Monday, February 22, 2016

The Market Crash Has Only Just Begun...........

The Market Crash Has Only Just Begun?

Check behind the smoke and mirrors we call markets...

Having successfully called the market's retreat in the fall of 2015, Universa's Mark Spitznagel is not taking a victory lap as he warns Bloomberg TV that "the crash has only just begun."

Investors are facing the most binary "let's make a deal" market in history in Spitznagel's view: choose Door #1 to bet on Keynesianism, central planners, and monetary interventionism; or Door #2 to bet on free markets, natural price discovery and a huge market correction.

"There is massive cognitive dissonance here," Spitznagel explains as history teaches us that door #2 is the right choice... but it's not possible to do that today as investors have been coerced to choose door #1, but when door #1 is slammed open "we will see that dreaded black swan monster."

That is what is going on right now:

"Investors want to go with The Fed when it's working, the problem is, when do you know that it is not working?"

"At some point this stops working..."  ALL THE LIES AND BULLSHIT.

"The market is going through a resolution process, transitioning from the cognitive dissonance of Door #1 to the harsh reality of Door #2... if everyone were to change doors at the same time, that is a market crash... it can't be done in a non-messy way."


"We are either already in a recession or rapidly moving towards one," warns billionaire investors Sam Zell. A stunned (STUPID!) Maria Bartiromo is shocked to hear from Zell that world trade has slowed dramatically and currency wars and election uncertainties have contributed to this. Most shocking of all to the Keynesian pump-primers (and oil bulls) is Zell's remarks that "when I look around the world for prospective demand, it's not there... demand is pretty weak." Markets are not pricing in recession and Zell warns, even with recent declines that "this is pretty frothy" thanks to easy money and he is a seller not a buyer.

Zell warns - "The Fed is out of tools to save the markets.. and that is going to make this more problematic."

Iconic American Company Posts Worst Results in 35 Years

Yesterday, Wal-Mart, the world's largest retailer, reported its first annual sales decline since 1980. The company also reported an 8% drop in its fourth-quarter earnings.

Management blamed the bad results on several things, including the strong dollar and higher wages. Wal-Mart's stock fell 3% on the bad news. Its stock is down 24% over the past year. Its revenues have grown just 3% since 2013. Its profits have dropped 14% over the same period.

As of today, 87% of the companies in the S&P 500 had reported earnings. Based on these results, Wall Street expects the companies in the S&P 500 to show a 3.6% decline in fourth-quarter earnings. It would mark the third consecutive quarter of declining earnings…which hasn't happened since the 2009 financial crisis. Stocks in the S&P 500 are still 46% more expensive than their historic average, according to the popular CAPE valuation ratio.

The U.S. economy and U.S. consumer aren't in very good shape … and the trend is worsening with time.


US Oil Rig Count Collapses At Fastest Rate In A Year

Rig counts dropped for the 9th straight week but for the 3rd week in a row, US oil rig counts dropped heavily (down 26 this week after -28, and -31 in the last 2 weeks). The 85 rig drop is a 17% plunge over 3 weeks - the fastest pace since Feb 2015, and 2nd fastest since Feb 2009.

And yet despite this collapse in rig, why Total crude production has barely dropped.

The US Economy Has Not Recovered And Will Not Recover

Financialization is the diversion of income streams into debt service. When debt service absorbs a large amount of the available income, the economy experiences debt deflation. The service of debt leaves too little income for purchases of goods and services and prices fall. Financialization is the process by which creditors capitalize an economy's economic surplus into interest payments to themselves. Financialization, not wage suppression, is the main instrument of exploitation and takes place via the financial system's conversion of income streams into interest payments on debt.

The rigged understatement of inflation deceived people into believing that the US economy was in recovery. The lower the measure of inflation, the higher is real GDP when nominal GDP is deflated by the inflation measure. By understating inflation, the US government has overstated GDP growth.

The unemployment measure that the presstitute press reports is meaningless as it counts no discouraged workers, and discouraged workers are a huge part of American unemployment. The reported unemployment rate is about 5%, which is the U-3 measure that does not count as unemployed workers who are too discouraged to continue searching for jobs. The US government has a second official unemployment measure, U-6, that counts workers discouraged for less than one-year. This official rate of unemployment is over 10%. When long term (more than one year) discouraged workers are included in the measure of unemployment, as once was done, the US unemployment rate is 23%.

Using the smoke and mirrors of under-reported inflation and unemployment, the US government kept alive the appearance of economic recovery.

The financial media does not question the propaganda that sustains the psychology that the US economy is sound. This carefully cultivated psychology keeps the rest of the world invested in dollars, thus sustaining the House of Cards.

The United States government has abandoned everyone except the rich.

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