Listen to this week’s “The Financial Physician” radio show. Today I discuss the crazy, volatile financial markets-Lou Click on the upper right corner PLAY arrow on player as the middle PLAY arrow is not working.
Listen to this week’s “The Financial Physician” radio show. Today I discuss the crazy, volatile financial markets-Lou Click on the upper right corner PLAY arrow on player as the middle PLAY arrow is not working.
I have been watching trading in the stock market for 32 years and I can’t remember a day like we saw on Monday. The Dow was down over 1,000 points in five minutes after the open. The market rallied all the way back to down 98 by early afternoon but by 3pm the market plunged again down 700 and then rallied a bit to close down almost 600 points. I expect a relief rally all early as today. The market is way oversold and due to bounce as much as 1,000 points. The real crash will come during the historically risky Sept-Oct period. Truly historic times. If still exposed to the market, I would use this rally to lighten up. -Lou
U.S. stocks end harrowing session with biggest drop in 4 years
Marketwatch-Wall Street suffered one of its most volatile sessions in years Monday, with the Dow industrials plunging more than 1,000 points in the opening minutes, bouncing back to recover most of the losses and then fading into the final bell to record the biggest drop in four years.
Meanwhile the main benchmark S&P 500 slipped into correction territory, having fallen more than 10% from its peak reached on May 21.
“Short-term fear of the unknown is still in the driver’s seat, I would expect more volatility in the coming weeks,” said Kate Warne, investment strategist at Edward Jones.
Indeed, Monday’s trading session saw the main indexes plunge by more than 5%. Nearly 14 billion shares changed hands on Monday, the largest volume since August 10, 2011.
Investors remained concerned about global growth in the face of plummeting commodity prices and slowing growth in China, the second largest economy in the world.
The Dow Jones Industrial Average DJIA, -3.57% ended the day down 588.47 points, or 3.6%, at 15,871.28—its lowest settlement since February 2014. All 30 members of the Dow finished the day in negative territory.
The S&P 500 SPX, -3.94% dropped 77.68 points, or 3.9%, to 1,893.21, the lowest level since October 2014. The index is down 8% year to date. Nearly all 500 members of the index closed with a loss.
Both the Dow and the S&P 500 scored their biggest one-day percentage declines since August 2011.
The Nasdaq Composite COMP, -3.82% ended the day down 179.79 points, or 3.8% at 4,526.25.
“Trading volumes are driven by ETFs today, but we are not seeing a lot of panic, where people dump large amounts of stocks in one go. There are still buyers out there, who are picking up stocks that have seen large corrections. However, volatility is back, so seeing large intraday and day-to-day swings is not surprising,” said Brian Fenske, head of sales trading at ITG.
Sal Arnuk, co-head of equity trading at Themis Trading, described Monday’s open as painful. “There’s definitely blood on the street. You can check the level of the VIX,” Arnuk said.
What A Week, Markets In Danger Zone
Wow , that was one ugly week.
As I (and many) have been warning for months, the financial markets are in big trouble and a major decline could happen at any time. Well it looks like the time is now.
This weeks in U.S. markets:
Monday: Dow +68, S&P 500 +11, NASDAQ +44
Tuesday: Dow -34 S&P 500 -5, NASDAQ -33
Wednesday: Dow -162 S&P 500 -18, NASDAQ -40
Thursday: Dow -358, S&P 500 -44, NASDAQ -142
Friday: Dow -539, S&P 500 -65, NASDAQ -171
Between Tuesday and Friday the Dow lost 1,093 (6.3%), the S&P 500 132 points (6.3%), and NASDAQ -386 points (7.6%)
That makes this the worst week for the Dow since 2011. All in all, the Nasdaq 100 Index lost more value in the past two days than at any time since March 2008.
On Friday loses accelerated, as they had all week, and closed at the lows of the day as investors dumped stocks into the weekend.
Technical levels were broken through like a hot knife through butter and portend worse action ahead.
I would not be surprised if we saw a rebound next week as stocks are significantly oversold short term but as we enter the historically dangerous months of September and October I expect the markets to get very scary.
Commodities continue their deflationary plunge with oil briefly breaking $40 bbl before closing at $40.43. Copper, Iron Ore and many other commodities are plunging as world demand shrinks in the face of a dramatic worldwide economic slowdown
Treasury bond yields plunged as investors sought the perceived safety of U.S. debt. There is no way the Fed will lower interest rates in the September meeting in the face of plunging world markets.
What is causing the dramatic selloff in global stock markets and commodities?
World economic growth is slowing , mainly in China and other emerging market countries. Over 20 global stock markets are already in bear markets. The strong U.S. dollar makes repayment of debts denominated in dollars more costly to foreign countries.
Since the end of the 2008 financial crisis, investors have come to believe that central banks will always come to the rescue every time the markets stumble. That confidence is now being shaken.
China’s surprise devaluation of their currency has roiled world financial markets as other countries have or are expected to do the same to remain competitive resulting in a currency war.
The bright spot in markets this week? Gold and silver had one of the biggest short term rallies in years as money seeks safety in real assets as opposed to inflated paper ones. Look for continued strength in precious metals as markets continue to get roiled.
Here are some UGLY charts showing he technical damage:
DOW: 16,000 is the next level of support (a further 3% decline)
S&P 500: No real support until 1850 (another 6% lower)
NASDAQ: Support at 4,600
Richard Russell Warns We Have Now Entered A Bear Market In Stocks And Fred Hickey Expects A Huge Rally In Gold!
On the heels of the Dow plunging 360 points, the Godfather of newsletter writers, 91-year-old Richard Russell, just warned that we have entered a bear market in stocks, plus Fred Hickey expects a huge rally in gold!
August 20 (King World News) – The Stock Market Has Turned Bearish
Richard Russell: “As subscribers know, I wish the best for America and believe that America is the hope of the world. Yet there are a few things that worry me.
I believe the US economy is sinking into recession as described by John Williams of Shadow Statistics. I believe we are in a period of deflation and deleveraging. I am convinced that the Fed knows the economy is contracting and this is the reason that they have not yet raised rates.
Professionals Selling Stocks To An Unsuspecting Public!
There are now 10 distribution days* in the S&P and 4 in the Nasdaq. Thus it is clear that many institutions are stepping to the sidelines. A combination of ten distribution days in the S&P and 4 in the Nasdaq comes to an ominous total of 14, and it puts the market under pressure.
As I write at the close, the Dow is down 357 and has broken below the critical 17,000 level. Transports are down 207 and have closed only 92 points above the 8,000 level. The Nasdaq has cracked the 5,000 level, down 141 to 4,877. To top everything else, my PTI is below its 89-day moving average.
Mighty Apple (AAPL) the world’s highest capitalization stock, closed down 2.36 to 112.65. The US dollar index closed down 0.42 to 95.94. Dollar holders are getting the message that the US economy is in trouble. At the stock market close, gold was up 18.6 to 1152.7 and silver was up 24 cents to 15.55. It is increasingly probable that the lows in the precious metals have been seen.
Russell Warns We Have Entered A Bear Market In Stocks
I believe the stock market has gone bearish; subscribers should stay with their position in physical silver and gold. Gold is a friend of free markets and the enemy of central banks and their fiat money. Rejuvenating a sick economy by creating more currency has never worked, and it won’t work this time.
Fred Hickey Says Gold Will Soon Have A Huge Rally!
Russell continues: “Fred Hickey is one of the smartest analysts and one of the hardest workers I know. The following is an excerpt from Hickey:
“There’s so much spin that comes out of Wall Street every day from hucksters who want this long-in-the-tooth stock bull market to continue (forever). The financial media (example: CNBC) is no better, with most of them doing Wall Street’s bidding (it’s who pays them) and cheerleading the Fed’s interventions because they’re died-in-the-wool believers in central planning and big government.
If I’m correct and the central bankers are failing and likely to lose control, then we should see major turns in fortunes for both stocks (a continuation of the current sell-off) and gold (a huge rally) soon. The paper gold speculators currently have off-the-charts record short positions based on faulty assumptions: that money printing works, that the economy is finally improving and that the Fed will be able to extricate itself from its 0% rates and bloated balance sheet box without blowing up the economy (and world). History is on our side. Money printing never works. The paper gold shorts will be vanquished.”
I finally have the file from this past Friday’s radio show. On this week’s show I discuss the mystery of The Shemiteh, the biblical seven year cycle that effects financial markets and world economies, it will blow your mind. By the way, 2015 is the year of The Shemiteh-Lou
I really respect Michael Snyder’s work.-Lou
A Death Cross, Wild Market Swings And A Currency War – And We Haven’t Even Gotten To September Yet
Things continue to line up in textbook fashion for a major financial crisis by the end of 2015. This week, Wall Street has been buzzing about the first “death cross” that we have seen for the Dow since 2011. When the 50-day moving average moves below the 200-day moving average, that is a very important psychological moment for the market. And just like during the run up to the stock market crash of 2008, we are starting to witness lots of wild swings up and down. The Dow was up more than 200 points on Monday, the Dow was down more than 200 points on Tuesday, and it took a nearly 700 point roundtrip on Wednesday. This is exactly the type of behavior that we would expect to see during the weeks or months leading up to a crash. As any good sailor will tell you, when the waters start getting very choppy that is not a good sign. Of course what China is doing is certainly not helping matters. On Wednesday, the Chinese devalued the yuan for a second day in a row, and many believe that a new “currency war” has now begun.
So what does all of this mean?
Does this mean that the time of financial “shaking” has now arrived?
Let’s start with what is happening to the Dow. When the 50-day moving average crosses over the 200-day moving average, it is a very powerful signal. For example, as Business Insider has pointed out, if you would have got into stocks when the 50-day moving average moved above the 200-day moving average in December 2011, you would have experienced a gain of 43 percent by now…
The Dow Jones Industrial Average has been on an unrelenting upward trajectory since its October 2011 low.
The signal that convinced many traders that the market was now moving with a bullish bias was when the 50-day moving average of the index price rose above the 200-day moving average a couple of months later at the end of December.
Since then the market rallied 6,200 points to a high of 18,333 before pulling back to last night’s close of 17,404. That’s a gain of around 43% even though the market is 5% off its high.
But now a cross is happening in the other direction. That is why it is called a “death cross”. It is quite understandable why a lot of investors are freaking out about the fact that the 50-day moving average has moved below the 200-day moving average for the first time in four years. Every major stock market in history has been preceded by a death cross.
Of course no indicator is perfect. Sometimes these death crosses come just before market crashes, and other times nothing much seems to happen. The following comes from MarketWatch…
The 50-day moving average (or “MA”) crossed below a rising 200-day MA on July 7, 2010, when the Dow closed at 10,018.28. The Dow’s closing low for 2010 was actually hit two sessions earlier, at 9,686.48.
But the Dow fell another 5.9% over six weeks after the Aug. 24, 2011 death cross, and tumbled as much as 50% over 14 months after the one appearing on Jan. 3, 2008.
And keep in mind that when the January 2008 death cross appeared, the Dow had lost just 7.8% from its Oct. 9, 2007 peak. That means the bull market was still firmly in place, as the rule of thumb is a bear market is defined by a decline of at least 20% from a significant peak. In addition, the 200-day moving average didn’t turn lower until two weeks after the death cross appeared.
But this is not the only indicator pointing to trouble ahead. Even while we have many stocks hitting 52-week highs, we also have an extraordinary number hitting 52-week lows. This is called a “split market”, and this is a very ominous sign. In fact, according to Peter Boockvar 62 percent of all stocks on the New York Stock Exchange are already trading below their 200-day moving average…
Are you prepared?-Lou
An Economic Earthquake Is Rumbling
This article was written by Bob Livingston and originally published at Personal Liberty Digest
While the people sleep, an economic earthquake rumbles underneath. The day that they begin to feel the quake draws near.
History will record that in this decade more people will lose more money (forget about the trillions of dollars already lost) than at any time in our history, including during the Great Depression.
At the same time, a very small group has made and will make huge sums of money.
During the Y2K scare (a real hoax) many people stored food. Then, after Y2K, many people wanted to dump their cache; and some did.
We advised readers of my Bob Livingston Letter at the time to store food simply because of the crisis world we live in, but to store those foods that you could rotate and consume. Stored food is a hedge against inflation. It’s a hedge against natural disaster. It’s a hedge against economic collapse. It was our advice before, and it has been our advice since.
This advice is still valid. People who don’t have some stored food don’t realize how dependent they are on the system and government. Of course, the system was designed and created to make the people dependent on government. That makes them easier to control.
Many people have been in hard times since 2008, thanks to bursting housing and derivatives bubbles — both fueled by the Federal Reserve’s money printing and both predicted by me in my Letter and by many other writers. For those of us who are not well-connected (those of us who are not in the 1 percent), there has been no relief. While the banksters got bailouts and Wall Street and the banksters benefited from the money printers, the middle class was impoverished. Savings were wiped out.
More working-age people than ever before are not working. More young workers than ever before are still living with their parents because they are either out of work or working at low-paying jobs. More people than ever before are on the government dole. Welfare pays more than most jobs. Retirement funds have been cashed out and spent on living expenses.
Wages have not kept up with inflation — not the phony inflation numbers peddled by the Fed and the propaganda media, but real inflation.
Printing-press money is fertile ground for expanding world crisis. Crisis is excellent cover for national and international chicanery. Boy, we have it!
How can anyone who is paying attention not recognize these tremors for what they are?
The default rate of companies with the lowest credit rating is at its highest level since 2013.
The auto loan debt bubble is at $900 billion, fueled by easy credit and long-term loans (more than 60 months on even used cars) that put the car buyer upside down as he drives off the lot and keeps him there. U.S. mortgage holders are carrying the most non-mortgage debt they’ve had in more than 10 years; 81 percent of that is automobile debt. Student-loan debt held by mortgage holders is the highest it’s ever been, with the average balance owed at nearly $35,000. Almost 5.7 million homeowners remain underwater on their mortgages.
As reported on last week’s radio show.-Lou
No cost-of-living adjustment for Social Security in 2016?
Lost in the news surrounding the release of the 2015 Social Security Trusteesreport is the likelihood that Social Security beneficiaries won’t see a cost-of-living adjustment increase, or COLA, in 2016. According to the Trustees, Social Security beneficiaries can expect to receive a COLA increase of 0.0 percent. That’s right … a goose egg.
But first, let’s review the more-discussed news from the report. While the outlook for Social Security’s combined trust funds is slightly improved, the overall trend for program finances is still very negative. The Trustees report a one-year improvement in the estimated exhaustion dates for both Social Security’s Old-Age and Survivors Insurance (OASI), or retirement, trust fund (from 2034 to 2035), as well as its combined OASI and Disability Insurance (DI) trust funds (from 2033 to 2034). The Trustees again project the disability trust fund will be depleted in the fourth quarter of 2016 — just in time for the general elections.
While most think of Social Security as a single program, the OASI and DI trust funds are legally separate because they are designed to serve different purposes and different populations. This split is of urgent importance for DI beneficiaries, as — absent legislative action to shore up the program’s finances — benefits will automatically be cut by almost 20% upon the trust fund’s depletion, since by law the program can only pay out in benefits what it receives in revenue.
Returning to the issue of the COLA, as the Trustees point out on page 113 of the report:
“Volatility in oil prices has resulted in substantial volatility in recent cost-of-living adjustments. A large cost-of-living adjustment in December 2008 was followed by no cost-of-living adjustments in December 2009 and December 2010. More recent volatility in oil prices has again affected the CPI. As a result, projections under the intermediate- and high-cost assumptions do not have a cost-of-living adjustment for December 2015.”
Unless there is significant inflation over the next few months, Social Security beneficiaries shouldn’t expect a cost-of-living adjustment (COLA) in their benefits for 2016. On the bright side, for those working and paying into the Social Security system via payroll taxes, when there isn’t a COLA increase, there’s also no corresponding increase in the amount of wage income subject to Social Security payroll taxes, currently $118,500. While that may be little comfort to those living on Social Security benefits, take heart that the Trustees do expect a COLA for 2017.
Where does it end? Everyone should have a credit watch service. I have Lifelock. I recently had $14,000 stolen from my bank account. Someone in California used my ATM card (it was still in my wallet) to charge $14k in five Apple stores.-Lou
Hackers stole Social Security numbers from 21.5 million, gov’t admits
Hackers swiped Social Security numbers from 21.5 million people — as well as fingerprint records and other information from background check investigations — in the massive breach earlier this year of federal personnel files, the government acknowledged Thursday.
The Office of Personnel Management included the findings in a statement Thursday on the investigation into a pair of major hacks believed carried out by China.
“The team has now concluded with high confidence that sensitive information, including the Social Security Numbers (SSNs) of 21.5 million individuals, was stolen from the background investigation databases,” the agency said of the second breach, which affected background investigation files.
OPM said it is “highly likely” anyone who underwent a background investigation through the agency since 2000 has been affected. The 21.5 million number mostly includes those who applied for one, but also 1.8 million others, “predominantly spouses or co-habitants of applicants.”
OPM said these records include “findings from interviews conducted by background investigators and approximately 1.1 million include fingerprints.” The agency said they have no information at this point to suggest “any misuse or further dissemination of the information that was stolen from OPM’s systems.”
Despite agency pledges to help those affected with credit monitoring and other assistance, the latest numbers are sure to deepen concerns about the risks those affected face.
The OPM statement Thursday pertained to a second breach, discovered in May — separate from one discovered in April which affected more than 4 million people.
Some people were affected by both breaches and the government estimated the total impacted by both was 22.1 million.
The larger breach impacted background investigation records of current, former and prospective federal workers and contractors. OPM acknowledged a wide range of information is potentially at risk:
“OPM has determined that the types of information in these records include identification details such as Social Security Numbers; residency and educational history; employment history; information about immediate family and other personal and business acquaintances; health, criminal and financial history; and other details. Some records also include findings from interviews conducted by background investigators and fingerprints. Usernames and passwords that background investigation applicants used to fill out their background investigation forms were also stolen.”
Your best investment may be a safe. Banks pay you nothing to “hold” your money so why keep it there? This is very sad.-Lou
“Heartbreaking” Scene Unfolds At Greek Banks As Pensioners Clamor For Cash
From: Zero Hedge
1,000 Greek bank branches chanced a stampede in order to open their doors to the country’s retirees on Wednesday.
The scene was somewhat chaotic as pensioners formed long lines and the country’s elderly attempted to squeeze through the doors in order to access pension payments.
As Bloomberg reports, payouts were rationed and disbursals were limited according to last name. Here’s more:
It’s a day of fresh indignities for the people of Greece.
About a third of the nation’s depleted banks cracked open their doors after being closed for three days. But all they did was ration pension payments, hours after the country became the first advanced economy to miss a payment to the International Monetary Fund and its bailout program expired.
On the third day of capital controls, a few dozen pensioners lined up by 7 a.m. at a central Athens branch of the National Bank of Greece, an hour before opening time. They were to receive a maximum of 120 euros ($133), compared with the average monthly payment of about 600 euros. Many left with nothing after the manager said only those with last names starting with the letters A through K would get paid.
“Not only will I have to queue for hours at the bank in the hope of getting 120 euros, but I’ll have a two-hour round trip,” said Dimitris Danaos, 77, a retired local government worker who was making the bus journey from his home outside the Greek capital to the suburb of Glyfada.
AFP has more color:
In chaotic scenes, thousands of angry elderly Greeks on Wednesday besieged the nation’s crisis-hit banks, which have reopened to allow them to withdraw vital cash from their state pensions.
“Let them go to hell!” said one pensioner waiting to get his money, after failed talks between Athens and international creditors sparked a week-long banking shutdown.
The Greek government, which closed the banks and imposed strict capital controls after cash machines ran dry, has temporarily reopened almost 1,000 branches to allow pensioners without cards to withdraw 120 euros ($133) to last the rest of the week.
The move has again sparked lengthy queues at banks across Greece — and outrage from many retirees who are regarded as among the most vulnerable in society, exposed to a vicious and lengthy economic downturn.
Under banking restrictions imposed all week, ordinary Greeks can withdraw up to 60 euros a day for each credit or debit card — but many of the elderly population do not have cards.
Another customer, a retired mariner who asked not to be named, told AFP he had no cash to buy crucial medicine for his sick wife.
“I worked for 50 years on the sea and now I am the beggar for 120 euros,” he said.
“I took out 120 euros — but I have no money for medication for my wife, who had an operation and is ill,” he added.
Here’s a look at the scene at National Bank in Athens courtesy of The Telegraph:
As we outlined in detail earlier this morning, the latest polls show a slim majority of Greeks plan to vote “no” in the upcoming referendum (which, as far as we know, will still go on). Many analysts and commentators say a “oxi” vote would likely lead to a euro exit and with it, far more pain for the country’s retirees.