Saturday, August 8, 2015

Markets In Turmoil....

Markets In Turmoil

Stocks ended the week in the red, with the blue-chip Dow clocking its longest losing streak since August 2011. It closed lower for a seventh straight session.

Dow down 7 days in a row

Dow down 800 points in 3 weeks

Copper down 11 of last 12 weeks

Crude down down 6 weeks in a row,28% drop.

Expect more dislocations! The markets have grown fat, dumb, complacent and happy since 2009, courtesy of massive doses of monetary morphine.

But QE went the way of the dodo here several quarters ago, something I warned about well in advance. And now it looks like we may be on the threshold of the withdrawal of even more easy money rocket fuel. Since investors haven't had to deal with an interest rate hike in more than nine years (June 29, 2006, to be exact), they could get severe indigestion from the first increase and any that follow it.

Raise more cash, take some profits, cut some losers, and buckle up. The next year or two could look much, much different from the last six.

The truth hurts... especially permabulls. David Stockman warns that "the top is in," and that the world is overdue for an "epochal deflation, like nothing it has ever seen. The "debt supernova" of the last decade or two has created massive over-capacity and this commodity deflation "is not temporary, it's the end of the central bank bubble." The catalyst has already happened -"It's China," Stockman exclaims, "China is the most lunatic pyramid of credit and speculation.. and capital is now fleeing the swaying towers of the China ponzi."

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