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Is the Next Great Bear Market Collapse Just Around the Corner?
The financial markets hit yet another series of bumps a week ago.
Those bumps are:
1) Turkey’s financial meltdown.
2) China’s shadow banking issues.
3) Argentina veering towards default.
While these economies are all markedly different, the common theme behind their current financial woes pertains to one dreaded word:
DEFAULT.
The biggest problem with the epic Central Bank rig of the last five years is that propping up a bankrupt financial system by printing money only works for so long.
The reason for this is that no one, whether it be a country, company, or person, can defy mathematics.
A loan can be extended, it can be restructured, or it can be finagled in countless financial ways. But at the end of the day, if your creditors lost faith in your ability to repay it… it’s GAME OVER.
This issue is now beginning to ripple throughout the emerging market space.
Moreover, the US equity market has entered a kind of mania a may in fact be topping.
Take note of the following:
1) Investors piling into stock-based mutual funds at a pace not seen since the Tech Bubble.
2) Margin debt (debt investors take on to buy stocks) at a record high.
3) Market leaders (Tesla, Netflix, Amazon, etc.) showing clear signals of investor rotation.
4) Corporate profit margins at record highs and primed to fall.
5) Market breadth shrinking (meaning fewer stocks participating in the rally).
6) The VIX (a measure of investor sentiment) dropping to levels of complacency not seen since 2007.
7) Investor bullishness hitting record highs and investor bearishness hitting record lows.
8) Investment legends either returning capital to investors (Icahn, Klarman) or sitting on mountains of cash (Buffett).
In simple terms, the bull market of the last five years finally went into mania mode as retail investors stopped worrying about income (investing in bonds) and drank the Fed’s Kool-Aid: bought stocks.
The blow off/ mania component of the rally occurred when retail investors began to pile into stocks (as is always the case with tops) around the end of 2012/ early 2013. Whenever this period ends, the chart of the DOW shows where we’re likely going:
Be smart… prepare in advance.
For a FREE Special Report on how to prepare your portfolio for a bear market collapse, visit us at:
http://phoenixcapitalmarketing.com/special-reports.html
Best Regards
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Eventually this WORLD OF DEBT we live in will take us down!! See Video Below "WORLD OF DEBT":
http://www.youtube.com/watch?v=99xsqxzJnXs
What I'm seeing develop is an "almost surreal" feeling of indifference towards reality. Companies have already ushered saving from interest paid on debt into the earning column and a major reason inflation remains low is they are sitting on a hoard of cash this has lowered the velocity of money. We must remember the artificially low FED controlled interest rates are a massive one-off or onetime tailwind that is mainly behind us. When they stop going lower or reverse the positive effect will ebb and become a major headwind. With massive government debt in many countries and the economy still weak this headwind has the potential to become devastating. More on this subject below,
http://brucewilds.blogspot.com/2014/01/slower-job-growth-red-flag.html
I don't know what the market is about to do. But given the information below, I think I'll stay short the S+P for now.
Three prominent bankers commit suicide in a 6 day period.
Dueker, 50, a chief economist at Russell Investments, had been missing since Jan. 29 and was reportedly having troubles at work.
On Sunday, William Broeksmit, 58, former senior manager for Deutsche Bank, was found hanging in his home, also an apparent suicide.
On Tuesday, Gabriel Magee, 39, vice president atJPMorgan Chase & Co’s (JPM) London headquarters, apparently jumped to his death from a building in the Canary Wharf area.
No doubt these markets have been a farce for some time and have no business being this high, but they are.
US indexes have the same problem - no clear cut close below December lows as shown in the daily below:
http://bullandbearmash.com/chart/dow-jones-daily-continues-consolidate-f...
Notice the higher highs and higher lows since 2012.
Clive Maund:
There was a vicious plunge in US (and other) stock indices late last week, especially on Friday. This came as no surprise to us with the clearest possible warning being posted on the site on the 2nd of this month in BROAD US MARKET update – NO NEW PARADIGM – GET OUT NOW!! Could this be the start of a major panic selloff? - it could, especially given the almost universal bullishness that is at large in the world now. http://sufiy.blogspot.co.uk/2014/02/clive-maund-gold-market-update-tnrv-...
Couldn't happen soon enough, I've been waiting five years.
Thankfully, ZH-ers, you have a "healthy" housing market to put your money into when you pull out of the stock bubble.
It's never been a better time to buy a house in California! Right? Am I right here?! Get in while you can! Quick! You don't want to miss out! Buy buy buy!
(hehehe...yes, that was sarc).
I don't think it was retail piling in over the past few months.
In such an event, the Treasury will be borrowing from the Fed to buy stocks, or the Fed will be buying directly.
If the Fed or treasury buy stocks to keep prices up, then such an economy is state owned by definition.
Isn't this the same article you wrote last year at this time?
Jesus, paid ads and you still get it wrong
The creditor is the Fed.
Its printing so you can pay.
"3) Market leaders (Tesla, Netflix, Amazon, etc.) showing clear signals of investor rotation."
Yeah, NetFlix rotated alright...from $350 to $409, Phoenix you fucking idiot
The takeaway is ..
1.) Sell your DOW/SP stocks
2.) Buy penny gold miners
3.) BUY BITCOIN
Buy lots of tinfoil to make hat's and hide in the closet until OBAMA say's its safe to come out.
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Did I miss any real 'take action' solutions here?
Get drunk, get stoned, and play stompy feet like Obozo.
At least my generation had balls enough to get drunk and screw;)
Chart's he's got Chart's run for the hills the chart's show the sky is falling.
* ok, I will play your game.
Those bumps are:
1) Turkey’s financial meltdown.
[ yep, true but they had a good prior, and now its game-over ]
2) China’s shadow banking issues.
[ manufactured by GS, ... so what, ... still better looking than that nation that fucks pitbulls ]
3) Argentina veering towards default.
[ Well, that is like a slow motion train-wreck for how many years ..? ]
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So on the basis of 1-3 above YELLEN is going to take away QE? Just the fucking opposite, but this is ZH, if you go opposite you can't lose.
What, for christ sake, is a 'collapsing bear market'?
it's a double negative, meaning a raging bull market.
A 'collapsing bear market' is a market prediction that can mean anything the author retrospectively wants it to mean.
Maybe he's talking about the content of ZH articles. It's not a matter of whether I agree. The grown ups are here for the international component and the honest exchange of information, but WTF?
All this lazy, childish, sloppy, group think.
VIX is not a measure of investor sentiment, it's expected volatility. Those who have never traded should not be writing about the markets. They should stick with Miley and Beebuh.
maybe he meant bouncing-bear market, not unlike a dead-cat bounce?
ZH is an alias for KITCO? Right
Graham Summers, why does he hide his name on this?
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These guys talk BEAR, and YELLEN promises QE to infinity, who are you going to believe? Yellen or Graham?
5500 would be quite the ride down from 16500. Collapse will happen way before it reaches anywhere near that. Even a 4000 point drop (not all in one day) would cause total mayhem.
The Economy is already stretched to the limits. There are no more backstops. No more bailouts. No more buy backs. No more real money to print. It's all been done! WTF do we do now maaaan?
With this leverage we have today, I can only imagine the effect that several 1k point down days in a row would have... You know, like those ones we had waaaaaaaaaay back like 7 years ago.
Have to read about it in history books though, because it was so long ago that nobody remembers what it was like to live back then.
5500, in my opinion, will be conservative.
If we use 1932 as a guide, the bottom could be about 1,600, which would be a 90% markdown from recent highs, and take us back to where we were ca. 1987.
Much like when in 1932, the market dropped to 41.22, which was a low not seen since 1903.
If we are talking collapse, might as well look at how far down, down could be.
Hang on a minute here, I too am a shorty but lets be reasonable. They can still print money. It will go down, but not like a rocketship. The fed will be at critical level deflecting momentum. Just like they did at sp 1768 when Berny told the world "no more punchbowl". That shit collapsed into 1768, no trades that I saw from 1775 to there, and it deflected off of that price like a fat kid compressing a diving board. The fed will be there again at 1700. Each time hey do that they burn up the usefulness of bad news. For instance by deflecting the price at 1768 the value of the amazon and walmart earning to drive the market was vastly dimineshed. This shit is exactly what they did the last time there was a 19% drop in the SP's. You can almost get a fucking ruler and put a trend line under how fast it will decline. If it gets to that line too quickly there will be a bounce. Bad news does run out, and no one is clear at what point they will reaquire enough short seller to squeeze to help them drive values.
The fly in the ointment for your theory I think is the unprecedented amount of leverage. Yes Yellen will go all "He/She Gone Wild" with the presses, and the statists will probably come up with some plan where .gov openly buys stawks or something crazy. But that is reaching the end of its usefulness. In the end, paper promises always get refused.
Ty for the reply. This will fail of course but let me offer a perspective that I have not heard before. 1908 JPM buys everything, all the bad debt. Then created the FED to make damn sure that never happened again. It took until 1929 for the crash people are comparing to now. That was not 5 years it was 21. What we are up to right now in a historical sence is 1914. This thing has the potential to ride a LOT further.
It is unfortunate that the stock charts on that site do not go back to about 1810, for the 1837, 1857, 1873, and 1893 panics were rather severe as well.
It was interesting how that 1932 low matched the 1903 low, which was 29 years prior. I am old enough to remember how big a deal DJIA 1,000, then DJIA 10,000 was.
1857 damn near brought everything down from what I have read.
Perhaps people use the 1929 crash as a reference for that is within memory, for how many people has one met that were born in the 1800's?
Great info, reading now, tyvm
The conclusion based on that chart is meaningless unless the vertical scale, the DJIA level, is logarithmic, which it ain't.
Those fancy "trendlines" don't mean shit irrespective of the axis scaling.
I don't think "logarithmic" means what you think it means.
It means your spam-ad dot connecting is highly faulty because you make a geometric interpretation that is not based on percentage gain of the "value" of the index.
The economies of the world are fucked. Shall we still focus on stock prices? Or will we get past the dollar concept?
Safe Haven for your ASS
Safe Haven for your Wealth
There are only two concerns.
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Neither are obvious, and that is a good thing, for those of us that have already covered our ass.
Genius...
Someone had to say something or they might think we're rude.
What happened to your Eurogeddon crusade?
Now is the time to be Euro baging, or is the crisis really over?
QE3 WB7 - The Tylers already proved that QE3 is an EU Bailout.
No crisis is over until the Pres' working group sticks their dick in it.
The Euro will be over when CNBC declares that everyone knew all along that it was always just a matter of time... After the fact of course.