ETC

A half-century ago, America - and then the world - was rocked by a mighty stock-market crash that soon turned into the steepest and longest-lasting depression of all time. Those who ignore the lessons of history are doomed to repeat it - except that now, with gold abandoned and each nation able to print currency ad lib, we are likely to wind up, not with a repeat of 1929, but with something far worse...

The question on everyone's mind now is simply whether the correction is over, or is there more to come? The sharp "reflexive" rally that will occur this week is likely the opportunity to review portfolio holdings and make adjustments before the next decline. History clearly suggests that reflexive rallies are prone to failing and a retest of lows is common.

There’s an ill will blowing across the country. The economy is tanking. The people are directionless, and politics provides no answer. And like former regimes, the militarized police have stepped up to provide a façade of law and order manifested by an overt violence against the citizenry. Americans must break free of the apathy-inducing turpor of politics, entertainment spectacles and manufactured news. Only once we are free of the chains that bind us—or to be more exact, the chains that “blind” us—can we become actively aware of the injustices taking place around us and demand freedom of our oppressors.

Are there any conditions now that are actually better than those of 2008? Or are conditions now less resilient, more fragile and more dependent on unprecedented central bank interventions?

S&P FUTURES AT DAY’S LOW, FALLING 61PTS OR 3.1%
NEW LOWS FOR NASDAQ FUTURES, DOWN 195PTS OR 4.6%
NEW LOWS FOR DOW FUTURES DOWN 533PTS OR 3.2%
EUROPE’S STOXX 600 FALLS 5.3%, WORST ONE-DAY DROP SINCE 2011

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).

“The war on drugs is over,... And we lost. There is no way we can arrest our way out of this." Situated on the coast of Massachusetts, Gloucester’s claims to fame include its status as “America’s original seaport,” as well as being the real-life location on which events in the movie The Perfect Storm (2000) were based. Now, the small town has a new reason to be the center of attention: its police have been granting complete amnesty to drug users who come to the station seeking help, even if they come bearing the remainder of their stash.

Economics is dead, and economists killed it. What we have seen over the course of the last eighty years is a systematic dismantling of the contribution of economics to our understanding of the social world. But apparently what is dead can be killed again.

As the capital markets from Shanghai to New York were melting down in ways hearkening back to the early days of the prior financial crisis - a period of time many would like to forget (or act) as if it never happened - the Nobel Laureate economist Paul Krugman decided it was time once again to weigh in with what will surely be viewed by the so-called “smart crowd” as a brilliant perspective on what ails the world: Not enough debt. He came out blazing with what seems the only bullet in his arsenal as a cure-all for what ever the ailment might be (e.g., debt.) as he argues this view in his latest: Debt Is Good.

Even if it is short term oversold, this is actually a quite dangerous market – caveat emptor, as they say.

Central bankers are watching Marx's dictum all that is solid melts into air play out in global stock markets with a terror informed by the scalding memories of 2008's global financial meltdown.  The herd must be turned away from selling by any means available, and at this point, that means coordinated buying by all the world's Plunge Protection Teams.

Perhaps the most important price point in the entire equity market was broken today... The odds of the post-2009 bull market continuing unimpeded are now significantly reduced.

It is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although  it's all just goalseeking guesswork) but overnight S&P futures followed yesterday's unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three.

While the PBOC was literally everything in its power to keep the Shanghai Composite above its 200-day moving average as some sign of 'stability', it forgot about that other proxy of overall Chinese economic health: copper. And just as we warned previously, ever since the CCFD crackdown in 2012, copper has been tumbling and more crucially has just broken a 15-year trendline. The plunge in copper means almost one in five mines globally is losing money.

The American dream has become perverted into the equivalent of hoping to pick a winning economic lottery ticket: hoping that you somehow will become one of the lucky 0.00001% who strike it big and make millions upon millions of Dollars.