Economic pressures

[Danny B]

Ray Dalio,,, bumps in the road

Ray Dalio is the guy who put a super computer program in charge of his bond business. His Bio;
"As said in his book, Principles, Mr. Dalio chose to become a lifelong student of investments, with the focus being that the past repeats itself, so by studying history using the most advanced computer algorithms on the planet, he can avoid making costly mistakes on behalf of his clients.
That is how Ray Dalio grew from a one-man show in 1982 to over 1,500 employees 35 years later, overseeing more than $160 billion worth of client funds.

His most conservative portfolios returned 9.88% annually for the last 40 years, which would turn $50,000 into $2,166,287.
Launched in 1991, his Pure Alpha Strategy, available only to the world's most well-connected sovereign wealth funds and pension funds, has returned 21% per year.
In a matter of only 2 quarters, Bridgewater has accumulated 3.894 million shares of GLD, which are worth $473M today and 11.3 million IAU shares, which are worth $140M today. Put together, Bridgewater is betting $613M of clients' money that gold will perform well, and we know the benchmark is 21%,
Dalio said that "Buffett is making a huge mistake" and that "If you don't own gold, you know neither history, nor economics."
CRITICAL: Gold Shrugging Off Manipulation!

The thing to keep in mind is; The banks and CBs want all capital flows to move to something that they control. First choice would be bank stocks and bank bonds. Second would be corporate debt and stocks. Far down on the list is crypto currency. The State can grab hold of cryptos at any time. Dalio bought GLD but, GLD only has a fraction of the gold that it appears to be representing. Collectively, the paper-gold markets sell every ounce about 135 times. We'll see how that works out.

The yield curve is the flattest it has been since 2007.
The S&P 500 hasn’t closed lower by 0.5% or more for 50 consecutive trading days, the longest streak since 1968.
The S&P 500 hasn’t finished red three days in a row for more than three months, the longest streak in seven years.
The S&P 500 hasn’t corrected 3% from its all-time high for over a year, the longest streak ever.
The average daily change (absolute value) for the S&P 500 in 2017 is only 0.30%, the second smallest range on record behind 1964.
https://lplresearch.com/2017/11/15/10-reason-to-worry/

"With both commodities and Chinese stocks suffering sharp overnight drops, it is hardly surprising that today trading desks have quietly been sending out boxes full of xanax their best under-25 clients"
"One such analysis, clearly geared to the Ritalin generation complete with 3 second attention spans, comes from Deutsche Bank which in a few hundred words seeks to explain the key risks threatening the world's most complex centrally-planned economy, and ground zero of the next financial crash."
The Complete Idiot's Guide To The Biggest Risks In China | Zero Hedge

Goldman: Automated Trucks To Cost 300k Jobs Per Year
Amazon Says It's "Almost Ready" To Get 1,000s Of Grocery Store Cashiers Fired
Sooner or later, this kind of stuff will be recognised as a problem.
"In psychology, this is known as the Dunning-Kruger effect, or the cognitive bias in which individuals with low ability perceive themselves as having high ability.

Dunning and Kruger found that after gaining a small amount of knowledge in a particular domain, an individual’s confidence soared. "
https://ofdollarsanddata.com/a-littl...s-8b158566e094

"QE in my judgement was like anaesthesia, effective only at numbing the pain of a world gone so terribly awry. Or alcohol, fomenting an international stupor so as to normalize people to a world so unlike what it used to be; to give, at least, some small hope for the future where more and more hopelessness invaded. "
THE LOST DECADE, or introducing EURODOLLAR UNIVERSITY | Alhambra Investments

11/17 “none of the problems from the financial crisis have been solved” – Zero Hedge That's not entirely true. A LOT of bonuses have been handed out.
11/17 Norway’s $1 trillion wealth fund looks to dump oil & gas stocks – Oil Price Norway has all that North Sea oil. Every Norwegian is a millionaire. ///
11/17 The high price of 16 years of failure in Afghanistan – WhoWhatWhy
Well, as killary said "it was worth it" The bankers raked in 9,000 TONS of opium. Whadayou mean failure?
http://www.kawther.info/wpr/2017/11/...and-production

11/16 Monsanto, U.S. farm groups sue California over glycophosphate warnings – Reuters
This is VERY good news. Just imagine what will come out in discovery and trial.

11/17 Future of cyberwar: weaponised ransomware, IoT attacks – Tech Republic
11/17 North Korea getting ready wage a global cyber war – eWeek So, we'll all have to go out and buy quantum computers.

[Danny B]

High-yield retail debt going into mass default

I try to focus on milestones in our progress towards economic shrinkage. I try to condense important info so that you don't have to read reams of confusing and useless information. It is up to you to decide how this affects you,,, what to do about it AND, when to do it.
“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out. "
“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.”
Loan volume is crashing.
"This current bubble has been based on irrational euphoria that has been fuelled by relentless central bank intervention, but now global central banks are removing the artificial life support in unison. "
This Is What A Pre-Crash Market Looks Like

"We have already shattered the all-time record for store closings in a single year and we still have the rest of November and December to go. Unfortunately, it truly does appear that things will get even worse in 2018, because a tremendous amount of high-yield retail debt is coming due next year. In fact, Bloomberg is reporting that the amount of high-yield retail debt that will mature next year is approximately 19 times larger than the amount that matured this year…"

"Just $100 million of high-yield retail borrowings were set to mature this year, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion."
"Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s."

Side note, 11/17 Investors are fleeing junk bonds (high yield) in near record numbers – CNBC
"In the past, retailers could always count on the middle class to bail them out, but the middle class is steadily shrinking these days. In fact, at this point one out of every five U.S. households has a net worth of zero or less."
"Total US debt in 1913 was $39 billion. Today it is $70 trillion, up 1,800X. But that only tells part of the story. There were virtually no unfunded liabilities in 1913. Today they are $130 trillion. So adding the $70 trillion debt to the unfunded liabilities gives a total liability of $200 trillion.

In 1913 US debt to GDP was 150%. Today, including unfunded liabilities, the figure becomes almost 1,000%."
Why America?s Retail Apocalypse Could Accelerate Even More In 2018

11/17 What debt crisis in provinces says about governing China – Economist What it says is; HUGE centrally planned economies are not a good idea.

[Danny B]

Armstrong's revenge,,,NO unity, no one-world GOV

Armstrong, "The current EU plan envisages blocking account disbursements for five working days and with the authority to extend any suspension to up to 20 days. "
"I recommend that you have 30 days worth of cash on hand. What the authorities do not understand is that if they freeze one bank, a run will unfold on all banks. The public will not believe whatever the government says. Therefore, banks that are not in crisis can be pushed into a crisis by a contagion. That is simply how it all unfolded in 1931-1933. The only way to stop a contagion will be a bank holiday and you have to close them all."
https://www.armstrongeconomics.com/w...anking-crisis/
Just imagine trying to operate a business when nobody has any cash.

"I was amazed at how many pension funds were there. They were some of the biggest and we hear that they are listening to you and had shifted into equities. Some were talking at the cocktail party how you have really helped them even selling the strategy to their boards. The ones who were there were from Europe, Japan, and Canada. Do any American pension funds listen to you?"
"It is true, that our biggest clients in pensions are ALL outside the USA. They see the world from an international perspective more so than American firms who still do not understand currency. " "American funds tended not to understand or even consider currency risk"
https://www.armstrongeconomics.com/m...urrency-first/
Armstrong tells investors that bonds are going to crash and, they should be in equities. Keep in mind that equities need customers / consumers and profit to pay dividends. Big oil BORROWED money to pay their dividends.
Armstrong got rodgered good and hard by the crooked N.Y. banks and N.Y. judges. A couple of years ago, Armstrong advised the Chinese banks to go around the primary dealer (big N.Y. banks) and buy treasuries directly from the Treasury. Now, Armstrong is advising the BIG funds to get out of bonds because they are going to crash.
Revenge is a dish best served cold.
https://www.armstrongeconomics.com/m...urrency-first/

"Because in an effort to achieve what they sometimes call the "global economic reset," or the "new world order," a more publicly accepted centralized global economy and monetary framework is paramount. And, this means the eventual implementation of a single world currency and a single global economic and political authority above and beyond the dollar system."
So, is this new political authority going to be American? British? Chinese? Russian? Who is going to control the issuance and expansion / flexibility of this world currency? Since "limited" globalism has proved to be such a disaster, how would full globalism be implemented so that it didn't make things much worse?
India is rushing the construction of new tunnels / roads to sensitive areas in the India/Chinese border. China is planning to build a 1,000 mile pipeline to bring "Indian" water to parched areas of China.
https://www.theatlantic.com/internat...istory/284300/
There are a couple of wars going on now over oil/gas pipelines. What happens if China wants a pipeline that the new-world GOV doesn't approve of?
https://www.savetibet.org/petrochina...tional-outcry/
With rising automation, EVERY State is going to try to have advantages and keep IT'S people employed.
http://www.zerohedge.com/news/2017-1...ld-order-reset
The article is interesting BUT, incorrect. The dollar is the reserve currency because it is so widely accepted,,, because the American bond market has such a long-term history of stability. Oil only accounts for a small fraction of dollar-denominated trade.

[Danny B]

Latest news

It's getting more and more difficult to condense the financial news.
As I posted, Ray Dalio invested heavily into paper gold. XAU tracks the price of gold even if they don't hold much at all. It is expected that; when the gold market crashes, they will just settle out in cash. If it works out that way, he stands to gain a lot. They claim that they hold a few hundred tons.
"One of the flash crashes this year was precipitated by the instantaneous sale of gold futures contracts equal in underlying amount to 60 tons of physical gold. The largest bullion banks in the world could not source 60 tons of physical gold if they had months to do it."
Armstrong goes on and on about hedging for currency risks.
FOFOA is equally convincing that the FOREX market will just disappear when all trade settlement is done in gold. Wait and see.

Deflation comes in many flavors from many different sources. E-trade is killing almost everything in sight.
John Malone Describes Amazon As "Death Star" Moving "In Striking Range Of Every Industry On The Planet" | Zero Hedge
Everybody wants a good deal, Amazon-opoly: Jeff Bezos May Be About To Control $53 Billion In Federal Government Spending | Zero Hedge
Every job eliminated by automation is just one less consumer.

"The great crash of 2018 is going to start in the deeper, darker depths of the credit market,”
https://www.rt.com/business/410317-b...sh-prediction/
The FED states that it ended QE years ago. The stock market keeps getting huge infusions of cash. U.S. GOV just created / spent about $1/2 trillion in one month. If QE ended, where is the money coming from. FED GOV is playing a game where they don't do QE and they are in much better shape that the PBOC, ECB and BOJ. What about our $1.5 B a day trade deficit? With the widespread adoption of the U.S. dollar for trade settlement, the importance of dollar-denominated trade in oil has greatly diminished. Pox Americana must convince the world that it's dollar is very reliable and valuable. It is hoping that the dollar will be seen as a safe haven.
China has created more new debt than the U.S. (reports), Japan and the ECB all put together. The FED is hard at work to maintain the illusion of responsibility and stability.

Hindenburg Omen and the Titanic Syndrome. https://www.silverdoctors.com/headli...ancial-crisis/
Consumption, https://mises.org/wire/were-living-a...al-consumption
BTC news;
11/19 The world’s biggest wealth manager won’t touch bitcoin – Bloomberg
11/19 Bitcoin, bitcoin cash, bitcoin gold and now bitcoin platinum – Oracle Times
11/18 Tulips, railways and why we don’t take bitcoin – 24hGold
11/18 Bitcoin investors plan to “HODL” until price hits $196,000 – Coin Telegraph
11/18 Saudi ‘corruption’ probe widens – Zero Hedge MbS is playing Whack-a-mole with rich, powerful people.

Stockman, "the GOP should be literally petrified by an horrid fiscal scenario for the coming decade that entails Social Security going bust, another $12 trillion of current policy deficits and a prospective $33 trillion public debt by 2027. And even that presupposes a macro-economic miracle in the interim: Namely, a 207 month stretch from 2009 to 2027 without a recession-----a feat which is twice the longest expansion in recorded history"
"hey have passed a FY 2018 budget resolution which implicitly embraces all of the above fiscal mayhem, and then adds upwards of $2 trillion (so far and counting interest) of incremental deficits to fund an ill-designed tax cut that is inherently an economic dud and political time bomb."
http://davidstockmanscontracorner.co...sgt-esterhaus/

" I will bet you dollars to donuts that central banks and governments will react in ways that are even more unthinkable."
Income vs education, http://ggc-mauldin-images.s3.amazona.../171117-12.jpg
"And this at a time when 95 cents out of every dollar collected by the US government goes to either pay a) interest, b) entitlement spending and c) defense. Which do you think goes first?

I don’t think it is interest (hard to make them that much lower). And I doubt it will be entitlements. Which leaves you with defense. And so just like European nations before it, the US will slash defense spending to keep the welfare state alive"
http://news.goldseek.com/GoldSeek/1510939909.php
Wait and see on that one. The chosenites need for us to kick off a big expensive war to save their bacon. The welfare State gets the axe.
Tesla, https://seekingalpha.com/article/412...rminal-decline

"In 2000, the subsequent crash was 39%, in 2007 it was 54%. We are now again witnessing just such a gap, with the S&P 500 at record levels. Here’s the graph, with John’s comments: "
Mind the gap ! https://3r8md7174doo44lgpk3kou79-wpe...ebt-111417.jpg
"With a current shortfall of $18,176 between the standard of living and real disposable incomes, debt is only able to cover about 2/3rds of the difference with a net shortfall of $6,605."
"“Prior to 2009, debt was able to support a rising standard of living..” Less than a decade later, it can’t even maintain the status quo. That’s what you call a breaking point.

To put that in numbers, there’s a current shortfall of $18,176 between the standard of living and real disposable incomes. In other words, no matter how much people are borrowing, their standard of living is in decline. "
"One consolation: Europe, Japan, China are in the same debt-driven decline that Americans are. We’re all going down together. Or rather, the question is who’s going to go first. That is the only hard call left. America’s a prime candidate."
https://www.theautomaticearth.com/20...minal-decline/
That P.O.S. Merkel is finally getting the boot (hopefully). That is bringing down the Euro.
http://www.zerohedge.com/news/2017-1...0%9D-collapses
The Eurozone was a creation of the zio-fascists. It was set up so that voting did almost nothing. The technocrats were going to run it and everything would be fine. Millions of bureaucrats would retire early with a fine pension. It will eventually go down the toilet and take the Euro currency down with it.

[Danny B]

The cracks are just getting bigger

Armstrong told the big funds that bonds were going to crash and they should move to stocks. They have done this. Has this become a self-fulfilling prophecy? Armstrong said that European banks were WAY too risky. With the German political system blowing up, the Euro is falling.
Armstrong, "Nevertheless, it reflects the realization that the European banking system is in serious trouble. I recommend that Europeans should have a stash of cash, and if you have a lot of cash in your account, put some into dollars in the States before it is too late."
https://www.armstrongeconomics.com/w...anking-crisis/
There is already capital flight from the Eurozone. Will this set off a rush?

"I’ve heard the same stories from Switzerland to Shanghai and everywhere in between, that there are physical gold shortages popping up, and that refiners are having trouble sourcing gold. Refiners have waiting lists of buyers, and they can’t find the gold they need to maintain their refining operations.
And new gold discoveries are few and far between, so demand is outstripping supply. "
https://dailyreckoning.com/gold-inte...-super-cycles/
Ray Dalio is playing the rise in the P.O.G. At some point, the demand will shift from "playing" to actual holding. When this happens, the whole P.M. market will freeze solid. "Holding" has always been the game in China.
11/18 India’s war on gold causes massive silver imports – 24hGold

Pretty much all the $trillions of stimulus went into stock buybacks. This makes earnings look much higher.
The Difference Between GAAP And Non-GAAP Q3 EPS For The Dow Jones Was 16%
So, even with the huge distortion of buybacks, earnings are still lousy. That is to be expected when the consumer is absent from the economy. The books have to be heavily fudged.
The Difference Between GAAP And Non-GAAP Q3 EPS For The Dow Jones Was 16% | Zero Hedge

Crypto-currencies do have a niche but, it is far different than precious metals. Here is a good article laying out the differences.
All the Reasons Cryptocurrencies Will Never Replace Gold as Your Financial Hedge | RiskHedge
This graph is called, "the price of gold". not true. It is a graph of the purchasing power of the dollar,,, in reverse.
https://images.riskhedge.com/media/u..._RH_ART_OG.jpg

Japan tried for many years to stimulate their economy by printing cheap money. People would borrow from Japan at 2% and invest it into GOV securities at 4%. The difference was free money and called the "carry trade". This interest-rate arbitrage has now spread to everything worldwide.
http://www.caymanfinancialreview.com...ancial-crisis/
FOFOA claims that the entire foreign currency market is going to disappear. THAT will leave a mark.

Humans aren't bees or ants. They aren't going to work without motivation.
They aren't machines that can be shut down when the market turns. They aren't going to procreate/reproduce at a given rate regardless of external circumstances. They MUST consume for markets to function. You can't drive them down into poverty and expect consumption to go on uninterrupted. The techies have completely ignored human nature.
https://www.theguardian.com/commenti...-john-naughton

[Danny B]

No realization of the power of contagion

Armstrong, "There is just no comprehension of how markets or the economy even function at the highest levels. It is assumed that contagions are just flukes so there are absolutely NO contingency plans whatsoever. I have tended to get called in more as a crisis manager AFTER the fact – never before. "
"Bottom line, contagion will destroy all financial obligations and transactions.

REPLY: No government that I am aware of has ANY plan for a contagion such as LTCM, S&L etc…. You must understand that the people who even dream up legislation have ZERO experience in markets."
"Absolutely everything is based upon a single failure of any institution. When the LTCM crisis hit, bids withdraw and institutions are unsure who to even trade with. This creates the NO BID crisis and volatility rises dramatically. The panic unfolds because of price moves without volume."
https://www.armstrongeconomics.com/w...ancial-system/

"They assume that if one CCP fails then the others just pick it up. Obviously, given that then the stress tests are taken just for one bank failure they do not price-in the fact that there will be no bid for anything!"
"“ASSUMPTION” for everything is a single failure and not a contagion as was the case in the S&L Crisis or the Long-Term Capital Management Crisis. For those who do not know what we call a “CCP” it is a central counterparty clearing house. "
"The markets will freeze when nobody knows who is acceptable counter-party risk."
https://www.armstrongeconomics.com/w...d-the-curtain/

"Consequently, the pension fund has collapsed from 66 billion euros in 2011 to only about 15 Billion euros in 2016. At this rate, Spain goes into default in 2018. "
https://www.armstrongeconomics.com/w...t-on-pensions/
Armstrong also has a good article that addresses the question of why so many people refuse to actually look at the financial situation, https://www.armstrongeconomics.com/a...n-a-new-light/

Armstrong claims that State debt will collapse and equities is the place to be. The stock markets depend on consumption to drive earnings. US GOV spends 24% of the GDP. If GOV is broke, state consumption will go way down. How will the markets fare when consumption crashes? How will corporate America stay afloat when it can't possibly service it's debt?
"Debt of nonfinancial companies has grown $1 trillion in just two years and now totals $8.7 trillion, roughly 45 percent of GDP, according to Informa Financial Intelligence."
https://www.cnbc.com/2017/11/20/the-...f-u-s-gdp.html

The debt-bomb will crash retail badly in the coming year. When the banks blow, what will that do to surviving retail?
Our money is debt-money. Our debt is debt also. What do we really hold that has positive value? Here is a comparison of debt-to-assets. Keep in mind that the comparison isn't completely valid when the money is debt also.
http://www.visualcapitalist.com/worl...lization-2017/
If that isn't enough reality, there is more.
"Our database on wheat from 1259 forward (excluding our data on the Roman Empire grain prices), reveals that there is a serious risk of famine from 2020 onward."
"94% of the world’s edible seed varieties have vanished." " Today, 75% of the world’s food comes from only 12 plants and 5 animal species (see source). This lack of biodiversity has seriously increased this risk of widespread crop disease,"
"We have the technology today to grow food inside without even soil. This is something one should consider to put in your basement as 2020 approaches on the horizon."
https://www.armstrongeconomics.com/m...aching-famine/

[Danny B]

Locking up the brakes at 150 mph

"Because it was equity, it would come under the SEC. I would not be allowed to hedge using futures greater than 15% at the time or else I would then violate the CFTC rules and cross into a futures fund. This was all because of a turf war between the two agencies. In other words, if I saw an imminent crash, I could not protect my clients by hedging more than 15%. You had to sell outright everything,"
https://www.armstrongeconomics.com/a...d-for-trading/

"we must also investigate deeply the trading company we use and how any wild ride will impact their ability to actually fund the successful trades we have managed to get into and out of"
"How would you recommend we evaluate the companies actually holding the bag to be able to pay up at the end of the day? This appears to me to be a most crucial question in the light of what Socrates is pointing out."
"The kind of market conditions we are about to face will force questions beyond extreme volatility, no bids and the gapping of price and trade. What Traders must realize is that these extreme price actions themselves trigger increased margins,"
"Under such panic moves, prices can gap ‘without’ a trade and is worth remembering people sell what they can not what they should. This forces other markets to move just to raise cash. If market movements are violent everyone is pulled into the mix."

"This is when you have to hope that every one of your fellow account owners (under the broker/clearer you are using) is liquid enough to honor margin requirements."
"Just to make you aware, it is possible that your money is vulnerable even if you do not have an open position and is just sitting with your clearer if they were to fail."
https://www.armstrongeconomics.com/w...brokerclearer/

"According to Bank of America, an inverted yield curve has preceded recession on seven out of seven occasions over the past 50 years."
https://dailyreckoning.com/yield-cur...dicts-economy/

11/21 Chicago Fed national economic index rebounds to decade high – MarketWatch
Wall Street Journal U. S. Manufacturing Rides Rising Tide, Buoyed by Global Growth, Optimism.
"overall U.S. manufacturing production is still down 4.3% from its pre-crisis high back in December 2007, and was no higher last month than it was three years ago in November 2014."
"If you look at output of U.S. consumer goods, which is much less attached to the global commodity/industrial cycle, the rising tide of manufacturing output is nowhere to be seen.
In fact, consumer goods production has flat-lined for the last two years,"
"Thus, between October 2007 and the April 2010 bottom, the U.S. lost 2.3 million manufacturing jobs — representing a loss of 76,000 high paying jobs per month."
"By contrast, during the three years since October 2014, the U.S. has recovered about one-tenth of that loss — with manufacturing jobs expanding at a rate of just 6,000 per month. That is to say, the WSJ was essentially trumpeting statistical noise."
"So Thursday’s industrial production number for October actually signaled that the U.S. industrial economy remains dead in the water. It is floundering in a manner that is off the historical charts — and not in a good way.
But stocks keep marching higher."

"Back in the winter of 1999-2000, for example, we were allegedly in the midst of a “new age economy.” The revolution in technology then underway, it was claimed, meant all historic valuation benchmarks — like P/E multiples, cash flow and book values — were irrelevant to stock prices."
"Within months of the dotcom epiphanies, however, the highflying NASDAQ 100 crashed — eventually hitting bottom 83% below its new age heights. And 15 months after the S&P 500 reached its goldilocks peak of 1570 in October 2007 it staggered around in smoldering ruins at 670 — down 57% from its housing bubble high."
"Needless to say, we are again on the precipice of a crash and correction that no one sees coming, but this one has an added twist.

Namely, three strikes and you are out!

What I mean, of course, is that the Fed and other central banks are out of dry powder. They are now stranded near the zero bound with bloated balance sheets that have actually reached hideous girth relative to current GDP and all historical experience — meaning they will have almost no capacity to reflate the next busted bubble, as they quickly did in 2001 and 2009."
https://dailyreckoning.com/the-illusion-of-growth/
reportedly, Silicon valley will soon run out of cash for IPOs from VCs.
https://markstcyr.com/2017/11/19/the...lley-meltdown/

Crypto news;
BTC to hit $5 million, https://www.rt.com/business/410519-b...ess-liquidity/
11/21 Ethereum-based Confido vanishes after raising $374,000 ICO – CryptoCoins News
11/21 Tether, a bitcoin startup, claims a hacker stole $31m – Techcrunch
11/21 A $31 million hack sent bitcoin’s price plunging – Quartz

[Danny B]

Bonds

Bond market notes

'The Great Crash of 2018' will start in bond market - strategist - RT.com
https://www.rt.com/business/410317-b...sh-prediction/
5 days ago
Bond market crash a big worry: Bank of America Merrill Lynch survey
https://www.cnbc.com/.../bond-market...ica-merrill-ly...
Bill Blain: "Stock Markets Don't Matter; The Great Crash Of 2018 Will ...
403 Forbidden...

6 days ago - "Stock markets don't matter. The truth is in bond markets.
Bond market crash is coming and could be devastating for pension ...
https://www.express.co.uk › Finance › Personal Finance
What happens if the bond market crashes? - Quora
https://www.quora.com/What-happens-i...market-crashes
The bond market may be the single most powerful man-made entity on earth. Empires, kings ... A Crash in the bond market can starve economies of credit and throw nations into debt crises.
Amazon.com: The Coming Bond Market Collapse: How to Survive the ...
https://www.amazon.com/Coming-Bond-M....../B00C42S5KE

[Danny B]

Stocks

Stocks and bonds will surprise a lot of investors in the next crash ...
Stocks and bonds will surprise a lot of investors in the next crash - Business Insider
7 days ago - People have become accustomed to an inverse relationship between stock and bond prices. ... In the next bear market, stocks and bonds will likely go down together....
Next Stock Market Crash: How It Can Happen in a Few Seconds ...
fortune.com › Commentary › Stock market
Bonds won't protect you if stocks crash - MarketWatch
How To Prepare For The Coming Stock Market Crash - Forbes
Greenspan Sees No Stock Excess, Warns of Bond Market Bubble ...
https://www.bloomberg.com/news/.../n...ut-when-bonds-...
The Clue to the Stock Market Is the Bond Market | InvestorPlace
https://investorplace.com/2017/10/cl...k-market-bond/

[Danny B]

The duet

"Since 2009, U.S. corporations have borrowed more than $9.5 trillion in the bond market. That’s 62% more than they borrowed in the eight years leading up to the 2008–2009 financial crisis."
"WARNING: U.S. Corporate debt-to-earnings ratio reaches a 12-year high"
"unprecedented $29 trillion corporate bond binge that has left many companies more indebted than ever."
Regardless of what Armstrong claims, stocks and bonds will blow together. He claims that GOV debt will blow completely. Dunno.

[Danny B]

S&P 500, DJIA, Wilshire and Russell

EVERYBODY is warning about a stock market crash. The CBs deluded themselves in the belief that they could make the markets continue to grow uninterrupted. NO more cycles. So, here are a few notes on the stock markets.

If your interested in the VIX, this is a very good article. It points out that investors hold very little cash and would have to meet huge margin calls in the event of a modest downturn. The article posits that the dealer will sink beneath the waves when the investors can't meet margin calls. Armstrong writes about the risk to the broker/clearer.
https://www.armstrongeconomics.com/w...brokerclearer/

11/23 Fed officials fear possibility of ‘sharp reversal’ in prices – CNBC
11/23 China is pumping a lot of cash into its economy to calm investors – CNBC Ah yes, CONFIDENCE.
11/22 Michael Pettis: China’s growth miracle has run out of steam – Zero Hedge YES, as the R.O.W. has run out of earnings.

"Most of these charts have one thing in common – they compare stocks to a range of economic aggregates related to corporate sales and with it earnings. After all, earnings per share, no matter how “earnings” are calculated, cannot forever increase or even be maintained due to cost cutting and share repurchases alone."
"those charts have demonstrated is that the market has valued low interest rates and positive sentiment more than other fundamentals combined"
EVERYBODY is looking at the S&P 500 and the DJIA. These charts look at the less manipulated Wilshire 4500 and the Russell 3000. If all the QE has flowed into stock buybacks for the big-name stocks, why try to use their numbers to get an accurate picture? I won't link the individual charts. They are easy to understand. Look at each one.
11 Charts Exposing The Madness Of The Stock Market Crowd | Zero Hedge

Stockman, "April 2000 when the hottest precincts of the stock market---the NASDAQ 100 stocks----began a perilous 80% dive; and it's also what happened in the broader markets-----including the S&P 500---in 2008-2009, when a thundering 60% plunge "
" After the NASDAQ had risen from 835 in December 1996 to 4585 on March 28, 2000---or to an out-of-this-world 5.5X gain in 40 months--"
"In fact, the index ended up in September 2002 almost exactly where it had been when Greenspan spoke the words "irrational exuberance""
https://media.ycharts.com/charts/99b...4c1ea81476.png

"In the Great Deformation we tracked 12 of the highest-flying big cap stocks ("Delirious Dozen") during the period between Greenspan's December 1996 speech and the April 2000 dotcom bust. During this 40-month period, the combined market cap of these 12 leading momo stocks---including Microsoft, Cisco, Dell, Intel, Juniper Networks, Lucent, AIG, GE and four others---soared from $600 billion to $3.8 trillion."
"GE's mid-2000 market cap of $500 billion stands at just $155 billion today;"
"Cisco's current $181 billion market cap, in fact, sits at just 36% of its bubble peak."
"In short, that was irrational exuberance back then, and it did not take long for the vast quantities of bottled air in the market cap of the Delirious Dozen to come rushing out. By the bottom in September 2002, four of these companies had vanished into bankruptcy and the market cap of the survivors had imploded to just $1.1 trillion.

That's a fact and you can look it up in the papers. In less than 30 months, $2.7 trillion of market cap had literally ionized. And these were the leading companies of the era."
"More importantly, the promising macro-economic situation at the turn of the century has given way to a world precariously balanced on $225 trillion of debt and the tottering $40 trillion Red Ponzi of China."
Contra Corner » The Mother Of All Irrational Exuberance

Venezuela, Venezuela inflation soars to 4,000% in 'death spiral' - Nov. 22, 2017
Britain, http://money.cnn.com/2017/11/22/news...s-in-the-world
The Uber-criminals and unregulated globalism, https://sputniknews.com/analysis/201...balist-elites/

[Danny B]

Global price convergence

Armstrong made it clear that you can't take one State in isolation. Capital flows around the globe. Just as we see a global price for labor and commodities, we are starting to see a convergence affecting other areas.
"What is most curious, is the fact that the Dow, Euro, Gold, and Oil all have the same timing targets, with oil showing the week of 12/04 is the strongest.
We are witnessing the global markets beginning to align. This is implying that international expectations are starting to dominate domestic or isolated market fundamentals."
https://www.armstrongeconomics.com/a...-this-weekend/
This locked-in globalism will bring global contagion. Stability and systemic shocks.
All The Old World Systems Are Being Deliberately Torn Down | Zero Hedge

Crypto news;
11/24 Bitcoin is a distraction, focus on gold – Kitco
11/24 Bitcoin is paving the way for gold’s return – GATA
11/24 Gold vs. Cryptocurrencies take centre stage at SF summit – Resource World
11/24 CNBC Mad Money host joins the bitcoin ‘bubble’ brigade – CryptoCoins News
11/24 Deutsche Bank joins bitcoin bashing brigade – Coin Telegraph
11/24 Why bitcoin is the MySpace of cryptocurrencies – Entrepreneur
11/24 Bitcoin cash passes $1,500, lead dev. pronounces Bitcoin dead – Coin Telegraph
11/23 A brief history of lost cryptocurrency – Slate

[Danny B]

The end of dreams

This article deserves a post by itself. My long detailed post on MfID seems to have disappeared.

This article goes very deeply into the socio-economic aspects of the winding down of empire and the end of the credit super-cycle.
"America would need to awake from its ‘dream’ a decade ago in End of Dreams: The Return of History,"
" like Germany after WW1 – America, does not feel itself defeated: Quite the converse, it sees itself having emerged from the Cold War wholly vindicated: in terms of its societal, governmental and capitalist models.

The American-shaped globalist order, in which three American generations have been steeped, had seemed so naturally to flow out from the Cold War, that the onset of world ‘order’ dissolution seems – shockingly, for many"
"The first great globalization wave, in the half-century or so before World War I, sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945.”
"America has been backing itself into the corner of an ‘American-shaped’ (imposed), second wave ‘globalisation’, and that is the major risk posed today"

"the élites, of which he [Howard] himself freely admits to having been a part, have failed to sustain the consent of electorates for this [Euro-centralisation and for globalisation]. This ignoring the need to sustain the consent of the electorate, bears a considerable responsibility for getting us into this mess”.
"The once-vital discourse of liberal democracy has been hollowed out, and transformed into a language of managerial technique … Within this discourse, freedom has been reduced to market behaviour; citizenship to voting; and, efficiency for the public good to efficiency for profit. "
"“As long as prosperity continued to increase as it has since 1945, western electorates were willing to give élites a very considerable measure of discretion about what they did, [whether in creating the EU], or whatever it might be. They were willing to acquiesce. "

"Dalio, the billionaire founder of top hedge fund, Bridgewater Associates, posted a new article, “The Two Economies: The Top 40% and the Bottom 60%”. He believes it is a serious mistake to think you can analyze or understand “the” economy because we now have two of them. "
"The wealthiest 0.1% has been increasing its share of wealth since the 1980s, while the bottom 90% has been losing ground. "
"after the Great Financial Crisis of 2008-9, the economy never recovered. The S&P may have, and the banks are back to profitable ways and big bonuses, but that has nothing to do with real Americans in their own real economy. 2009 was a turning point, and the crisis never looked back”.

"And Max Hastings’ point is that with austerity gone, early popular acquiescence has turned to anger against the élites – for having so taken them for granted in their utopian globalist projects.

Now the wider point: what we have here is the intersection of geo-politics with geo-finance. Both are now wholly contingent on the ‘saving of appearances’."
" western ‘prosperity’ underwrites the global order, and the global order underwrites American ‘prosperity’. The American and European élites therefore find themselves painted into a globalised ‘rules-based order’ corner,"
"It has become a vicious circle: as high debt, to GDP ratios, low-interest zombification of entities and shrinking personal disposable income in the 60%, have depressed growth. Yet, paradoxically, never has the need for more of the same – QE, low or negative interest rates,"
"the flip side to continuing the ‘easing’ paradigm is the ongoing hidden transfer of wealth from general taxpayers (the 60%) to the 40%: more populism; more unexpected election outcomes in Europe; more fake-ness; quicker dissolution of the glue holding society together;"
https://www.theautomaticearth.com/20...f-appearances/

[Danny B]

Spreading poverty

Germany is the powerhouse manufacturer king of Europe. Germany has a one trillion dollar capital account surplus.
"About 20 percent of people in Germany are threatened by poverty and other forms of social exclusion. According to EU statistics, close to a quarter of the bloc’s (EU) residents faced such precarious conditions in 2016.

Poverty and other forms of social exclusion affect 16 million people in Germany — 19.7 percent of the population "
"According to the study, about 16.5 percent of people in Germany face such precarious conditions because they are paid too little"
http://geab.eu/en/poverty-and-social...mans-on-brink/
German election: How EU and German arrogance led to far-right rise ...
https://www.express.co.uk
The low-wage competition from the East is now an existential problem of survival for the West.

If 300 million Chinese farmers moved into the industrial economy, does that mean that 300 million Westerners will have to move to the agrarian economy? Even that correction wouldn't be sufficient. Much of the discretionary spending that kept the producers working is a thing of the past.
"Municipal leaders said that a recent count over several nights found 55,188 homeless people living in a survey region comprising most of Los Angeles County, up more than 25% from last year."
"In recent years the number of homeless people has grown. Whereas rents increased by 18% between 2005 and 2015, incomes rose by 5%. When Rudy Giuliani entered City Hall in 1994, 24,000 people lived in shelters. About 31,000 lived in them when Mike Bloomberg became mayor in 2002. When Bill de Blasio entered City Hall in 2014, 51,500 did. The number of homeless people now in shelters is around 63,000."

"Already, we have shattered the all-time yearly record for retail store closings, and we still have more than a month to go."
"A record number of store closures — 6,735 — have already been announced this year. That’s more than triple the tally for 2016, according to Fung Global Retail and Technology, a retail think tank.
And there have been 620 bankruptcies in the sector so far this year, according to BankruptcyData.com, up 31% from the same period last year."
"Already, we have shattered the all-time yearly record for retail store closings, and we still have more than a month to go." "Sadly, analysts are projecting that the number of store closings could be as high as 9,000 next year."
As America Gives Thanks, Homelessness Continues To Set New Records In Major Cities All Over The Nation
Debt and poverty,,,, like peanut butter and jelly.
Goodbye American Dream: The Average U.S. Household Is $137,063 In Debt, And 38.4% Of Millennials Live With Their Parents

[Danny B]

The coming deflationary pressures from the CBs

Premier Xi of China just recently consolidated his power and now, he wants to rein in the unregulated banks, https://www.theepochtimes.com/china-...2_2361179.html
11/24 The party is over for Australia’s $5.6 trillion housing frenzy – Bloomberg
Maybe,
https://www.theepochtimes.com/chines...d_2366496.html

The CBs believed that they could end the business cycle. They blew unimaginably large bubbles. A bubble is a speed-bump on the economic highway. The bigger the speed-bump, the more loss of control. They were deluded from the beginning.
Look at the '07 speed-bump on this chart, http://www.zerohedge.com/sites/defau...citi%202_0.jpg Then look at the current slope.
"However, leaving readers unimpressed - and unscared - will not satisfy Lorenzen, which is why the credit strategist who works together with the godfather of rational doom, Matt King, and has been warning for weeks that now is the time to sell credit,"
"And while Lorenzen touches on many things, at its core, his warning is straight out of Shumpeter: the longer nothing changes, the greater the crash will ultimately be, a topic which DB's Aleksandar Kocic dissected over the summer, even defining an entirely new term in the process: metastability. "

Investors are moving into riskier and riskier investments in search of yield,,, in a ZIRP world. They think that they will read the tea leaves and charts and get out in time. History doesn't favor that.
"Over the last 50 years, only 2 out of 19 corrections in US credit were led by a recession. 12 had no overlap with a recession at all. In half the corrections, there wasn’t even a discernible turn in the leading economic indicator beforehand. Plainly, there is a long history of market corrections being triggered by other factors than fundamentals "
"We don’t dismiss the importance of triggers. Indeed, when you look back at the last fifty years, nearly every major correction in credit can be associated with a triggering event (Figure 28). "

"Lorenzen believes that "2018 is different." As we see it, it is now increasingly vulnerable to a mid-cycle, “technical” correction, based on what we have discussed above:

Central bank asset purchases are set to be the smallest in a decade (Figure 29). A $1tn of incremental demand versus 2017 is needed from private sources."
"That seems to be a growing fear among a number of central bankers that we have spoken to recently. In our experience, they too are somewhat baffled by the lack of volatility and concerned about the lack of response to negative headlines."
The CBs engineered a Pavlovian response in the financial sector. Everybody KNOWS that the free money will keep flowing. The FED is due to raise rates in December. We'll see how that works out. The CBs know that they have to get off the tiger eventually.
Catastrophe theory is waiting in the wings, https://www.youtube.com/watch?v=FHgQUjqg-AI

"It presents the thesis that The Age of Capital has ended. It’s over and finished, the System known as Capitalism is presently defunct."
"You see, the alternative is The Reset which is just as dangerous. How to change the System Framework within which the economy operates, alongside operational and legal changes to ownership, without System and social disintegration? "
https://beforethecollapse.com/2017/05/23/the-reset/