapthorne points out, is a resounding no.

What makes a market is having differing opinions at nearly all times. It is therefore educational for people caught off guard last week to see -once more- that markets can drop at a savage speed (as opposed to the overall magnitude), regardless of whatever foggy economic situation we are in (or market participants believe them to be).

In the aftermath of China's worst manufacturing PMI since the financial crisis, which in turn sent the Shanghai Composite crashing to the "hard floor" level of 3500, below which the PBOC and Beijing officially are seen as having lost control, virtually every China expert and strategist rushed to defend China's policymakers (and its stock market) with predictions that an RRR cut as large as 100 bps is imminent, and would take place as soon as this weekend, a much-needed move to calm nerves that China is in control. it did not.

dear HFTs, get ready to be the scapegoats

— zerohedge (@zerohedge) August 20, 2015

BULLARD SAYS FED DOESN'T REACT DIRECTLY TO EQUITY MARKETS

The musings of the many wonderful minds who preach to goldbugs, contrarians, real anarchists, real patriots, conservatives and republicans, moralists, real believers in genuine free markets, solution seekers and a combination of them all, have had a significant impact on my worldview.

So why are so many prominent voices now warning that a global financial crisis is imminent? The answer is actually very simple: A global financial crisis is imminent.

Last year, when alternative economic analysts were warning that the commodities crush and oil crash just after the taper of QE3 were blaring signals for a downshift in all other financial indicators, the general response in the mainstream was that we were overreacting and paranoid and that the commodities jolt was temporary. Perhaps the fact needs repeating that it’s not paranoia if they are really out to get you. Only a short time later, it is truly amazing how the rhetoric from the mainstream economic yes-men is changing. So now that the mainstream is willing to report on clear economic dangers, what happens next?

When we see guys like Bernie Sanders get visibly angry at guys like Alan Greenspan it behooves all of us to go beyond the entertainment of it or some prima facie agreement and to truly understand why the anger is justified. If we were to all take the responsibility to understand the lifeblood of our American existence i.e. the economy, we will most certainly be moved to remove not only the policymakers but the system that together serve only those at the top of the economic food chain and at a cost to the rest of us. When we do we will be asking why in the hell is no one yelling at Janet Yellen??

Take a step back from the media, and Wall Street commentary, for a moment and make an honest assessment of the financial markets today. If our job is to "bet" when the "odds" of winning are in our favor, then exactly how "strong" is the fundamental hand you are currently betting on? This "time IS different" only from the standpoint that the variables are not exactly the same as they have been previously. Of course, they never are, and the result will be "...the same as it ever was."

You can stop waiting for a global financial crisis to happen.  The truth is that one is happening right now.  All over the world, stock markets are already crashing...

As it turns out it is not just in the US that the "smart money" is bailing out as fast as it can: according to Bloomberg, the wealthiest investors in China’s stock market are also scrambling for the exits. To wit: "The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June."

"The Goldman blowback is a particularly challenging subject to understand and analyze. Taken to extremes, criticism of the firm, which was founded and built by Jewish Americans, smacks at times of anti-Semitism. Fed officials don’t want to fall into the trap of ostracizing qualified people merely because of their association with the firm or its Jewish roots."

- John Hilsenrath

The Telegraph’s John Ficenec has written an excellent piece warning of a possible market crash in the coming weeks. He identifies eight key “signs things could get a whole lot worse.”