Friday, February 27, 2015

Stock-Market Crash: The Countdown Begins........AN ABSOLUTE MUST READ!

Stock-Market Crash: The Countdown Begins

It's time to start the countdown to the crash of 2015-2016. No, this is not a prediction of a minor correction. Plan on a 50% or more crash.

Most investors don't want to hear the countdown, will tune it out. Basic psychology. They'll keep charging ahead with a bullish battle cry, about how the Nasdaq will keep climbing relentlessly to a new record above 5,048 ... smiling as they remember reading that a whopping 73 companies are now in the Wall Street Journal's Billion Dollar Start-up Club, with Uber ($41 billion), SpaceX ($12 billion) and Snapchat ($10 billion). Hearts race even faster reading in Bloomberg BusinessWeek that "China's IPO Boom Mints Billionaires" and Jack Ma's Alibaba fortune is now valued at $35.1 billion.

Yes, technology IPOs are in the lead, and with all that good news, it's easy to understand why investors tune out, don't want to hear the warnings, no countdown to the coming crash.

But the crash of 2015-2016 is coming. Dead ahead.

Maybe not till we get a bit closer to the presidential election cycle of 2016. But a crash is a sure bet, it's guaranteed certain: Complete with echoes of the 2008 crash, which impacted on the GOP election results, triggering a $10 trillion loss of market cap ... like the 1999 dot-com collapse, it's post-millennium loss of $8 trillion market cap, plus a 30-month recession ... moreover a lot like the 1929 crash and the long depression that followed.

Plus cycles theorists warn that we dodged a crash in 2012-2013, thanks to the Fed's stimulus and cheap-money polities. Or rather delayed it, which adds more power to the next one.

Yes, Mark Hulbert's already warned that the "stock market risk is higher today than it was in the dot-com era." Yes, a dip prior to a crash is possible. Sue Chang writes of a 10%-20% stock-market correction by July.

But we also know markets are typically up the third year of a presidency. So if no crash is in the cards this year, then why bother with warnings and a countdown? Why bother building up the 2016 elections with lots of dark early warning signs, and doom-and-gloom warnings for the next 18 months?

Why? Simple, behavioral economists have long been telling us that investors will either choose to stay in denial till it's too late, never having learned the lessons of history when the market collapsed in 2008, 2000 or 1929, when they collectively lost trillions. Or we know some investors really do want to heed the warnings, so they can plan ahead, avoid big losses, and take advantage of opportunities later, at the bottom.

Deja vu 2008: Watch another presidential hopeful collapse!

Let's compare 2015-2016 with earlier crashes: 2008 to 2000 to 1929, knowing all bulls drop into bears eventually. Basic cycles theory. And this next one will trigger losses bigger than 2000 and 2008. So bet against the house at your peril.

Jeremy Grantham's already on record predicting that "around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse."

That will translate into the DJIA crashing from today's 18,117 down 50% to about 9,000. Ouch, the Dow crashing all the way below 10,000. Unimaginable. Bulls will hate it. No wonder our brains tune out, turn off. 

Instead, we prefer the happy talk that will just keep coming out of Wall Street and Washington till the collapse arrives. 

We'll just keep denying reality ... till it's too late.

Deja vu 2000: irrational exuberance, dot-com technologies

Remember 1999. Just 16 years ago. Roaring hot "irrational exuberance." Renewed stock market mania. Wall Street was hot. Stocks roaring. Back then investors demanded insane annual returns during the worldwide millennium celebrations: the top 19 mutual funds had 179% to 323% annual returns.

Yes, dot-com stockholders expected 100% plus returns on zero revenues. Laughed at 30% index fund returns. Early retirement was all the buzz in barbershops and at neighborhood barbecues ... Then came the tech crash of 2000. Two wars. A 30-month recession. By 2005, global real estate was a hot new mania. Wall Street, Main Street, all addicted to the next new manias ... More is never enough. We're our own worst enemies.

Skeptics may think this is a joke. Far from it. There's a huge lesson for all investors in this victory. But we never learn. We're in denial. Repeat.

Deja vu the Crash of 1929: and the long Great Depression

"The United States is more vulnerable today than ever before including during the Great Depression and the Civil War," says Thom Hartmann." Why? "Because the pillars of democracy that once supported a booming middle class have been corrupted, and without them, America teeters on the verge of the next Great Crash." 

"The United States is in the midst of an economic implosion that could make the Great Depression look like child's play," warns Hartmann. His analysis is brutal, sees that "the facade of our once-great United States will soon disintegrate to reveal the rotting core where corporate and billionaire power and greed have replaced democratic infrastructure and governance. 

Our once-enlightened political and economic systems have been manipulated to ensure the success of only a fraction of the population at the expense of the rest of us." 

Déjà vu the Crash of 2015-2016: sorry you'll never hear coming

Why won't we hear the crash? Are we all deaf? No. In fact, the warnings are always long and loud and crystal clear. So why won't most investors hear them? 

Here's why ...

The crashes will just keep coming. On March 20, 2000 we warned: "Next crash? Sorry, you'll never hear it coming." But few listened. The 1990's dot-com's mania was so blinding, it drowned out rational thinking, led to Wall Street losing $8 trillion in the 2000-2003 bear market recession. Still, nothing much has changed. Another round of warnings roared from 2004 into 2008. Few listened. Then another crash. And Wall Street lost even more, $10 trillion.

Throughout much of 2012-2013, pundits warned how bad the market really was. But in December the Wall Street Journal revealed that after 13 years in negative territory, Wall Street's "Lost Decade" (which lasted from the 2000 crash to the end of 2013), finally broke even on an inflation-adjusted basis. And investors got back into bullish feelings. And that eased the panic and bought the bulls more time.

Yikes, it took 13 long years to break even from Wall Street's losses of 2000 and 2008. And now investors are being warned that the coming Crash will be even worse, with new losses of 50% or more. 

Will denying the warnings ... of the coming Crash, one that promises in the end to become bigger and badder and far more dangerous than 2008, 1999 and 1929 combined. 

Listen closely, The countdown has started!

The Data Shows the REAL Economy is Imploding…Is a Crash Next?....A MUST READ!

The Data Shows the REAL Economy is Imploding…Is a Crash Next?

The global economy is literally imploding.

Investors believe that China's economy is chugging along, but the non-fraudulent data says otherwise.

China's GDP numbers are a total fiction. And Chinese Government officials even ADMIT it! Back in 2007, no less than current First Vice Premiere of China, Li Keqiang, admitted to the US ambassador to China that ALL Chinese data, outside of electricity consumption, railroad cargo, and bank lending is for "reference only."

As RBS Economics notes, China's rail volumes are collapsing at a rate
not seen since the Asian Financial Crisis. The Chinese economy is literally collapsing faster NOW than it did in 2008.

As far as Europe goes, Mario Draghi just admitted in the EU Parliament that the ECB has only one tool left at its disposal: QE. After that, there is nothing left in the tool box.

And despite announcing QE a few months ago, Europe is lurching towards deflation. Greece's banks are imploding while the Ukraine is moving rapidly into hyperinflation.

The Euro has taken out critical support and is likely going BELOW parity with the US Dollar.

In the US, as Societe General's Albert Edwards has recently noted, US corporate profits and sales are rolling over in a BIG way. The US Dollar rally is crushing profits across the board not just in the energy sector.

Stocks are set up for an absolute CRASH. They are pricing in ECONOMIC PERFECTION and the reality is that the global economy is imploding.

And the system is just as fragile as it was in 2008.

1.     Corporate debt is back to 2007 PEAK levels.

2.     Stock buybacks are back to 2007 PEAK levels.

3.     Investor bullishness is back to 2007 PEAK levels.

4.     Margin debt (money borrowed to buy stocks) is at 2007 PEAK levels.

5.     The leveraged loan market is flashing major warnings.

6.     Corporate insiders are dumping shares at a pace not seen since the TECH BUBBLE TOP

7.     Numerous investment legends have warned of a coming crash.

8.     Investor complacency is at a record.

9.     The Fed has confirmed QE is ending this week, so the juice is cut off for now.

It is very likely that this year will go down as the end of the great Central Bank rig of the last six years. The time to prepare is now, before the big collapse hits.

"Faith In Fed Abilities" Are Too Firmly Embedded In The Investor Class..........

"Faith In Fed Abilities" Are Too Firmly Embedded In The Investor Class

Treasuries are one of the last remaining safe-havens.  I believe this last point is important because as the Fed initiates its pivot toward rate hikes, it is hard for me to imagine that financial markets will be able to circumvent a new financial crisis, regardless of how 'gradual' the FOMC's path to normalization. I expect Treasuries to receive 'crisis' (risk-off) inflows that will take yields back toward all-time lows.

Financial repression and belief in the "Fed put" pushed investors further and further out the risk curve over the past six years.  

Too many asset managers have remained fearful of underperforming peers and benchmarks; a powerful incentive to stay 'risked-up'.   The psychology of bullish, and faith in Fed abilities, have been too firmly embedded in the investor class.

Today, the Fed's balance sheet is no longer growing and lift-off is looming, so investors need to stop believing that the Fed will lift asset prices in perpetuity.  Their fear of missing the upside is an imprudent (and potentially irresponsible) reason to stay exposed to the riskiest assets that do not fully or adequately compensate an investor for the assumed level of risk.

Financial markets are upside down.
They are distorted by extreme experimental central bank policies and by disruptive competitive currency devaluations.  

As the owner of the world's reserve currency, ending the dangerous 'race to the bottom' policy actions have to begin with the Fed hiking rates.

There are N # of currencies and N-1 number of exchange rates.  As the world's reserve currency, the USD is the Nth currency, so it has an extra degree of freedom.  It is for this reason that the Fed can have a dual mandate. Other major central banks cannot be the first to hike rates or they risk being left too far behind.

Yellen's testimony was a success. After a long period of using rigmarole 'Fedspeak' to explain questionable policy maneuvers that were primarily designed to 'buy time', Yellen spoke more clearly this week.   Despite considerable caution, she accomplished her goal of giving the FOMC more flexibility without disrupting 'risked-up' financial markets.

Odds are very high that 'patience' will be removed at the March 18th FOMC meeting.  She has watered-down the impact when it is removed, but since there has not been a hike in rates since 2006, many investors remain skeptical of seeing any hike in 2015.  There is another set of investors who plan to remain aggressively positioned until they actually see a rate hike (greater fool theory).   After the March FOMC meeting and purge of the word 'patient', Fed decisions will be on a meeting by meeting basis.  It seems many of these investors might be ill-prepared or slow to adjust.

Markets don't seem to want to believe it, but a June hike looks probable.

I expect an outsized market reaction to a hike, I do not find it inconsistent to also expect lower long yields to accompany it.  I also expect a flatter curve, wider credit spreads, higher market volatility and materially lower equity markets. If I am wrong about a June hike, it would likely be due to a problematic geo-political event or material economic underperformance in the US, both of which would benefit long Treasuries.

Given the Fed's policy pivot, it is possible that asset manager outperformance will now come from under-weighting their benchmarks and the riskiest assets; after all, asset prices over the past several years have been driven more by Fed policy than strong fundamentals.  If the Fed is going to hike in June, then first movers (out of the riskiest assets) may have a material advantage for outperformance.  

This is particularly true if:

1) the upside/downside return distribution is highly skewed to the downside;

2) moral hazard (speculation) has been exhausted will the Fed's flat-lined balance sheet;

3) crowded trades are widespread, and;

4) market illiquidity is pervasive.

Stronger Dollar vs Company Earnings......ANOTHER PESKY FACT!

Stronger Dollar vs Company Earnings

It appears that in fact a stronger dollar is in fact disastrous for US company earnings (and one would thought implicitly the US economy)... but then again I don't have a PhD in economics.

Thursday, February 26, 2015

The U.S. Economy is Dead.....AN ABSOLUTE MUST READ!

The U.S. Economy is Dead

For the past quarter century; the most effective "stimulus" for the U.S. economy has been a fall in gasoline prices. This is no great surprise, given that the United States had been the most gas-guzzling nation on the planet – and by a wide margin. 

But times have changed!

After Barack Obama publicly admitted that the U.S. government had ruthlessly manipulated oil prices lower, as "part of its strategy" of economic terrorism against Russia; global oil prices have been cut in half. The only other time that oil prices have fallen so far or so fast in the last quarter century was the brief/temporary collapse in prices which accompanied the Crash of '08.

Has this enormous economic stimulus kick-started the U.S.'s zombie economy? Not at all. Indeed, the collapse in the U.S. retail sector has accelerated throughout this plunge in oil/gasoline prices. This should not be possible. Economic stimulus from lower prices (in any sector) is supposed to be automatic.

What does it mean when an economy not only fails to respond to "automatic" stimulus, but continues to rapidly decompose? It means we are dealing with a dying or already deceased economy. This is a "surprise" to the irredeemable charlatans who have the audacity to call themselves economists, but it shouldn't have been. Not if any of them were paying attention. Not if any of them lived in the real world.

In the real world; evidence of the U.S.'s zombie economy is both overwhelming and abundant. It begins with 0% interest rates. As has frequently been noted in the past; 0% interest rates are the economic equivalent of a defibrillator. As with a defibrillator; it is the most-extreme form of stimulus known to us. As with a defibrillator; it is a "therapy" option which is so radical/reckless that it is only ever intended to be used as a last resort, to resuscitate a patient on Death's door. !!!!! LAST GASP!

Equally, as with a defibrillator; if it doesn't "work" right away, it will never work (has anyone ever heard of a nation called "Japan"?). 

When a doctor attempts to resuscitate a patient with a defibrillator, and fails after a couple of minutes; does he continue to jolt the patient, again and again and again and again – year after year? Of course not. He quickly gives up, because it has become evident that he is no longer "treating a patient", but merely charring a corpse.

This is exactly what the U.S. government (and other Western governments) have been doing for the past 6+ years with its 0% interest rate: charring a corpse. Further proof that the U.S. economy is already dead comes from a chart of the heartbeat of the U.S. economy (and any capitalist economy) – it's "velocity of money". THE CIRCULATION OF MONEY IS THE LIFEBLOOD OF ANY ECONOMY. A DECREASE IN BLOOD FLOW IS A DECREASE IN HEALTH, PERIOD! 

As we see; the U.S. "heartbeat" (i.e. the flow of money) has nearly stopped, having fallen further/lower than at any time in recorded history. 

What does it mean when money stops moving, in a "capitalist economy"? What does it mean when the money (i.e. blood) stops moving in the heart of the greatest Capitalist Empire the world has ever seen?  R.I.P.

But there is even further, equally overwhelming proof that this gas-guzzling, consumer economy is dead, and it comes from the gasoline consumption numbers, themselves. "Official" U.S. gasoline consumption has plummeted by nearly 75% from its absolute peak in July of 1998. More pertinently; the gasoline consumption numbers have plummeted by roughly 66% since the start of the U.S.'s (imaginary)"recovery".

What does it mean when the gas-pumps stop being used in a gas-guzzling economy? It means the same thing as when the money stops moving in a capitalist economy, or when a "patient" fails to respond to a defibrillator. R.I.P.

This brings us to the ghastly train-wreck known as "the U.S. retail sector", the cornerstone of our consumer economy. Most Americans are already familiar with the "Black Friday Shopping Massacre" in the 2014 U.S. holiday shopping season. Yet despite that horrific 20+% (year-over-year) collapse in U.S. holiday shopping; the "news" from the U.S. retail sector has gotten much, much worse since that initial plunge.

It began with an equally large/ugly collapse in December retail sales. When adjusted for inflation, and expressed as an annualized number; the "0.9%" drop reported by the statistical liars of the U.S. government translates into a 25% plunge in December retail sales – even worse than the Black Friday collapse.

Equally important, and as noted in recent commentary; these horrific plunges in U.S. retail sales are cumulative. After retail sales collapsed at the end of November, it collapsed by an additional(annualized) 25% in December. And now, as we move to January and a new year; we see yet another, sickening plunge in U.S. retail sales – even as gasoline prices continue falling.

The "advance estimate" of U.S. January retail sales reports another, enormous, cumulative drop. The "-0.8%" fantasy-number reported by the U.S. government translates into another, additional (annualized) collapse in excess of 20%.

With U.S. gasoline prices now hovering just above $2/gallon; this represents roughly a $1.50/gallon plunge from average prices through most of 2014. In other words; (for the first time) Big Oil has chosen to pass along to consumers nearly the entire plunge in crude oil prices, in the form of lower gas prices. Yet despite this massive stimulus to the U.S. economy; the U.S.'s consumers are so broke that they haven't even been able to maintain their low level of spending.

Supposedly, their wallets are all full of the dollars they have been saving from dramatically lower gasoline prices. Yet outside of gasoline purchases; Americans continue to buy less of everything else. So-called "core retail sales", which excludes (among other things) gasoline consumption, fell in January by nearly 10% when adjusted for inflation and annualized.

The near-bankrupt consumers (in this near-bankrupt economy) don't have "more dollars" in their wallets thanks to the huge plunge in gasoline prices, they have simply been going further into debt at a slower rate. 

The only "benefit" the U.S. economy has received from (much) lower gas prices is that this corpse is decomposing at a slower rate than it would have, if the U.S. government had not manipulated oil prices lower.

Yet note what the liars/charlatans expect us to believe (inside and outside the U.S. government). In their fantasy-world; despite the horrific and unprecedented collapse in U.S. retail sales in November and December, we're supposed to believe that "consumer spending" for the fourth quarter (as a whole) rose by 4.3%.

In the Wonderland Matrix fabricated by these liars; the faster U.S. "retail sales" fell each month, the faster U.S. "consumer spending" rose for the whole quarter. It's exactly the same as someone claiming to have traveled downhill in order to get to the peak of a mountain. 

It's not just a lie, it's a ridiculous lie!

It is precisely these sorts of perverse, utterly absurd lies which will inevitably shatter the brainwashing which the Fed (puppet-master of the U.S. government) has laboured so diligently to perfect over the past several decades. Yet what other solutions does it (and its media/government puppets) have?  IF YOU BELIEVE OR SUSPECT THE ANSWER IS NONE / NOTHING, THEN YOU KNOW THAT THE REAL DISASTER STILL LIES IN OUR FUTURE. 

Ultimately any lie one uses to attempt to cover-up a corpse is quickly perceived to be ridiculous and/or perverse, for one, simple reason. Corpses tend to smell very bad, over time. Soon the stench emanating from the U.S. zombie economy will be so overpowering that it will be perceptible even to the deadened senses of its zombie population.


The Cancer Of Financial Repression.......A MUST READ!

The Cancer Of Financial Repression


It is going on on several fronts conducted by different institutions and people for their own agendas, though they all seem to be mutually supporting.


What that means is that they are converting the entirety of the economic surplus to paying interest on debt. They are draining the economy of all vitality! 

There is nothing left for the expansion of consumer demand, business investment and old age pensions. It expropriates the economic surplus that is created beyond the maintenance of the current living standard into interest on debt.

OFF-SHORING OF MIDDLE CALLS JOBS by Corporations & Wall Street 

What the Corporations and Wall Street have achieved by off-shoring manufacturing jobs and tradable professional job skills such as software engineering & information technology. What they have done by moving these offshore is to recreate the labor market conditions and wage exploitation of the late 19th century.


There is no free market in the markets. These are markets that are manipulated.


I think there is a lot of collusion. For example the government colluded with the banking system in financial deregulation. For example they repealed Glass-Steagall. They expressed this absurd claim that financial markets are self regulating.

They turned the financial system into a gambling casino where the bets are covered by the tax payer and central bank.

The cancer which started in the US Financial System has spread globally. The carriers of the cancer have been the International Banks.


Some of the Financial Repression is collusion of government serving the financial interests because Wall Street is a huge supplier of political campaign funds which you are highly dependent on to get re-elected. So you answer to the donors. You don't answer to the public interest. 

You answer to:

Wall Street,
The Military-Security Complex,
The Agri Business like Monsanto,
The extractive Industries (Oil, Timber, Mining)

These are the powerful interest groups that use the government to serve their interests.


With the destruction of the manufacturing jobs in America through off-shoring, it has reduced the power of the unions and destroyed the Democrats independent source of campaign funds.

You now have two parties with the same head and reporting to the same masters. There is no longer any countervailing power in Washington.

You no longer have the Democrats supporting workers against the Republicans supporting business. Both parties represent monied interests.

This is the reason nothing will change until their is another massive crisis! 

David Stockman: The Clock Is Ticking, The Carnage Is Coming Soon........

David Stockman: The Clock Is Ticking, The Carnage Is Coming Soon

The clock is ticking.  The carnage is coming soon and it's not merely Greece and whether it stays in the euro or not…."But it's symptomatic of what I believe is the gathering crisis in the world, which is that our two-decade long grand experiment in financial bailouts, massive money printing by central banks everywhere, and non-stop Keynesian debt stimulus is heading towards the wall.  

Look at what's coming down the pike. After Wednesday in Europe, it's inconceivable to me that there will be any lasting deal on Greece. It is almost certain now that we are at the threshold or crossing the Rubicon which will result in a crackup of the EU and the euro. There are just too many centrifugal forces blowing apart this experiment, which was misbegotten from the very beginning. 

That will then catalyze a thundering global crisis of confidence in central banks, generally, and then we will be off to the races. 

Everywhere we look in the world the central banks are on the edge of desperation.  

Sweden has joined the cavalcade of negative interest rates. Denmark was already there and is desperately fighting off a massive inflow of capital out of the EU and into their market. We saw the calamity a few weeks ago when the Swiss finally had to give up their rather lunatic peg and the exchange rate soared overnight, creating enormous losses and carnage. 

Draghi is about ready to unload $1.3 trillion of make-believe, printed out of thin air money into the European financial and bond markets. Japan's madness knows no limit. The red capitalists in Beijing are flying by the seat of their pants right now as they see an implosion everywhere in their massively overextended and debt-ridden markets, particularly real estate. 

Brazil and Turkey are in huge trouble…… The central banks as late as 2006 had combined balance sheets of $5 trillion. Today it's $16 trillion. Total outstanding credit in the world is now past $200 trillion. 

There are going to be enormous losses and cascading effects. !!!! 

There is a huge amount of dislocation on the way and it's going to be devastating in its scope and intensity. There is going to be a massive financial conflagration. It's going to be the Great Repricing of all kinds of financial instruments — stocks and bonds."  

US Government's "New Rule" Allows Banks To Completely Make Sh#t Up.........

US Government's "New Rule" Allows Banks To Completely Make Sh#t Up

The Federal Financial Institution Examination Council recently told banks that, "if a particular asset . . . has features that could place it in more than one risk category, it is assigned to the category that has the lowest risk weight." 

This gives banks extraordinary latitude to underreport the risk levels of their investments. Bankers can now arbitrarily decide that a risky asset 'has features' of a lower risk asset, and thus they can completely misrepresent their investments.

Bottom line, it's becoming extremely difficult to have confidence in western banks' financial health.

They employ every trick in the book to overstate their capital ratios and understate their risk levels. This, backed by a central bank that is borderline insolvent and a federal government that is entirely insolvent.

It certainly begs the question—is it really worth keeping 100% of your savings in this system?

I would respectfully suggest finding a new home for at least a portion of your savings.


Wednesday, February 25, 2015

Governments Control Markets; There Is No Price Discovery Anymore.....AN ABSOLUTE MUST READ!

Governments Control Markets; There Is No Price Discovery Anymore

One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team."

One glimpse at a few days during 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. 

However, as Dr. Pippa Malmgren - a former member of the U.S. President's Working Group on Financial Markets - it is not conspiracy theory, it is an actual fact:

"there's no price discovery anymore by the market... governments impose prices on the market."

In this 38 minute interview, linked below, Lars Schall, for Matterhorn Asset Management, speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President's Working Group on Financial Markets (a.k.a. the "Plunge Protection Team"). 

She addresses the following in the interview:

Malmgren's recent book "Signals: the breakdown of the social contract and the rise of geopolitics";

the "inflation vs deflation" debate

the closer ties between Russia and China

the future of the Euro

Germany's gold reserves

and the phenomenon of "financial repression"

Moreover, Dr Malmgren explains what she foresees as the endgame of the financial crisis.


Still don't believe?

The link below is Scott Nations in 2008 being taunted and badgered by the CNBS anchors (Liesman) and some other guest muppet when he dares to suggest the Fed is intervening and that the President's Working Group (i.e. Plunge Protection Team) is hard at work...


Look at the market action on the 10th and 28th and tell me what else might have generated a 100 point rally in the S&P under that situation? Liesman fobs him off as some conspiracy wonk...

Yep looks normal to me... 10/10/2008

and how about 10/28/2008

Those are 100 point moves on a 700/800 S&P!! Nothing to see here eh...? Liesman, CNBS,and our government have an agenda and it has nothing to do with facts or truth! 

This Won't End Well.........A MUST READ!


This Won't End Well

With the S&P 500 now in positive territory for the year and the mainstream media back in normal cheerleading mode, it is worth noting that: 

1) "Most shorted" stocks have outperformed the broad market this year.

2) the last 3 weeks have seen the biggest short squeeze in almost 4 years. 

3) Hedge funds are now at a record high 57% net long. 

We suspect, given the looming Humphrey-Hawkins and March FOMC and the short-term 'gap' between the market and fun-durr-mentals, volatility will be on the rise again.

The "Most Shorted" stocks outperformed the broad market in 2015 so far...

Amid the biggest short squeeze since 2011...

Hedge funds have never been more net long the market...

Short positions shed light on the "other side" of fund portfolios
We combined $1.5 trillion of single-stock and ETF long holdings in 13-F filings of 854 hedge funds with our estimate of hedge fund short positions. We estimate hedge funds accounted for 85%, or $627 billion, of the $738 billion in single-stock, ETF and market index short interest positions filed with exchanges as of December 31, 2014.

Our analysis suggests that hedge funds operate 57% net long (net/long), a new record.

And the yawning chasm between markets and macro and micro is daunting to all but the most 'ignorant'

This won't end well!

Economic Weakness Around the World.....A MUST READ!

Economic Weakness Around the World

"How can we have an economic recovery when there is barely any discretionary disposable income for 40% of the population? As we have shown, those that have seen their incomes grow are not the ones most likely to spend, while the bottom 40% of households still rely heavily on government assistance, have had stagnant incomes and have been faced with increasing inflation for "non-discretionary" goods that constitute a very large share of their incomes. There is clearly no recovery…"

Eric Sprott

"Most developed economies have consumed and borrowed at worrying levels. The US federal government has on-balance-sheet liabilities of over $16 trillion and off-balance-sheet liabilities estimated at about $70 trillion. These numbers do not include state and local government liabilities, or the likely liabilities from underfunded private pensions. Not to mention increased costs associated with more comprehensive health care and an aging population!"

Rick Rule

"This is the second longest bull market in the last 100 years. I wouldn't buy shares here. I'm not interested. Now can the market go up another 20 percent? I wasn't interested to buy the NASDAQ in late 1999, but between January 2000 to March 2000, the NASDAQ went up another 30%. Afterwards people were crying when they realized their losses. The markets go up and down. I think that the upside potential now for the general stock market is very limited and there is considerable downside risk. Probably more downside risk than investors realize."

Marc Faber

Economic Weakness Around the World

The oil price is driven by the same dynamic that underpins the case for most commodities, such as copper, uranium, or iron ore. As people get richer, especially in emerging markets, they tend to consume more metals with which to build houses and cars, and more fuels to generate energy and power machines. Yet commodities have been flat since the Great Recession ended, suggesting, once again, that economic growth is slowing down.

The price of copper is at a four-and-a-half-year low of $2.60 per pound. Uranium sells for $36 per pound today, down from around $65 in 2011. Iron ore for delivery in 2015 trades for below $60 per tonne on the futures market, down from over $180 per tonne in 2011.

The price of oil, meanwhile, had not declined substantially over the last three years. Perhaps its recent price collapse is not as sudden and inexplicable as many believe.

Indeed, a low oil price is consistent with the price action we've seen in other commodities. It also dovetails with economic data we're seeing from around the world, which suggest that global growth rates are simply decreasing.

The Eurozone is trudging along more slowly than the US, according to statistics from the European Central Bank. In the third quarter of 2014, its GDP was nearly flat at 0.3% in growth. Inventories were being dis-hoarded, falling by around 15 billion euros over the last 6 months. This suggests that fewer goods are being produced and stockpiled – a response to weak demand. Employment grew by 0.2% over the quarter, meaning that unemployment levels are still high for the developed world, and industrial production increased by only 0.1%.

The situation is similar in Japan. Despite sustained ultra-low interest rates and activist policies meant to stoke growth, the country is mired in what isn't far off from being a depression. Its GDP shrank 0.5% in the third quarter of 2014, right on the heels of a more than 1.5% contraction in the second quarter.

Developed-world economies are not the only ones that are experiencing weakness now.

China's annual growth rate has slowed from around 10% in 2011 to around 7.5% as of the third quarter of 2014. 11 Its domestic consumer market appears subdued. In the third quarter of 2014, the Consumer Price Index (CPI), which measures the average change in the prices of consumer goods and services, was its lowest since February 2010. The real estate market has been weak and domestic investments in fixed assets – which includes new building projects – grew by only 16.1%. That number was above 21% in early 2013, and has been declining steadily ever since.

Weak economies around the world offer weak demand for commodities and for capital. The effect is to keep interest rates extremely low and to push commodity prices down.

The same logic applies to oil, which has long been priced with the expectation of ever-increasing demand and ever-declining supply. We can therefore view the oil price as a symptom of poor global economic growth, which is a long-term problem – and not just as a short-lived consequence of a slight oversupply of oil.

Falling oil prices are yet another sign that the world economy may be more fragile than before the Great Recession. !!!!

Why is this important? 

Well, many write off the oil price drop as merely the machinations of Saudi Arabia to throw a monkey wrench in the wheels of the US shale industry – or perhaps a market that's over-reacting to a slight supply and demand imbalance. You would then naturally expect a quick recovery after the market worked through the problem of oversupply, or once OPEC and Saudi Arabia had adequately bludgeoned its rivals. On the other hand, if you attribute the oil price decline to a more significant underlying issue within the world economy, then the oil price drop starts to look like the harbinger of a more long-term trend.

The World According To Bulls... Or Bullshit

The World According To Bulls... Or Bullshit  

It's different this time... "decoupled" "cleanest dirty shirt" "goldilocks" - oh wait!


There's only one problem with that...

So buy Europe, right?


Nothing matters except central banks... for now.

Tuesday, February 24, 2015

There's No Way Out Now......VERY IMPORTANT!

The invisible hand, which is not so invisible at this point, central banks managing the markets, all of the money printing, all of the insanity, and it's just the same thing day-after-day, week-after-week — nothing seems to change.  And of course everything works until it stops working, but can you talk about this?

The world has entered a period of immense financial destruction and social disorder.

This is a very important read, the facts and the truth still matter.....

There's No Way Out Now

Breaking news is highlighting the all time highs again while the underlying economic news is negative across the board.  

No other time in history has the economy been in such dire straits and have the markets so completely apathetic to the facts.

Whether it's total debt, Consumer debt, retail sales, housing, productivity, inventories, full time jobs, GDP, wages, just about any and every indicator is negative.

And if we put it in the context of having such extreme monetary policies with the sole intent toward all of these moving in a highly positive direction the above indications aren't just terrible they are frightening. It's kind of like when you're in a fight and you've just hit the other guy with your best punch and he doesn't flinch. You start to think this ain't going to end very well.  

I expect the Fed folks are suffering from a case of the 'oh shit that was the best I got' syndrome.

Our nation's 'best and brightest' economists and financial 'experts' have created policies that are their best ideas to generate economic growth and these policies have failed completely.  

The only thing preventing this nation from a full on collapse is an all time high stock market.  And that is the only reason the market is at all time highs.  Volume is sparse, institutional money is on the sidelines and every metric you can think of is falling apart yet markets are at all time highs, thanks to the Fed, and the Fed alone.

Remember we had a 10% sell off over the course of about 8 trading days in October. The Fed stepped in and stated that QE4 was cocked and ready. That reminded investors the market is risk free and with that it once again moved on to new highs.  Now understand, this is in the face of 12% unemployment, a dead housing market, declining real retail sales, negative real GDP when adjusted for debt and a middle class that is now completely reliant on consumer debt for basic survival.

You can look to things like real wages and real median income to see if the American consumer, always the bulk of GDP and really the only measure of GDP that should be of concern, is healthy or not.  And the data shows us the American consumer has slightly more real income than they did in 1985 (7% more).  They have lost 10% of their income since 2000.  They have also taken on 150% more debt to compensate for the loss of income during that period.  The obvious implication is that the typical American's real free cash flow has diminished significantly.  Yet somehow the market expects future corporate free cash flows to grow forever without the existence of the American consumer driving them?  

Where does the money come from?

For the past three years corporate earnings have been growing by way of contraction.  Revs – Costs = Earnings.  Reduce costs and earnings will grow.  However the obvious conundrum is that costs are limited and thus cost cutting is not a sustainable growth strategy. 

We do it when we have nothing left to show growth. 

Share buy backs and cuts to production have been the only reason earnings have been positive.  This was true in 2006 and 2007, and by 2008 the cash-flow from cost cutting ran out.  We are once again entering that phase and should expect to see a significant slow down in earnings growth despite the fanciest of corrupt accounting.

If you have even a slice of common sense you understand that debt being used for consumption is not the sign of economic or financial strength, money pulled away from capex isn't income and earnings growth by way of cost cutting is not sustainable.  

So be careful when listening to the bank analysts so willing to get on television to tout American economic prowess and divert attention away from things that portray the real story.  They get paid to cheerlead. !!!

In fact, in an onslaught of research Brian Belski of BMO sent me, produced by his team of analysts, not once did they discuss revenues in their medium and long term market forecasts. BRIAN BELSKI AND HIS GROUP OF MENTAL MIDGETS ARE ABOUT THE BIGGEST CHEERLEADERS ON WALL STREET! 
 Revenue is the one item that every business in the world cannot exist without.  It is actually the only item that all businesses would fail without. Yet in all of the research provided by Belski not once did his team discuss revenues.  The reason is simple.  It would contradict the story he is paid to sell. BRIAN BELSKI AND IDIOT ARE SYNONYMOUS!

Any reasonable and impartial analyst forecasting the future performance of the market will certainly discuss sales or something that relates to the existence and position of a consumer. In fact, Morningstar's key measure is wherewithal of future cash flows, meaning they put a significant amount of focus on stability of future sales.  But not Belski and his group,
BMO, they suggest a capex resurgence, that has nothing to do with growth in sales, will be the great saviour.  Odd given demand growth as measured via sales is the only reason a firm will expand capacity. BRIAN BELSKI AND HIS KIND CAN'T MAKE MONEY USING THE TRUTH SO THEY LIE!

The reality is that America's economy and thus America's bottom 80% has been at best flat for 6 years and is now actually sliding backwards despite the vast amount of money being injected.  

Even according to the Fed's own reports, we have yet to see 3% annual growth in GDP since 2007.  And that figure includes all of the growth in consumer credit.  Take out the consumer credit, which we know cannot count as growth as it has a negative net effect, and the reality of negative GDP sets in. 

That is utter failure!  Don't tell me next year again.   You folks at the Fed have absolutely failed!  Who gets 6 or 7 or 8 years of burning through trillions of dollars with no results???  Who gets that??  Come on give me a break already!! YOU HAVE FAILED! PERIOD! YOU'RE FIRED! GET OUT!

Those are the words that every American in the bottom 80% would receive if their performance was as poor in their respective jobs, should they be lucky enough to have one.  It absolutely boggles the mind that these arrogant fools who have so clearly made every wrong choice available to them still walk around and talk as though we are to believe they know anything about anything.  Who are these clowns and what world do they live in??  

There is absolutely zero accountability in our nation's leadership!

What could possibly change next year that hasn't changed after 6 years? What input has a 6 year lag?  These are the common sense questions that nobody seems to be asking.  If these clowns are seriously just going to say next year then give me an explanation of why it hasn't happened despite their calls each year that next year will be the year.  And why this year's call of next year is different?  What is the lag effect that hasn't yet come to fruition that we are now expecting to hit?  

People are beginning to realize housing is not going to be the saviour.  In fact, we almost don't hear about housing anymore.  But for years after the great credit crash, housing was touted as being the thing that will pull us out of recession.  I have been very clear that the housing effect is dead.  So not only is the expansion of jobs in the construction sector improbable but the wealth effect of home ownership too is dead.  Subsequent to 2008, the typical home owner simply doesn't see home equity as stable enough to live against because surprise surprise house prices do decline.

Screen Shot 2015-02-19 at 9.55.37 PM

The above chart tells us that housing, now higher than its been in 6 years has only made it back to the historic lows.  And with home loans more difficult than ever to obtain this is not going to change anytime in the near future.  So we can write off housing as the catalyst for true economic growth.

So then what is it that will pull us out of the economic doldrums in which we've experienced for so many years now?  Well as discussed above, BMO Capital Markets believes a resurgence in capex will be the answer.  Driven by weakening emerging markets and a behavioral change in the American consumer to a move away from cheap products into more expensive products that are produced closer to home, BMO is predicting capex will surge and with it will lift America.

And while I agree with the premise that capex is a very important part of turning the economy around I fail to see a catalyst for a resurgence in capex.  You see capex correlates highly to revenues, not earnings. The reason is that revenues correlate significantly to demand.  When revenues are growing it is a signal that demand is growing requiring more capacity. More capacity means capital expenditures. There is nothing outside of strong demand that drives capex on a large scale.  Tax incentives can push capex forward but not often and not on a large scale. 

The continuing decline in capital expenditures is proof that demand is not strong for the two states do not coexist.  In fact, capacity utilization is the lowest it's been in decades despite declining capacity which all else equal should increase capacity utilization, which tells us that everything is not equal.  Utilization has declined faster than capacity!

Screen Shot 2015-02-20 at 12.51.38 AM

The chart depicts degrading efficiency in capital assets over time.  While companies have streamlined the workforce they are still in process of streamlining capital assets. This should continue as the average capacity utilization before 2000 was around 85% and currently we are just inching back to around 80%.  The interesting thing about this that absolutely nobody on television dares to mention is that capex is the basis for a trickle down recovery. That is, make borrowing costs relatively cheap and corporations will use that low cost period to increase capex because it lowers the break-even for a given project and thus increases return on capital.  And ROC growth equates to big bonuses for C-suite executives.

But why didn't C- suite executives take advantage of low cost capex? Well you can thank both fiscal and monetary policies for destroying corporate capital expenditures.  As a CEO you must allocate your cash to maximize shareholder value.  And when the US has implemented a fiscal policy with the highest G20 corporate tax rate it means the break-even is higher than every other developed nation.  And so when demand is weak there is no reason to invest in capex unless costs are relatively very low, which the tax has ensured is not the case.

From a monetary perspective, borrowing costs are extremely low and corporations are borrowing to take advantage of the cheap cash.  However, the Fed has guaranteed an upward moving stock market.  And so the CEO is required to maximize shareholder value and thus must take the lower risk, higher return investment, which is most certainly the stock market over a high cost, high risk consumer market.  Essentially between fiscal and monetary policy there is no way the CEO can in good conscience build out capacity.

So housing and capex are off the list as a growth function for the economy. How about jobs?  Well according to the mainstream media, the Fed and the government, unemployment is down to 5.7%, which is historically pretty good.  But then why the lack of economic or wage growth?  This too is pretty basic stuff.  If we look to the U6 unemployment figure we see unemployment and underemployment remains well into the double digits at 12%.  This is certainly improved from the 2009 17% print but it is still higher than at any point between 2000 and 2008.

So despite all the calls of a radiant job market the reality is much more grim.  Again, the proof is in the pudding.  If the job market was so very strong, wages and median incomes would see material increases.  That is just the law of supply and demand for labour.  Because we actually see weakening wages and incomes it tells us there is increasing slack in the job market.

And so housing, capex and jobs then are off the list as potential growth drivers.   

Essentially we've just determined that we won't have a wealth effect, a supply side or a demand side recovery. Outside of that I'm not sure what type of recovery exists. I suppose a central banking recovery or at least that's what the Fed is telling us.  But 6 years on and we are still waiting for all that wealth, created by the Fed's trickle down policies, to actually trickle down.

Instead the cheap money has been used to compliment the corporate layoffs with share buybacks.  Money saved from layoffs and from 0% loans go to share buybacks, which actually take money outside of the economy and into secondary markets that have no positive impact on the economy. But it has created immense unearned wealth to .1% of the population. 

Just so happens that the same folks holding onto these policies are part of that .1%.  All starting to make a bit of sense now?

Now none of this is earth shattering. I'm certain most, when really focused on such things, understand that jobs, capacity expansion and housing are all in pretty bad shape. Yet we allow these central bankers to simply continue the same policies. 

It is imperative for the typical American consumer to understand that the Fed will carry on with these policies until it all collapses. !!!!!!

It's exactly what they did in the lead up to the 2008 debacle.  They deny there are any existing problems that are not being overcome by their intellectual wizardry.

And the pundits laughed anytime cooler, wiser heads attempted to speak the truth about the coming collapse.

My point to all of this is while the overwhelming message continues to be everything is strong and the future is absolutely as bright as ever, as measured by the all time high markets, the facts and the data clearly tell a different story.  

Pundits and Wall Street will always tout the 'everything is great' story until it is too late. 

They laugh and ostracize anyone who attempts to rock the boat with a message of reality.  And they do it to deter others from delivering such a message. !!!!

That message is that there exists no catalyst mechanism to pull us out of this economic slumber. If you listen carefully to pundits, politicians and those on Wall Street, they never actually state a way out.  They state the fundamentals are very strong but they never point to any specific fundamentals because there aren't any strong fundamentals.  

And so here we go again with analysts touting strong fundamentals, pundits vehemently calling for economic growth and yet we haven't seen any of it.  Year after year after year we accept their story and the whole time the typical American gets poorer (median net worth is down 40% since 2007) while the top .1% is getting richer and richer.

Inevitably this all time high market overvaluation will blow up the same as last time despite all these folks laughing at such predictions.  

There is no escaping it and the real hell of it is that more retail cash is in the market than in 2007.  Because net worth is down 40% that means a much higher total percentage of total household wealth is going to be lost in this next crash. The devastation will be more than most folks can sustain and the government will again look to reimburse the banks rather than the citizens.  

So you can listen to and laugh along with the 'all knowing' mainstream liars or you can take heed of history and protect yourself now.  But do remember the choice was yours. You will have nobody to blame but yourself when it all comes tumbling down.

Alan Greenspan Warns.....DO NOT MISS THIS!

Alan Greenspan Warns: There Will Be a "Significant Market Event... Something Big Is Going To Happen"

With the Federal Reserve printing trillions upon trillions of dollars to keep the economic system afloat, many investors and financial pundits have surmised that the fundamental economic problems facing the United States during the crash of 2008 have been resolved. Stocks are, after all, at historic highs.  

But the insiders know different. !!!!! 

And if there's any single person out there who understands U.S. monetary policy and its long-term effects on domestic and global affairs it's former Federal Reserve chairman Alan Greenspan. As the head of the world's most powerful central bank for nearly two decades he's privy to the insider conversations and government machinations that have brought us to where we are today.

Greenspan recently joined veteran resource analyst Brien Lundin at the New Orleans Investment Conference to share some of his thoughts. The former Fed chairman made it clear that the central bank is facing a serious problem and one that will have significant ramifications in the future.

We asked him where he thought the gold price will be in five years and he said "measurably higher."

In private conversation I asked him about the outstanding debts… and that the debt load in the U.S. had gotten so great that there has to be some monetary depreciation. He said that the era of quantitative easing and zero-interest rate policies by the Fed… we really cannot exit this without some significant market eventeither a stock market crash or a prolonged recession, which would then engender another round of monetary reflation by the Fed.

He thinks something big is going to happen that we can't get out of this era of money printing without some significant repercussions – and pretty severe ones – that gold will benefit from.

His assessment is based on concerns over the U.S. dollar which will more than likely suffer a currency devaluation at some point in the future.

The end has to come at some point...  If you look at a chart of the U.S. dollar index it has gone nearly parabolic in the last few months… In any market that is so one sided, that is accelerating so rapidly, that trend will end… it will most likely end in a fairly violent fashion.

The man who is essentially the architect responsible for domestic monetary policy under four U.S. Presidents has now said that a significant market event will take place when the Fed is eventually forced to exit their monetary easing and zero-interest rate policies.

Are you prepared (preparing) for that day?

Monday, February 23, 2015

Ukraine "Preparing For Full-Scale War" With Russia.......A VERY DANGEROUS WORLD!

Ukraine "Preparing For Full-Scale War" With Russia, Demands The West Supply Lethal Weapons

"We don't want to scare everybody, but we are preparing for full-scale war," warns Vadym Prystaiko - Ukraine's deputy foreign minister - during a stunning interview that "what we expect from the world is that the world will stiffen up in the spine a little." Demanding that West provide 'lethal weapons' Prystaiko rages "everybody is afraid of fighting with a nuclear state. We are not anymore." 

Coming just a week after the Minsk Summit 'peace' deal and with Germany having warned they are likely unable to stop arms being supplied to Ukraine, Prystaiko concludes, "we would like [The West] to send lethal weapons to Ukraine... weapons to allow us to defend ourselves."

Ukraine's deputy foreign minister says he is preparing for "full-scale war" against Russia and wants Canada to help by supplying lethal weapons and the training to use them.

Vadym Prystaiko, who until last fall was Ukraine's ambassador to Canada, says the world must not be afraid of joining Ukraine in the fight against a nuclear power.

In an interview airing Saturday, Prystaiko says the ceasefire brokered by Germany and France was not holding.

"The biggest hub we ever had in the railroad is completely destroyed and devastated," he told host Evan Solomon about Debaltseve, captured by Russian-backed rebels after the terms were to have taken effect earlier this week.

"We see that they are not stopping," he says, suggesting the fight was now heading south to the port of Mariupol.

"It doesn't take a genius to see what they are trying to do.… They are taking more and more strategic points."

The former ambassador was in the room during the attempts to broker a political solution with Russian President Vladimir Putin in Minsk.

"Personally I don't trust him," he says. "You look at him and you think, 'Are you serious?'"

"Nobody knows what is going on in his head. I believe he is becoming very emotional [over the two countries' historic ties]," he suggests, calling Putin's intentions "difficult to predict."

Prystaiko echoes the view German Chancellor Angela Merkel is said to have expressed to U.S. President Barack Obama privately a year ago: "He is rational in his own way. He is in some parallel universe ... and he sees differently than everyone else." HE SEE'S THAT THE WEST IS ALL TALK AND NO ACTION!

'We have to do something'

"The stakes are really high," Prystaiko says, pointing out that Ukraine has now closed its border crossing with Russia. "We don't want to scare everybody, but we are preparing for full-scale war."

What to do in the face of such a threat? For starters, get over your fears, he says.

"What we expect from the world is that the world will stiffen up in the spine a little," he says. "Everybody is afraid of fighting with a nuclear state. We are not anymore, in Ukraine — we've lost so many people of ours, we've lost so much of our territory.

"However dangerous it sounds, we have to stop Putin somehow. For the sake of the Russian nation as well, not just for the Ukrainians and Europe."

Prystaiko says Ukrainians are blunt when it comes to what they need.

"We would like Canada to send lethal weapons to Ukraine," he said. "Weapons to allow us to defend ourselves."

Canada has been helping to train Ukrainian soldiers for the last decade, but it isn't enough, he says.

"It wasn't on the level that would help our army against an invasion."

Ukraine wants weapons, and training to use them, he said.

But he doesn't hold back from calling on Ukraine's Western allies to step up, echoing the frustration he expressed last November over Canada's willingness to intervene in Iraq but not send troops to help Ukraine.

"I was quite blunt... and probably it was premature at that point but now I have to ask again: If we see the same sort of rebels coming towards central Ukraine, towards other cities, how much is different from what we see in Iraq and the international help which was coming?"

"Unfortunately, we will probably pose a very serious question for the rest of the world: How can we react to this new challenge? We haven't had it for 50 years in Europe. Now it's back again."

This coming just a week after the Minsk Summit deal and further to Putin's warnings that "if Kiev seeks a military solution, war will never end," it appears Ukraine has gone from bad to worse to worst possible scenario as proxy war tensions mount.

New Fukushima Leak Sees 70x Increase In Radiation..........A VERY DANGEROUS WORLD!

After A Recent Spike In Earthquake Activity , New Fukushima Leak Sees 70x Increase In Radiation

It has been a disturbing week for Japan, not due to any recent economic calamity resulting from Abenomics, but because for the first time since the catastrophic 2011 earthquake, the nation has been rocked with a series of ever stronger tremors, with two 6.0+ stronger quakes recorded in just the past 2 days:

The quakes come at an awkward time, just a few short months before Japan's government aims to restart its first nuclear reactor around June, following the Fukushima devastation.

While it is unclear if it is directly related to the recent surge in tectonic activity, overnight another radioactive water leak in the sea was detected at the crippled Fukushima nuclear plant, the facility's operator TEPCO announced. Contamination levels in the gutter reportedly spiked up 70 times over regular readings.

The levels of contamination were between 50 and 70 times higher than Fukushima's already elevated radioactive status, and were detected at about 10 am local time (1.00 am GMT), AFP reported. After the discovery, the gutter was blocked to prevent leaks to the Pacific Ocean.

As RT adds, throughout Sunday, contamination levels fell, but still measured 10 to 20 times more than prior to the leak. "We are currently monitoring the sensors at the gutter and seeing the trend," a company spokesman said.

"It has proved difficult for TEPCO to deal with plant decommissioning. Postponed deadlines and alarming incidents occur regularly at the facility. Earlier this week, the UN nuclear watchdog (IAEA) said Japan had made significant progress, but there is still a very serious radioactive threat, and a "very complex" scenario at Fukushima."

So while Tepco not only has no idea how to proceed with the toxic cleanup at the Fukushima site 4 years after the explosion having scrapped its idiotic "ice sarcophagus" idea a year ago, and continues to scramble to push the illusion that it is on top of the situation - one which any earthquake threatens to unravel with devastating results - Japan is already preparing for its next epic catastrophe, when it proceeds to launch even more nuclear power plants in the coming months. Then again, once Japan suffers the next and final Fukushima-type event and the endgame for doomed nation arrives, at least the government can "blame nature" for finally destroying the country, deflecting attention from years and decades of failed economic policies.