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1987 And Market 'Accidents' Waiting To Happen
Marc Faber noted recently, "markets will punish the interventionists one day," and while we are already seeing 'accidents' occurring in JGBs, Gold, EM debt, and now US Treasuries; US equities remain immune. However, given the current uncertainty of macro-economic data, high-leverage, fear of rising interest rates, and instability of currency markets, all of the same conditions that led to the 1987 crash are now present in financial markets. Does this mean the markets are going to crash? Certainly not; but the conditions may be right for another 'market accident' to happen.
Correlation is not causation...
correlation is not causation...
It's different this time...
The following quotes from the Fed's research paper entitled "A Brief History of the 1987 Stock Market Crash With a Discussion of the Federal Reserve Response" - embedded below - were listed as the primary causes of the 1987 crash...
"During the years prior to the crash, equity markets had been posting strong gains. Price increases outpaced earnings growth and lifted price-earnings ratios; some commentators warned that the market had become overvalued"
"Importantly, financial markets had seen an increase in the use of “program trading” strategies, where computers were set up to quickly trade particular amounts of a large number of stocks, such as those in a particular stock index, when certain conditions were met."
"The macroeconomic outlook during the months leading up to the crash had become somewhat less certain. Interest rates were rising globally."
Ring any bells?
(h/t @RonnieSpence)
Full Fed paper below:
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>Marc Faber noted recently, "markets will punish the interventionists one day,"
No it won't, this is the model that's left. This is all there is left or none of it.
So... a couple months?
This was over two years ago. This is the uncontrolled train wreck waiting to happen. Otherwise it's when ever the bond market goes tits up. Could be Monday...could be anyday. It's when people decide they've had enough and stop playing the game.
The interventionists ARE the market now.... the bond collapse is a bank protest to higher Capital requirements and Basel III. If JD and Blankfiend decide they dont wanna cough up more capital then they WILL collaspe the ponzi stock market to once again raise captial from its cheapest source...the sheeple... thru their collection agencies at IRS, Treasury, FED, and hair cutting bank accounts...good luck to you...
interventionalists have ave always been the market makers...though the makers were once honest, honored all trades and did not game the system...and used their info gained as such to better their company via the immediate market intel...we're talkin a whole new sport...no loosers but the latest to get out...and there's no where to go...
Let's make it known, you can not be an interventionist and be honest. The two do not go along with each other in the least.
Youre charting indicates that the 10 year is a screaming buy and that I should short junk and EMEA while going long utilities.....
Or are you telling me to go buy a farm and ammo?
Cant tell...
Depends on whether you can eat fiat m9ney or e-stock certificates
Youre charting indicates that the 10 year is a screaming buy and that I should short junk and EMEA while going long utilities.....
Or are you telling me to go buy a farm and ammo?
Cant tell...
Go with the farm, ammo, APC, toilet paper, scotch..
This is no accident...
SAO PAULO (AP) — Police say enraged spectators invaded a football field, stoned the referee to death and quartered his body after he stabbed a player to death.The Public Safety Department of the state of Maranhao says in a statement that it all started when referee Otavio da Silva expelled player Josenir Abreu from a game last weekend. The two got into a fist fight, then Silva took out a knife and stabbed Abreu, who died on his way to the hospital.The statement issued this week says Abreu's friends and relatives immediately "rushed into the field, stoned the referee to death and quartered his body."Local news media say the spectators also decapitated Silva and stuck his head on a stake in the middle of the field.Police have arrested one suspect.
Note to self: Discontiue stabbing people I have minor disagreements with.
Indeed, the world has become truly mad.
What was that old Greek/Mycaenean saying, "Whom the Gods would destroy, they first make mad"? Looks like it's happening in spades worldwide.
I love this kind of news .... it justifies all my racial concerns ! LOL
Video: Brazilians in Sao Paulo doubt government ability to prevent crime
http://www.presstv.com/detail/2013/01/23/285169/brazilians-doubt-govs-cr...
And coming to a North AMerican town near you soon. Then again, it's already here!
And I thought some of my family members took their kids soccer and football games a little too seriously
No offense to homosexuals, but soccer is totally gay!
Agreed. Hockey rules!
Long bond down 2 1/2 points on Friday ... this is a big deal. How long can equities stand in the face of this onslaught ... unless money out of bonds flows into equities
I guess we'll find out. Agreed, when you have 100 bps moves in Treasury yields (especially when starting at only about 1.6-1.7%) in such a short period of time, it is likely to break something somewhere. Somewhere in the world somebody is looking at numbers on their ledger, linked to US Treasury yields, that are driving their bank into the ground. Right now. As we speak. Take your pick on where it starts- could be just about anywhere on the globe at this point.
If 'nothing' happens, I'm changing my name from Bear to Bull.
Egypt collapsing, Syria collapsing, Euro in tail-spin, copper near year low, oil at year high coupled with big, big jump in rates; I'm in biggest short position of the year .... what could possibly go wrong?
Good luck bear. I'm short everywhere too except the indices. I'm getting signals to push them out the window short. I'll cover a few yen shorts and short the russel on any weakness.
God damn, you got balls. Either that or you've got more money than brains.
I've killed the ¥en, CAD, AUD, FRANC, AND COPPER .
So yes, like the name implies.
Yup. I learned long ago when moves like we have seen lately start happening (Japan, China, treasuries, bonds, gold, etc) something is breaking. As interconnected as everything is if one or two things break it is likely the wave is set in motion and nothing is going to stop it.
US stockmarket really only thing not collapsing, that is likely temporary.
I am very short US market since Japan. I haven't seen anything yet but more things coming unglued. Might take a bit, but feeling just fine waiting.
Side not, really thinking this will not be as bad as last collapse. But we will see.
Been shorting gold while also building long term longs at bottoms. Its going to snap back hard one of these days. I hope lol.
long eur...not time to destroy it yet...wish it was...grains too cheap cant have that before an election...though looks a little dry where i am...rainscomming but only enough to keep the dust down.
1.28 level will be the important one, I believe...
Yeah, what was the DVo1 again? That's right, $1.7 Billion. We've gone from 1.61% to 2.7% in 2-3 months, what does that add to the debt service, say $180 Billion anualized. Let's see, $325 Billion+$180 Billion=$525 Billion in debt service. Yeah, that's sustainable.
If you go to the WSJ market data center or other financial sites where you can get a historical graphic record of 10 and 30 year treasury yields (as well as JGB's back into 1995) several patterns become apparent.
First, there have been a number of periods in the past 5 to 7 years during which there have been very sharp rises in yields... very severe bear bond markets. But each has reversed later on back to lower yields as the expectations for robust growth, etc., have failed.
This time looks not much different.... Stocks rally and if there was real serious economic growth, commodity prices would not be retreating, but rallying.
Opps!
Disconnect.
Take your pick. Either the economy is growing healthily on its own or it is not.
If not, it cannot either support or sustain higher rates.
Second, during (I think it was) 2006, the BoJ did announce a taper. Same thing as now happened. Rates rose, stocks rallied... and then all unwound.
And if we think that the "new normal" is sub par economic growth, poor employment, malaise, etc, then the same pattern could well follow.
Especially if one buys into the thesis that we are in a Liquidity Trap, looking forward to a future experience similar to Japan of the last 30 years!
Meaning, this might be a good time for a nice paired trade (which is net income carry positive, to boot) to be long bonds and short of stocks...
Further, if there is no global problem, then it would appear that everything else has been hit, stocks, bonds, etc, commodities (ex oil, energy complex/geo-political) with the exception of US stocks.
Including a strong dollar.... which are all indica of global strains.
Will real taper happen?
Anybody's guess, but market based indica tell otherwise... ex US stocks... which suggests they are likely the most vulnerable asset. Or else everything else is "wrong".
Just food for thought.....
Knukles I am a sucker I'm sure but I am going with this time it's different. First of all that chart above cracks me up. The 10yr in 1987 vs today. What a difference eh?
Anyway my point is, I wonder how many more QE's we get. Sure the market could tank 25% next week on absolutely no news and that would probably drag the 10yr back to below 2% again. But if you kill the market then we probably, even by bullshit standards today, end up in another recession. That means we get QE5, bigger and better. The fed knows at this point it will really be buying every single bond. I think they are trying to avoid that outcome. The media would try to spin it bullish for stocks but the realization sets in that we are screwed at that point. My guess anyway.
That horseshit jobs report on Friday seems to back up the "growth" meme being put out there by the fed. For whatever it is worth, I speak to a buddy of mine who is a real estate attorney. He says his phone is ringing off the hook now with people trying to buy right now because they think rates are going higher and want to lock in here. So we may get some positive real estate data out which CNBC will vomit ad nauseum in our faces that higher rates are not a problem.
I see pain all around. Stocks....bonds..commodities..except for the S&P which magically, despite every individual company shitting the bed, seems to keep plowing ahead.
Long story short I see yields grinding higher and everything else grinding lower in it's wake. With Crude being the wildcard. If it keeps moving higher a cable is going to snap for sure and a lot of people are going to lose some limbs.
The goal is to bankrupt the country and every person in it.
Ding, ding, ding! We have a winner.
“Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave.”
~Leo Tolstoy, Russian writer.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. The one aim of these financiers is world control by the creation of inextinguishable debt.”
~Henry Ford
“If all bank loans were paid, no one would have a bank deposit, and there would not be a dollar of currency or coin in circulation.
This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent monetary system.
When one gets a complete grasp upon this picture, the tragic absurdity of our helpless position is almost incredible–but there it is.”
~Robert H. Hemphill
“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
“Under the Federal Reserve Act, panics are scientifically created. The present panic is the first scientific one, worked out as we figure a mathematical equation.”~ Napoleon Bonaparte
(Congressman Charles A. Lindbergh, The Economic Pinch, 1921.) “The new law will create inflation whenever the trusts want inflation. It may not do so immediately, but the trusts want a period of inflation, because all the stocks they hold have gone down... Now, if the trusts can get another period of inflation, they figure they can unload the stocks on the people at high prices during the excitement and then bring on a panic and but them back at low prices.…The people may not know it immediately, but the day of reckoning is only a few years removed.”
(Congressman Charles A. Lindbergh, referring to the Federal Reserve act, Congressman Lindbergh stated this a few years prior to the stock market crash in 1929 which ushered in the Great Depression Congressional Record, Vol. 51, p. 1446. December 22, 1913.) Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!
~From the original minutes of the Philadelphia committee of citizens sent to meet with President Jackson (February 1834), according to Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels - online PDF History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.
-James Madison “The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization.”
~Otto von Bismark (1815-1898), German Chancellor, after the Lincoln assassination “Money plays the largest part in determining the course of history.”
~Karl Marx writing in the Communist Manifesto (1848). “Banks lend by creating credit. They create the means of payment out of nothing. ” Ralph M Hawtry, former Secretary to the Treasury.
“… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.”
~The Earl of Caithness, in a speech to the House of Lords, 1997. “The bank hath benefit of interest on all moneys which it creates out of nothing.”
~William Paterson, founder of the Bank of England in 1694, then a privately owned bank Notye that this "benefit" is also society's unpayable debt, for the very money that is the benefit of the banksters is the money required to pay the interest bill it generated. “The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
~The Rothschild brothers of London writing to associates in New York, 1863. “I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.”
~Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924. Note that you weren't taught this in the Rockefeller and Carnegie financed schooling, creativity, critical thought killing system. Real history is absolutely fascinating. http://www.themoneymasters.com/the-money-masters/famous-quotations-on-ba... http://www.jesus-is-savior.com/Evils%20in%20Government/Federal%20Reserve... http://theeconomiccollapseblog.com/archives/quotes-about-the-federal-res... We were warned. We didn't listen, couldn't be bothered. We will be burned for it. The brave man inattentive to his duty, is worth little more to his country, than the coward who deserts her in the hour of danger. ~Andrew Jackson
1987 and 2013 are not comparable
The comparison I'm citing is the last 6 to 8 or so years, which are comparable insofar as representative of this "New Normal" of shite lifestyle they're trying to make us accustomed to as OK.
Liquidity Trap, the whole bit.
And yes, if Ben and the Boys believe, which they do, that the stock market is a leading indicator of the economy (forget the cause and effect, if they goose it it'll pour over into the economy...NOT) then they cannot allow stocks to go down or rates to bite.....
Meaning that as the economy doesn't respond, QE back on.
Nothing but perceptions has changed, FFS.
And the last jobs report was a bloody disaster.
Not enough to add additional full time real benefits paying jobs to keep the consumer consuming, or to bring down U without manipulating the participation rate.
Period.
http://www.breitbart.com/Big-Government/2013/07/05/only-47-americans-hav...
There is no parting of the clouds, sun rising, angels singing, trumpets blaring.
Fuck me, there ain't even a guy who owns a white hat anymore.
And all the mean time, the rest of the world's going south real the fuck quick and Ben's gonna stop?
No Way.
They taper and some bad data comes in, the politicians will be all over the NSA to get the poop to get the Board of Governors and Open Market Committee to run the presses 24/7/365 with the new minimum denomination of $1 trillion.
If not, then we're home safe, eh?
Then we can all watch CNBS and be happy forever having needlessly scared ourselves near death for no reason.
Cynical me.....
the smart money is on taper talk, bad data, moar qe...rince repeat...ad nauseum. That's for sure.
The jobs report was a disaster to everyone except an algorithm, which just looks for headlines.
and you are right, in terms of yields, 2013 ain't 1987. But just seeing how high yields were back then is crazy.
Right, they don't need anything but volatility to trade. Market up, market down, no matter. They make money on the transaction.
They make money by rigging the market. That's different from betting of volatilty.
>>And yes, if Ben and the Boys believe, which they do, that the stock market is a leading indicator of the economy<<
They don't believe that nonsense, but hey hope you do.
They lie to no end - the bigger the more effective.
Look, organic growth is contracting at $500 billion a quarter and dropping faster than it did prior to 2008 (3rd chart down)!
http://market-ticker.org/akcs-www?singlepost=3216019
This is based on the Fed's own numbers! They know this, but they hope you don't!
The central banks are rising rates against this backdrop of organic growth collapsing...
http://www.dailypaul.com/290836/central-banks-sell-record-sums-of-us-debt
They want you to think growth and more QE just when they pull the rug out and bust everythinig so their TBTF&Jail front corporations can turn their paper into real chit, like farms, businesses, land, homes, cars, toll roads, energy companies, water companies, state parks, etc... and buy up whatever else is left, for pennies on the dollar, with all the money they just stole from society.
This is like taking candy from a baby... and we need to stop drooling on our bib as a society.
Yep - - -(and thanks for the earlier quotes you posted).
People seem to think the banks just 'can't taper' because of the impact on the already crippled Main Street economy. The banksters could care less about Main Street or the USofA - - or anyone else.
The Fed and every other structure (BIS, etc) is in place to further bankster interests. If that means crashing the global economy, that's what they'll do.
P.S. - - -Someone thought the politicians might call up NSA to get dirt on the Fed and force them to turn on the money spigots. Who do you think controls the politicians and all the government agencies ?
After all we have witnessed, learned we are talking " accidents ". Next you'll be wasting time calling criminal practices, mistakes! Lets be serious the banks, financial services, corporates are living in denial. Premeditated fraud via algos and public/ private ( fascist ) political / market practices is the reality. "Accidents are unforseen occurances ". Casino; hope and hit fed policies and ignorance reign supreme.
Yeah but, Ric Edelman on the radio today said everything is great and I'm missing out on a golden opportunity to guarantee a prosperous retirement if we use his online services to manage our money, or what's left of it. Basically we should BTFD and wait for our pot of money at the end of the rainbow.
slick Ric the slimeball
Ric also told people to join the real estate party back around 2005. So.....
look at producer prices first derivative curve as it approaches oct 1987.
here in the Deflationists Lounge we think its time to lighten up on high P/E stocks - you know the ones we mean. All previous crashes have been buying opportunities. The one that is coming will be the Mother of All Dips.
It will be a Rip-a-Dip Dandy
Lord! I'd think it was time to lighten up on all stocks, not just high P/E's!
The stock indexes did not have the world's fastest FED operated computers connected to them prior to Winter 2011 so it would be impossible to say short of an EMP if stock indexes will go down during a bond apocalypse. My guess is no, that the indexes are now completely under the control of the FED and the TBTF in the US.
Also until licensed lawyers and doctors are fighting over openings to clean out the elephant cages at the city zoos you are going to see a back and forth movement of fraud and manipulation as the banksters grind the US into Greece.
All TA is bunk .... show me a graph of government capriciousness ? LOL
as long as there is oil, we will be left to squabble over leftovers. when the oil production start to fall, we better find something else, or the ruling class will decide to cull the numbers. sorry for the way it sounds but generally people used to be better informed of the reality 100 years ago, then theu are today, despite all the discoveries made since.
When the oil gets scarce, we'll just use gasoline or lighter fluid.
Or kerosene
Or acetone
Lotta alternatives.
huffing gold spray paint and model glue
Time to go long farm-raised sperm whales.
i think using up the land and the oil to grow corn to make fuel can be added to that list.
Or we'll use deep drilling technology to pull the stuff up from places out in the middle of nowhere like the Russians. (Far deeper than where any dinosaurs may have existed to create 'fossil fuel'.)
'Peak Oil' - - - like man made 'global warming' and the fiat 'US dollar' - - -> another myth by the con men.
We are trapped in a world fabricated by liars. All we need to do is to see that.
oil is above 100 usd which says there is less to go around to satisfy the demand. I know price is manipulated, but I would think it is manipulated down so that USA can still import it to keep the ponzi game.
Why would you think its manipulated down ?
Websearch F William Engdahl and Kissinger's agreement with the Saudis to manipulated the price of oil upwards in the 70s, as long as they put their money in money center banks and US government securities.
Who do you think controls the oil game anyway ?
Coal oil
id rather have a ligher sweet in my old jalopy.
Only as long as the fresh water lasts. Then it's game over for everyone.
Is the world facing an Enron moment, an economic domino theory collaspe or a shortage of toilet paper? This site will scare the money out of you. Geeeze. ZH should have anxiety drug advertisments on each side of the articles.
It does.
The ZH red pill: side effects include concern over your immediate, intermediate and long term fiscal future which may or may not be tied to supply issues through all asset classes including those necessary to life.
Look at the motto for ZH - - - "On a long enough timeline the survival rate for everyone drops to zero"
In the end, we all are dead. But do we choose to live free while alive ?
If you havent had a chance yet, read the book and see the movie (Fight Club).
Nah .. IMO you don't want to take some kinda pill to mask the 'fear', you want to embrace it. And then move through it. There are too many people that allow themselves to be controlled by their fear.
Fear is the tool that TPTB use to control people.
A people who refused to be controlled by fear . . . would be totally free and independent.
And they would live up to their full human potential.
Market "accident".....is there a Depends for that?
1987 was no accident by the way.
Big banks were silently recapitalised after their south american losses and the Fed removed the bottom from the market suckering all the unsuspecting bettors
There were a LOT of unsuspecting bettors back then-even the top middle class. Funny how so many when to jail after, which seems to be a tad different then today.
Soooo, go short referees?
'87 was a pretty good year, other than the markets.
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Durden…!
You #$%^ers freak me out!
How can you print a @#$%ing chart that looks EXACTLY like the 87 crash?!?
You're makin dis's shit up!?
Oh…
Stats don't lie, do they?
Keep it comin'!
Love you!
Goin' broke! But drownin' on other people's heads!
•?•
V-V
SnP closing above the 50 day on chump volume while Germany sheds 2.3% giving everytying back from the day before. To me, it looks like the perfect whipsaw set-up for a major gap down on Monday for the SnP. Like, where people sober up over the weekend, and then realize "what the fuck am I doing?" And then sell first thing monday morning -ASK TO MARKET only. So, gap down to 1585 with a close no better than 1560. I think it will probably be even more, depending how much higher the yield on the 10 year travels. But then, whats the hurry even there (bonds). Sit on cash and wait for the 10 year to crest 3 and change. 2nd quarter earnings are going to shit the bed so much so that even if Taper was taken off the table and replaced with MOAR QE, it would be regarded as a sign that the FED has failed (which of course, it already has - but, that will be the mantra) and the SnP will make like Wile E Coyote (or Tom Petty). Just doesn't appear to me that BTFD has enough commitment with everybody looking at everybody else. And Ben can buy as much as he wants, they will still sell it out from under him. Besides Ben doesn't show up till Tuesday anyhow. We are so FED focused - a major move down is in order whether you believe markets are rigged, or, don't believe markets are rigged.
The world can only end once. -Art Cashin'
LTCM!!! Of course fat tails wont exist anymore as the central banks have bought them all.
World gone full retard led by US, us with the smoke and mirrors on Bionic Steriods... "It look so real" , NOT.
September crash?
September crash?
Well, the debt ceiling has to be dealt with again by September. Lots of September taper talk too. A major correction will be the nail in Barry's coffin going into mid-terms. Team Red will pick up a bunch of seats & save the economy with moar war.
The market crashed in 2008. Since then we have used monopoly money to send the green arrow up. Roll the dice...who's turn is it?
OCTOBER CRASH ? No QE will save it till after the mid term elections....Maybe January 2014
07/08/13 crash.