I'm glad I'm not one of them, long ago I decided to live below my pay scale, and save.
Right now I may be having a lawsuit with my retirement because they say I owe for an over payment going back years.
Even if I have to pay it all back Ill not be hurting since i do have funds in reserve in investments, and savings.
It's sad people know they will get in over their heads, and just keep on spending without cutting back.
I refuse to be tossed in as part of the national debt when it's their debt, not mine.
The Coming Financial Meltdown
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Civil discussion appreciated. No Spam...
Civil discussion appreciated. No Spam...
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Blue Frost
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Re: The Coming Financial Meltdown
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
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Blue Frost
- SUPER VIP
- Posts: 98099
- Joined: May 14th, 2012, 1:01 am
- Location: Yodenheim
Re: The Coming Financial Meltdown
He's done a great job hasn't he, just ask his followers, and Hillary that wants to continue pillaging the peoples money.
No matter the facts, not facing them is best for many.
No matter the facts, not facing them is best for many.
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
Re: The Coming Financial Meltdown
Hopefullly Trump will be true to his word and do his best to recover the USA from the last two administrations. Obama sure didn't seem too pleased with Trump after their first meeting. I imagine that Trump could see right through Obama. If so then I wouldn't be surprised that Obama could feel Trumps disgust with Obama for the things he has done and the way he is.
How Trump Can Make Billions For America With No Risk
GlobalIntelHub
11-15-16
A simple plan to boost the American financial markets and bring back unknown billions in US Dollars, and to solidify the US Dollar as the only World Reserve Currency
Several simple steps to make money for America Inc. and create an environment for growth at the same time
Trump’s transition team announced the repealing of Dodd-Frank (LOUD CHEERING). This ‘Dodd-Frank’ act is a cancer, it has been eating away at the financial industry and the entire economy, like a wrecking ball smashing what was left of the economy after the housing crash.
One of the abused children of this damage (there were many) was the Currency market, or FOREX. We will here elaborate on key points here for the Trump Administration which no doubt the market will agree with.
Dodd-Frank is a giant Octopus with 15,000 rules and 20,000 + pages there’s probably not a single human being on the planet who has read and understands the entire ‘law’. We will elaborate here on a very specific part of Dodd-Frank, all that pertains to FOREX.
List of steps to take to reform Dodd-Frank by reversing FOREX specific rules, that will boost markets, increase profits, reduce volatility, save on costs & fees, and bring money back to USA:
1) Delete the FIFO rule. FOREX is not futures. There’s absolutely no utility to FIFO as it pertains to FX. Some algorithmic traders may have 100, 200, or 300 orders on an account. Exiting positions in the exact manner that they were entered, in such situation, is impossible. Why should any trader have to exit positions in the same order as they were entered? (Use the Hotel analogy, Trump owns 12 hotels, some are profitable some not why should Trump sell the 1st hotel built and not just the 3 losers?)
2) Increase the leverage. Increased leverage IS NOT correlated to increased risk. The regulators force members to say that an increase in leverage is an increase in risk. This is mathematically and logically incorrect. Increase in leverage MAY increase risk, however it is NOT CORRELATED. For example, if your use of the leverage is for hedging purposes, in this scenario, increased leverage DECREASES risk. There are few hedging possibilities for multi-nationals in USA (such as vanilla options), Spot FX remains the only hedging option for many small businesses. This may be as simple as opening an Oanda account and taking opposite positions against accounts receivable. In such a scenario, the profit or loss from such a position is a wash against the real business money flows, in which case, a high amount of leverage can be useful. The decrease in leverage was a knee-jerk reaction to quell the rampant fraud, but the real effect was simply that back alley dicers as we call them in FX, simply moved their accounts to London. The decrease in leverage has no economic benefit, doesn’t serve any purpose other than forcing billions of dollars outside of USA. The argument that 500:1 leverage is for gamblers is very weak, these people don’t understand FX. In the stock market it might be ridiculous, however FX doesn’t move that much. In a typical week the EUR/USD may move 1% or 2% - in extreme cases up to 5%, such as during Brexit when the GBP/USD moved 9%. Compared to any other market, this is very small. The brightest example provided by Google (GOOG) which is up 1,415.39% since IPO. This is an impossibility in FX if the EUR/USD is up 50% in a year, it will likely be down 50% the next. Currencies have a tendency to revert to the mean, and even when they trend, the changes are slight on a percentage basis. For this reason, if a small degree of leverage was used as in stocks, it would be impossible to ever turn a profit by trading FX. And, incidentally, increased leverage will support the Fed’s QE program as Liquidity Providers (LPs) extend credit to US Dollar markets they are effectively creating credit. The current leverage policy on FX is contrary to the Fed’s QE program.
3) Delete the Hedging rule. The most ridiculous of all rules is the so called ‘hedging’ rule that prohibits being long & short the same currency on the same account. Regulators claim it’s a good rule because if you are long and short you are effectively flat, but it charges a fee (the spread) and thus, the rule saves money to customers. This is warped and twisted thinking, incoherent and not based on reality similar to their statement that “Foreign Futures is Forex” no, Foreign Futures are Foreign Futures. FOREX is Foreign Exchange of currencies, or spot trading, and NOT futures. FOREX is always traded ‘off-exchange’ by the nature of what it is. FOREX is a banking market, traded by interbank FOREX dealers not on a futures exchange like the CME. What traders mostly complain about this rule if someone wants to hedge, why not let them? If the brokers EXPLAIN to customers this flawed logic, that’s one thing that’s acceptable. Make customers tick a box that they understand the potential for unnecessary costs- but allow them to do it! Because practically, when trading FOREX, you need hedging. This rule simply forced many strategies to stop working completely, or move overseas.
4) Bring back the PAMM. PAMM stands for Percent Allocation Management Module. PAMM is the FOREX equivalent of a futures ‘block account.’ The problem is for Forex managers, trading many client accounts as one. It’s a simple solution independent software combines many small accounts into one ‘master’ account, which enables the manager to trade one account vs. hundreds or thousands of individual accounts.
5) Reduce the net-cap for RFEDS to a reasonable $5 Million if they are STP (Agent only). FXCM, Oanda, and Gain Capital have a Monopoly on retail FX. And, even though FXCM has been under DOJ investigation, hundreds of client lawsuits, countless fines from the CFTC, NFA, and other regulatory bodies, hundreds upon hundreds of customer complaints; they continue to be one of the few options for retail traders which practically, is no option. The chances of making money at FXCM are slim to none, as they say in FX you have 2 hopes; no hope and Bob Hope. FXCM takes screwing the customer to a ‘new fangled art form’
6) Allow Broker Dealers to offer FX. The NFA is no more an FX regulator than FINRA. FX should be regulated on a banking level, perhaps by the Fed. It was thought that currencies are financial commodities, and since FX futures were already offered at the CME, the CFTC seemed to be the natural regulator for FX. A currency is not a security, but it does meet the definition of a security if you invest in it. Although the IRS considers investment in foreign currency as debt under some rules; some investors will place their funds in a currency with the intent of appreciation of capital. Or to put it differently, they are afraid of the deterioration of value of their domestic functional currency. This was obvious before “Brexit” when lines formed outside of banks from customers who wanted to exchange their British Pounds for US Dollars, Euros, and Swiss Francs. In any case, the securities business is in many aspects far more complex than commodities. Securities brokers, broker dealers, and other FINRA licensed organizations are also under far greater scrutiny, have higher costs of compliance, have more compliance related staff, etc. Why keep their noses out of the feeding trough?
7) Stop intimidating foreign brokers through FATCA. There isn’t any law that strictly prohibits a retail US Citizen from opening a foreign FX account. However, since many larger institutions in general are afraid they will be “Swissed” hitman style by goons as described in Confessions of an Economic Hitman, they simply do not allow US Citizens to open accounts. US Citizens have become persona non-grata in the FX world. US Citizens can’t even visit their websites. In order to allow the foreign brokers to fairly compete with new US broker upstarts, this practice should be stopped. If the tax code is to be overhauled, visit FATCA and specifically, make FATCA reporting easy and simple; most importantly for institutions. TD Ameritrade doesn’t whine and complain about issuing 1099s at the end of the year it’s mostly automated. It’s been “Turbo Taxed” by accounting departments. It should be just as easy for foreign institutions to report US citizen taxpayer obligations. Oh and by the way this will also stop foreign non-reporting of income, which previously was a big black hole!
Practically, the majority of rules apply only to retail investors which in today’s environment, means 99% of the population. The rules don’t apply to the one percenters or in FOREX LINGO QEPs, ECPs. Leverage still applies, but ECPs can easily open accounts in London, Singapore, and Sydney legally and circumvent all these rules which are guaranteed to choke any strategy.
Why did Dodd-Frank make all these silly rules?
The reasoning was, that because FX frauds used these tools, they should be eliminated. But this is severely flawed logic that would never work in the real world that would be like saying, let’s bomb a village because one or two criminals live there. Dodd-Frank and the climate in general cleaned up a lot of the fraud thank you. Now the fraud is gone. But instead of harassing legitimate traders and investors, regulators should invest in fraud prevention tools. The list here can be very long. Some suggestions:
A managed reporting system such as the NFA uses for RFEDs like FORTRESS but for CTAs, Hedge Funds, and other CPOs who choose to participate in the verified reporting system. Sites such as myfxbook.com and fxblue.com provide this service technically to traders but there is no auditing function. One of the largest frauds has to do with financial reporting, more specifically, the misreporting of performance numbers. The solution is very simple a centralized reporting system that automatically captures performance data (there are only so many trading venues) and ‘verifies’ these numbers are true and accurate, and also can return statistics such as peak to valley draw downs, etc. Each product can have an ID, similar to an NFA ID, where investors can check in an official database, which is secured and encrypted, all the numbers. Building such a system is extremely cost effective, it would reduce regulatory costs as well, reduce fraud, and boost investor confidence. In fact, it would cause foreigners to invest in USA. Something like this doesn’t exist in Europe. Let’s bring that money into USA, support our markets, support the economy. Wall St. and Chicago should be the trading centers of the world not London. What happened to the American Revolution, that 200 years later we’ll regulate and tax our financial businesses out of America and back to the British? WTF
What would be the effect on the markets if these suggested changes were implemented?
1) There would be competition in retail FX this would make trading better, as competition in any market does. There was competition in the US before Dodd-Frank and in the legitimate FX world (discounting the fraud) there were many legitimate companies that had a good offering.
2) Billions of dollars would flow back to USA to be held by institutions in New York, Chicago, Charlotte, Los Angeles, and others.
3) Instead of a new growth industry of algorithmic FX taking off in foreign countries, it would happen right here at home in Charlotte, Chicago, New York, San Francisco, Atlanta, and in other trading centers.
4) Stabilization of FX markets in general; this will be nebulous to quantify, however it’s not difficult to surmise, that if there is more competition, more volume, and less fees that the FX market will be more stable. Because the US Dollar is the world’s reserve currency that’s really important! Also, it is critical that the United States take a global role in administrating FX markets, because of the USD world reserve status.
Look at a quick practical example. Here’s a strategy that didn’t lose in 4 years of real live trading www.magicfxstrategy.com but it won’t work with the ridiculous US rules. The stock market is going to tank, hedge funds are flat on the year, 11 Trillion is in negative yielding assets. Investors will seek such strategies. But in this case, it will be market centers like London, Singapore, Sydney, Auckland, Limassol, Moscow, and others that will receive the millions of dollars that will pour into such strategies. Why not, make Wall St. the FX capital of the world? Isn’t that the idea of global capitalism?
For a complete pocket guide to everything FOREX Checkout Splitting Pennies Understanding Forex. Makes a great business gift to your accountant, business partner, or Democrat relative that doesn’t understand the way the world works.
How Trump Can Make Billions For America With No Risk
GlobalIntelHub
11-15-16
A simple plan to boost the American financial markets and bring back unknown billions in US Dollars, and to solidify the US Dollar as the only World Reserve Currency
Several simple steps to make money for America Inc. and create an environment for growth at the same time
Trump’s transition team announced the repealing of Dodd-Frank (LOUD CHEERING). This ‘Dodd-Frank’ act is a cancer, it has been eating away at the financial industry and the entire economy, like a wrecking ball smashing what was left of the economy after the housing crash.
One of the abused children of this damage (there were many) was the Currency market, or FOREX. We will here elaborate on key points here for the Trump Administration which no doubt the market will agree with.
Dodd-Frank is a giant Octopus with 15,000 rules and 20,000 + pages there’s probably not a single human being on the planet who has read and understands the entire ‘law’. We will elaborate here on a very specific part of Dodd-Frank, all that pertains to FOREX.
List of steps to take to reform Dodd-Frank by reversing FOREX specific rules, that will boost markets, increase profits, reduce volatility, save on costs & fees, and bring money back to USA:
1) Delete the FIFO rule. FOREX is not futures. There’s absolutely no utility to FIFO as it pertains to FX. Some algorithmic traders may have 100, 200, or 300 orders on an account. Exiting positions in the exact manner that they were entered, in such situation, is impossible. Why should any trader have to exit positions in the same order as they were entered? (Use the Hotel analogy, Trump owns 12 hotels, some are profitable some not why should Trump sell the 1st hotel built and not just the 3 losers?)
2) Increase the leverage. Increased leverage IS NOT correlated to increased risk. The regulators force members to say that an increase in leverage is an increase in risk. This is mathematically and logically incorrect. Increase in leverage MAY increase risk, however it is NOT CORRELATED. For example, if your use of the leverage is for hedging purposes, in this scenario, increased leverage DECREASES risk. There are few hedging possibilities for multi-nationals in USA (such as vanilla options), Spot FX remains the only hedging option for many small businesses. This may be as simple as opening an Oanda account and taking opposite positions against accounts receivable. In such a scenario, the profit or loss from such a position is a wash against the real business money flows, in which case, a high amount of leverage can be useful. The decrease in leverage was a knee-jerk reaction to quell the rampant fraud, but the real effect was simply that back alley dicers as we call them in FX, simply moved their accounts to London. The decrease in leverage has no economic benefit, doesn’t serve any purpose other than forcing billions of dollars outside of USA. The argument that 500:1 leverage is for gamblers is very weak, these people don’t understand FX. In the stock market it might be ridiculous, however FX doesn’t move that much. In a typical week the EUR/USD may move 1% or 2% - in extreme cases up to 5%, such as during Brexit when the GBP/USD moved 9%. Compared to any other market, this is very small. The brightest example provided by Google (GOOG) which is up 1,415.39% since IPO. This is an impossibility in FX if the EUR/USD is up 50% in a year, it will likely be down 50% the next. Currencies have a tendency to revert to the mean, and even when they trend, the changes are slight on a percentage basis. For this reason, if a small degree of leverage was used as in stocks, it would be impossible to ever turn a profit by trading FX. And, incidentally, increased leverage will support the Fed’s QE program as Liquidity Providers (LPs) extend credit to US Dollar markets they are effectively creating credit. The current leverage policy on FX is contrary to the Fed’s QE program.
3) Delete the Hedging rule. The most ridiculous of all rules is the so called ‘hedging’ rule that prohibits being long & short the same currency on the same account. Regulators claim it’s a good rule because if you are long and short you are effectively flat, but it charges a fee (the spread) and thus, the rule saves money to customers. This is warped and twisted thinking, incoherent and not based on reality similar to their statement that “Foreign Futures is Forex” no, Foreign Futures are Foreign Futures. FOREX is Foreign Exchange of currencies, or spot trading, and NOT futures. FOREX is always traded ‘off-exchange’ by the nature of what it is. FOREX is a banking market, traded by interbank FOREX dealers not on a futures exchange like the CME. What traders mostly complain about this rule if someone wants to hedge, why not let them? If the brokers EXPLAIN to customers this flawed logic, that’s one thing that’s acceptable. Make customers tick a box that they understand the potential for unnecessary costs- but allow them to do it! Because practically, when trading FOREX, you need hedging. This rule simply forced many strategies to stop working completely, or move overseas.
4) Bring back the PAMM. PAMM stands for Percent Allocation Management Module. PAMM is the FOREX equivalent of a futures ‘block account.’ The problem is for Forex managers, trading many client accounts as one. It’s a simple solution independent software combines many small accounts into one ‘master’ account, which enables the manager to trade one account vs. hundreds or thousands of individual accounts.
5) Reduce the net-cap for RFEDS to a reasonable $5 Million if they are STP (Agent only). FXCM, Oanda, and Gain Capital have a Monopoly on retail FX. And, even though FXCM has been under DOJ investigation, hundreds of client lawsuits, countless fines from the CFTC, NFA, and other regulatory bodies, hundreds upon hundreds of customer complaints; they continue to be one of the few options for retail traders which practically, is no option. The chances of making money at FXCM are slim to none, as they say in FX you have 2 hopes; no hope and Bob Hope. FXCM takes screwing the customer to a ‘new fangled art form’
6) Allow Broker Dealers to offer FX. The NFA is no more an FX regulator than FINRA. FX should be regulated on a banking level, perhaps by the Fed. It was thought that currencies are financial commodities, and since FX futures were already offered at the CME, the CFTC seemed to be the natural regulator for FX. A currency is not a security, but it does meet the definition of a security if you invest in it. Although the IRS considers investment in foreign currency as debt under some rules; some investors will place their funds in a currency with the intent of appreciation of capital. Or to put it differently, they are afraid of the deterioration of value of their domestic functional currency. This was obvious before “Brexit” when lines formed outside of banks from customers who wanted to exchange their British Pounds for US Dollars, Euros, and Swiss Francs. In any case, the securities business is in many aspects far more complex than commodities. Securities brokers, broker dealers, and other FINRA licensed organizations are also under far greater scrutiny, have higher costs of compliance, have more compliance related staff, etc. Why keep their noses out of the feeding trough?
7) Stop intimidating foreign brokers through FATCA. There isn’t any law that strictly prohibits a retail US Citizen from opening a foreign FX account. However, since many larger institutions in general are afraid they will be “Swissed” hitman style by goons as described in Confessions of an Economic Hitman, they simply do not allow US Citizens to open accounts. US Citizens have become persona non-grata in the FX world. US Citizens can’t even visit their websites. In order to allow the foreign brokers to fairly compete with new US broker upstarts, this practice should be stopped. If the tax code is to be overhauled, visit FATCA and specifically, make FATCA reporting easy and simple; most importantly for institutions. TD Ameritrade doesn’t whine and complain about issuing 1099s at the end of the year it’s mostly automated. It’s been “Turbo Taxed” by accounting departments. It should be just as easy for foreign institutions to report US citizen taxpayer obligations. Oh and by the way this will also stop foreign non-reporting of income, which previously was a big black hole!
Practically, the majority of rules apply only to retail investors which in today’s environment, means 99% of the population. The rules don’t apply to the one percenters or in FOREX LINGO QEPs, ECPs. Leverage still applies, but ECPs can easily open accounts in London, Singapore, and Sydney legally and circumvent all these rules which are guaranteed to choke any strategy.
Why did Dodd-Frank make all these silly rules?
The reasoning was, that because FX frauds used these tools, they should be eliminated. But this is severely flawed logic that would never work in the real world that would be like saying, let’s bomb a village because one or two criminals live there. Dodd-Frank and the climate in general cleaned up a lot of the fraud thank you. Now the fraud is gone. But instead of harassing legitimate traders and investors, regulators should invest in fraud prevention tools. The list here can be very long. Some suggestions:
A managed reporting system such as the NFA uses for RFEDs like FORTRESS but for CTAs, Hedge Funds, and other CPOs who choose to participate in the verified reporting system. Sites such as myfxbook.com and fxblue.com provide this service technically to traders but there is no auditing function. One of the largest frauds has to do with financial reporting, more specifically, the misreporting of performance numbers. The solution is very simple a centralized reporting system that automatically captures performance data (there are only so many trading venues) and ‘verifies’ these numbers are true and accurate, and also can return statistics such as peak to valley draw downs, etc. Each product can have an ID, similar to an NFA ID, where investors can check in an official database, which is secured and encrypted, all the numbers. Building such a system is extremely cost effective, it would reduce regulatory costs as well, reduce fraud, and boost investor confidence. In fact, it would cause foreigners to invest in USA. Something like this doesn’t exist in Europe. Let’s bring that money into USA, support our markets, support the economy. Wall St. and Chicago should be the trading centers of the world not London. What happened to the American Revolution, that 200 years later we’ll regulate and tax our financial businesses out of America and back to the British? WTF
What would be the effect on the markets if these suggested changes were implemented?
1) There would be competition in retail FX this would make trading better, as competition in any market does. There was competition in the US before Dodd-Frank and in the legitimate FX world (discounting the fraud) there were many legitimate companies that had a good offering.
2) Billions of dollars would flow back to USA to be held by institutions in New York, Chicago, Charlotte, Los Angeles, and others.
3) Instead of a new growth industry of algorithmic FX taking off in foreign countries, it would happen right here at home in Charlotte, Chicago, New York, San Francisco, Atlanta, and in other trading centers.
4) Stabilization of FX markets in general; this will be nebulous to quantify, however it’s not difficult to surmise, that if there is more competition, more volume, and less fees that the FX market will be more stable. Because the US Dollar is the world’s reserve currency that’s really important! Also, it is critical that the United States take a global role in administrating FX markets, because of the USD world reserve status.
Look at a quick practical example. Here’s a strategy that didn’t lose in 4 years of real live trading www.magicfxstrategy.com but it won’t work with the ridiculous US rules. The stock market is going to tank, hedge funds are flat on the year, 11 Trillion is in negative yielding assets. Investors will seek such strategies. But in this case, it will be market centers like London, Singapore, Sydney, Auckland, Limassol, Moscow, and others that will receive the millions of dollars that will pour into such strategies. Why not, make Wall St. the FX capital of the world? Isn’t that the idea of global capitalism?
For a complete pocket guide to everything FOREX Checkout Splitting Pennies Understanding Forex. Makes a great business gift to your accountant, business partner, or Democrat relative that doesn’t understand the way the world works.
-
Blue Frost
- SUPER VIP
- Posts: 98099
- Joined: May 14th, 2012, 1:01 am
- Location: Yodenheim
Re: The Coming Financial Meltdown
Ford today announced their truck production in Mexico would be returning to Ohio so Trump hounding them over the election has helped some already. What he had against Ford i don't know, but he was singling them out a lot, there is other car companies down there.
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
Re: The Coming Financial Meltdown
I have a friend in Ohio with almost two masters degreesa nd he hasn't been able to get a job there in over a year now. Some of these formerly democratic states are hurting so much from Obama's evil doings that they switched to republican.
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Blue Frost
- SUPER VIP
- Posts: 98099
- Joined: May 14th, 2012, 1:01 am
- Location: Yodenheim
Re: The Coming Financial Meltdown
Since Trump was elected the Markets are booming, even Goldman Sacks which put him down is saying we will have a good year to come.
I don't trust any of this though, it might be good for a while then fall thanks to policy that takes time to be into effect from Obama.
I don't trust any of this though, it might be good for a while then fall thanks to policy that takes time to be into effect from Obama.
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
Re: The Coming Financial Meltdown
Even in Canada after the Obama disaster I have a lot of hope in Trump. I just hope that he comes through.
Get Ready For Higher Interest Rates, A Major Recession And A Giant Stock Crash
Since Donald Trump's victory on election night we have seen the worst bond crash in 15 years. Global bond investors have seen trillions of dollars of wealth wiped out since November 8th, and analysts are warning of another tough week ahead.
The general consensus in the investing community is that a Trump administration will mean much higher inflation, and as a result investors are already starting to demand higher interest rates. Unfortunately for all of us, history has shown that higher interest rates always cause an economic slowdown.
And this makes perfect sense, because economic activity naturally slows down when it becomes more expensive to borrow money. The Obama administration had already set up the next president for a major recession anyway, but now this bond crash threatens to bring it on sooner rather than later.
For those that are not familiar with the bond market, when yields go up bond prices go down. And when bond prices go down, that is bad news for economic growth.
So we generally don't want yields to go up.
Unfortunately, yields have been absolutely soaring over the past couple of weeks, and the yield on 10 year Treasury notes has now jumped "one full percentage point since July"...
The 10-year Treasury yield jumped to 2.36% in late trading on Friday, the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!
The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads - including Yellen's "relatively soon" - have pushed the odds of a rate hike to 98%.
As I noted the other day, so many things in our financial system are tied to yields on U.S. Treasury notes. Just look at what is happening to mortgages. As Wolf Richter has noted, the average rate on 30 year mortgages is shooting into the stratosphere...
The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That's up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month "on a short list of 4 worst months in more than a decade."
If mortgage rates continue to shoot higher, there will be another housing crash.
Rates on auto loans, credit cards and student loans will also be affected. Throughout our economic system it will become much more costly to borrow money, and that will inevitably slow the overall economy down.
Why bond investors are so on edge these days is because of statements such as this one from Steve Bannon...
In a nascent administration that seems, at best, random in its beliefs, Bannon can seem to be not just a focused voice, but almost a messianic one:
"Like [Andrew] Jackson's populism, we're going to build an entirely new political movement," he says. "It's everything related to jobs. The conservatives are going to go crazy. I'm the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it's the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We're just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution -- conservatives, plus populists, in an economic nationalist movement."
Steve Bannon is going to be one of the most influential voices in the new Trump administration, and he is absolutely determined to get this "trillion dollar infrastructure plan" through Congress.
And that is going to mean a lot more borrowing and a lot more spending for a government that is already on pace to add 2.4 trillion dollars to the national debt this fiscal year.
Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down. It is being projected that we will see a sixth straight decline in year-over-year earnings for the S&P 500, and industrial production has now contracted for 14 months in a row.
The truth is that the economy has been barely treading water for quite some time now, and it isn't going to take much to push us over the edge. The following comes from Lance Roberts...
With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American's, there is not a lot of wiggle room for policy mistakes.
Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later.
Yes, the stock market soared immediately following Trump's election, but it wasn't because economic conditions actually improved.
If you look at history, a stock market crash almost always follows a major bond crash. So if bond prices keep declining rapidly that is going to be a very ominous sign for stock traders.
And history has also shown us that no bull market can survive a major recession. If the economy suffers a major downturn early in the Trump administration, it is inevitable that stock prices will follow.
The waning days of the Obama administration have set us up perfectly for higher interest rates, a major recession and a giant stock market crash.
Of course any problems that occur after January 20th, 2017 will be blamed on Trump, but the truth is that Obama will be far more responsible for what happens than Trump will be.
Right now so many people have been lulled into a sense of complacency because Donald Trump won the election.
That is an enormous mistake.
A shaking has already begun in the financial world, and this shaking could easily become an avalanche.
Now is not a time to party. Rather, it is time to batten down the hatches and to prepare for very rough seas ahead.
All of the things that so many experts warned were coming may have been delayed slightly, but without a doubt they are still on the way.
So get prepared while you still can, because time is running out
Read more at http://www.prophecynewswatch.com/articl ... B4oHpzL.99
Get Ready For Higher Interest Rates, A Major Recession And A Giant Stock Crash
Since Donald Trump's victory on election night we have seen the worst bond crash in 15 years. Global bond investors have seen trillions of dollars of wealth wiped out since November 8th, and analysts are warning of another tough week ahead.
The general consensus in the investing community is that a Trump administration will mean much higher inflation, and as a result investors are already starting to demand higher interest rates. Unfortunately for all of us, history has shown that higher interest rates always cause an economic slowdown.
And this makes perfect sense, because economic activity naturally slows down when it becomes more expensive to borrow money. The Obama administration had already set up the next president for a major recession anyway, but now this bond crash threatens to bring it on sooner rather than later.
For those that are not familiar with the bond market, when yields go up bond prices go down. And when bond prices go down, that is bad news for economic growth.
So we generally don't want yields to go up.
Unfortunately, yields have been absolutely soaring over the past couple of weeks, and the yield on 10 year Treasury notes has now jumped "one full percentage point since July"...
The 10-year Treasury yield jumped to 2.36% in late trading on Friday, the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!
The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads - including Yellen's "relatively soon" - have pushed the odds of a rate hike to 98%.
As I noted the other day, so many things in our financial system are tied to yields on U.S. Treasury notes. Just look at what is happening to mortgages. As Wolf Richter has noted, the average rate on 30 year mortgages is shooting into the stratosphere...
The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That's up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month "on a short list of 4 worst months in more than a decade."
If mortgage rates continue to shoot higher, there will be another housing crash.
Rates on auto loans, credit cards and student loans will also be affected. Throughout our economic system it will become much more costly to borrow money, and that will inevitably slow the overall economy down.
Why bond investors are so on edge these days is because of statements such as this one from Steve Bannon...
In a nascent administration that seems, at best, random in its beliefs, Bannon can seem to be not just a focused voice, but almost a messianic one:
"Like [Andrew] Jackson's populism, we're going to build an entirely new political movement," he says. "It's everything related to jobs. The conservatives are going to go crazy. I'm the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it's the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We're just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution -- conservatives, plus populists, in an economic nationalist movement."
Steve Bannon is going to be one of the most influential voices in the new Trump administration, and he is absolutely determined to get this "trillion dollar infrastructure plan" through Congress.
And that is going to mean a lot more borrowing and a lot more spending for a government that is already on pace to add 2.4 trillion dollars to the national debt this fiscal year.
Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down. It is being projected that we will see a sixth straight decline in year-over-year earnings for the S&P 500, and industrial production has now contracted for 14 months in a row.
The truth is that the economy has been barely treading water for quite some time now, and it isn't going to take much to push us over the edge. The following comes from Lance Roberts...
With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American's, there is not a lot of wiggle room for policy mistakes.
Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later.
Yes, the stock market soared immediately following Trump's election, but it wasn't because economic conditions actually improved.
If you look at history, a stock market crash almost always follows a major bond crash. So if bond prices keep declining rapidly that is going to be a very ominous sign for stock traders.
And history has also shown us that no bull market can survive a major recession. If the economy suffers a major downturn early in the Trump administration, it is inevitable that stock prices will follow.
The waning days of the Obama administration have set us up perfectly for higher interest rates, a major recession and a giant stock market crash.
Of course any problems that occur after January 20th, 2017 will be blamed on Trump, but the truth is that Obama will be far more responsible for what happens than Trump will be.
Right now so many people have been lulled into a sense of complacency because Donald Trump won the election.
That is an enormous mistake.
A shaking has already begun in the financial world, and this shaking could easily become an avalanche.
Now is not a time to party. Rather, it is time to batten down the hatches and to prepare for very rough seas ahead.
All of the things that so many experts warned were coming may have been delayed slightly, but without a doubt they are still on the way.
So get prepared while you still can, because time is running out
Read more at http://www.prophecynewswatch.com/articl ... B4oHpzL.99
Re: The Coming Financial Meltdown
Obama has spent his 8 years in office doing everything he could to destroy the American economy. Hopefully Donald Trump will be able to undo the damage Obama has brought on the people who voted for him.Will Obama start world war 3 to finish off America completely ? I don't believe that the USA has a chance with Obama as disaster in chief. I also think Obama is behind this accusing Russia of messing with the election. i do believe that Obama is outraged that Putin is quickly wiping out Obama's muslim terrorists.
Lessons From Obama: Sacrifice the Future For Short-Term Political Gain
News Image BY MICHAEL SNYDER/ECONOMIC COLLAPSE BLOG DECEMBER 05, 2016
Barack Obama is one of the biggest "Keynesians" of all time, but unfortunately most Americans don't even understand what that means.
In this article, I am going to share with you the primary reason why Barack Obama has been able to prop up the U.S. economy over the past eight years.
If Barack Obama had not taken the extreme measures that he did, we would be in the midst of a historic economic depression right now. But by propping things up in the short-term, he has absolutely demolished our long-term economic future.
But like most politicians, Obama has been willing to sacrifice the future for short-term political gain.
If you take any basic college course in economics, you are going to learn about John Maynard Keynes. Without a doubt, Keynes was one of the most famous economists of the 20th century, and one of the things that he believed was that governments should go into debt and spend more money when an economic downturn strikes.
By injecting additional funds into the economy during a time of crisis, he believed that the severity of recessions and depressions could be reduced.
This approach ultimately become known as "Keynesian economics", and in the post-World War II era virtually the entire world embraced it at least to some degree. Here is more on Keynes from Investopedia...
An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynes advocated increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the Depression.
Subsequently, the term "Keynesian economics" was used to refer to the concept that optimal economic performance could be achieved - and economic slumps prevented - by influencing aggregate demand through activist stabilization and economic intervention policies by the government. Keynesian economics is considered to be a "demand-side" theory that focuses on changes in the economy over the short run.
Keynesian economists correctly point out that there is a "multiplier effect" to government spending. In other words, when the government spends money it ends up in the hands of ordinary people.
In turn, those people spend that money on various goods and services that they need, thus boosting overall economic activity.
And the more the money circulates, the more the economy is stimulated. So one dollar of additional government spending does not just add one dollar to GDP.
Rather, the impact on GDP is often significantly greater than that.
Of course the bad news is that whenever the government borrows money it is stealing consumption from the future.
So we are literally destroying the future that our children and our grandchildren were supposed to have in order to make the present look a little bit brighter.
When Barack Obama entered the White House, the U.S. was in the midst of the worst financial crisis since the Great Depression.
The Bush administration had already begun to ramp up spending, but Barack Obama took "government stimulus" to ridiculous new levels.
The national debt has risen by an average of more than 1.1 trillion dollars a year while Obama has been in charge, and this fiscal year we are on pace to add more than 2 trillion dollars to the debt.
At this moment, the U.S. national debt is a whopping $19,901,545,151,126.51, and it will cross the 20 trillion dollar mark by the time Donald Trump is inaugurated on January 20th.
But when Barack Obama was inaugurated, the national debt was only 10.6 trillion dollars. That means that we have added about 9.3 trillion dollars to the debt since that time.
So we have borrowed and spent 9.3 trillion dollars under Obama that we did not have. But because of the "multiplier effect", that 9.3 trillion dollars actually had a far greater impact on the U.S. economy.
Let's be conservative and just double that number. So that would give us an 18.6 trillion dollar overall impact on U.S. economic activity. Spread over eight years, that comes to an average GDP impact of 2.325 trillion dollars a year.
But over the last eight years U.S. GDP has only been averaging about 16 trillion dollars a year. So if you took away 2.3 trillion dollars a year, that would be about one-eighth of our entire economy.
In other words, without all of this debt that Barack Obama and Congress have been getting us into, we would be in the worst economic depression in U.S. history right now.
And I haven't even factored in state and local government debt, corporate debt or household debt. The truth is that I am not exaggerating one bit when I say that we are enjoying a debt-fueled standard of living that we simply do not deserve.
But even with all of this debt, the U.S. economy has still not been performing really well. In fact, Barack Obama is going to be the only president in U.S. history to not have a single year when U.S. GDP grew by at least three percent.
Despite what many in the mainstream media are telling you, the reality of the matter is that Donald Trump is going to inherit an economy that is deeply troubled.
If you doubt this, please see my previous article entitled "11 Very Depressing Economic Realities That Donald Trump Will Inherit From Barack Obama".
Donald Trump is talking about cutting taxes and reducing regulations, and all of those things are good, but ultimately those measures are not going to matter that much.
What is going to matter is what Donald Trump decides to do about our exploding debt.
If Donald Trump wants the U.S. economy to continue to remain at least somewhat stable in the short-term, he is going to have to keep piling up debt like Obama has.
Because if Trump and the Republicans decide that they want to get our debt under control, that will plunge us into a horrifying economic depression almost immediately.
But if Donald Trump continues to steal money from future generations of Americans at the same pace that Barack Obama has been doing, he will literally be destroying the future of America.
It will be a crime on a scale that is almost beyond words, and if they get a chance to do it, future generations of Americans will look back and curse him for what he has done to us.
So Donald Trump is really in a no-win situation when it comes to the economy.
The only way that he can match Obama's performance is to do what Obama did, but by doing so he would literally be killing the future.
As a nation we have been consuming far more wealth than we produce for a very, very long time, and the only way that we have been able to do this is because we have been able to go into so much debt.
But now a day of reckoning is fast approaching, and I am not sure if Donald Trump even realizes that he will soon be faced with some incredibly heartbreaking choices.
Read more at http://www.prophecynewswatch.com/articl ... Pk4bpuR.99
Lessons From Obama: Sacrifice the Future For Short-Term Political Gain
News Image BY MICHAEL SNYDER/ECONOMIC COLLAPSE BLOG DECEMBER 05, 2016
Barack Obama is one of the biggest "Keynesians" of all time, but unfortunately most Americans don't even understand what that means.
In this article, I am going to share with you the primary reason why Barack Obama has been able to prop up the U.S. economy over the past eight years.
If Barack Obama had not taken the extreme measures that he did, we would be in the midst of a historic economic depression right now. But by propping things up in the short-term, he has absolutely demolished our long-term economic future.
But like most politicians, Obama has been willing to sacrifice the future for short-term political gain.
If you take any basic college course in economics, you are going to learn about John Maynard Keynes. Without a doubt, Keynes was one of the most famous economists of the 20th century, and one of the things that he believed was that governments should go into debt and spend more money when an economic downturn strikes.
By injecting additional funds into the economy during a time of crisis, he believed that the severity of recessions and depressions could be reduced.
This approach ultimately become known as "Keynesian economics", and in the post-World War II era virtually the entire world embraced it at least to some degree. Here is more on Keynes from Investopedia...
An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynes advocated increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the Depression.
Subsequently, the term "Keynesian economics" was used to refer to the concept that optimal economic performance could be achieved - and economic slumps prevented - by influencing aggregate demand through activist stabilization and economic intervention policies by the government. Keynesian economics is considered to be a "demand-side" theory that focuses on changes in the economy over the short run.
Keynesian economists correctly point out that there is a "multiplier effect" to government spending. In other words, when the government spends money it ends up in the hands of ordinary people.
In turn, those people spend that money on various goods and services that they need, thus boosting overall economic activity.
And the more the money circulates, the more the economy is stimulated. So one dollar of additional government spending does not just add one dollar to GDP.
Rather, the impact on GDP is often significantly greater than that.
Of course the bad news is that whenever the government borrows money it is stealing consumption from the future.
So we are literally destroying the future that our children and our grandchildren were supposed to have in order to make the present look a little bit brighter.
When Barack Obama entered the White House, the U.S. was in the midst of the worst financial crisis since the Great Depression.
The Bush administration had already begun to ramp up spending, but Barack Obama took "government stimulus" to ridiculous new levels.
The national debt has risen by an average of more than 1.1 trillion dollars a year while Obama has been in charge, and this fiscal year we are on pace to add more than 2 trillion dollars to the debt.
At this moment, the U.S. national debt is a whopping $19,901,545,151,126.51, and it will cross the 20 trillion dollar mark by the time Donald Trump is inaugurated on January 20th.
But when Barack Obama was inaugurated, the national debt was only 10.6 trillion dollars. That means that we have added about 9.3 trillion dollars to the debt since that time.
So we have borrowed and spent 9.3 trillion dollars under Obama that we did not have. But because of the "multiplier effect", that 9.3 trillion dollars actually had a far greater impact on the U.S. economy.
Let's be conservative and just double that number. So that would give us an 18.6 trillion dollar overall impact on U.S. economic activity. Spread over eight years, that comes to an average GDP impact of 2.325 trillion dollars a year.
But over the last eight years U.S. GDP has only been averaging about 16 trillion dollars a year. So if you took away 2.3 trillion dollars a year, that would be about one-eighth of our entire economy.
In other words, without all of this debt that Barack Obama and Congress have been getting us into, we would be in the worst economic depression in U.S. history right now.
And I haven't even factored in state and local government debt, corporate debt or household debt. The truth is that I am not exaggerating one bit when I say that we are enjoying a debt-fueled standard of living that we simply do not deserve.
But even with all of this debt, the U.S. economy has still not been performing really well. In fact, Barack Obama is going to be the only president in U.S. history to not have a single year when U.S. GDP grew by at least three percent.
Despite what many in the mainstream media are telling you, the reality of the matter is that Donald Trump is going to inherit an economy that is deeply troubled.
If you doubt this, please see my previous article entitled "11 Very Depressing Economic Realities That Donald Trump Will Inherit From Barack Obama".
Donald Trump is talking about cutting taxes and reducing regulations, and all of those things are good, but ultimately those measures are not going to matter that much.
What is going to matter is what Donald Trump decides to do about our exploding debt.
If Donald Trump wants the U.S. economy to continue to remain at least somewhat stable in the short-term, he is going to have to keep piling up debt like Obama has.
Because if Trump and the Republicans decide that they want to get our debt under control, that will plunge us into a horrifying economic depression almost immediately.
But if Donald Trump continues to steal money from future generations of Americans at the same pace that Barack Obama has been doing, he will literally be destroying the future of America.
It will be a crime on a scale that is almost beyond words, and if they get a chance to do it, future generations of Americans will look back and curse him for what he has done to us.
So Donald Trump is really in a no-win situation when it comes to the economy.
The only way that he can match Obama's performance is to do what Obama did, but by doing so he would literally be killing the future.
As a nation we have been consuming far more wealth than we produce for a very, very long time, and the only way that we have been able to do this is because we have been able to go into so much debt.
But now a day of reckoning is fast approaching, and I am not sure if Donald Trump even realizes that he will soon be faced with some incredibly heartbreaking choices.
Read more at http://www.prophecynewswatch.com/articl ... Pk4bpuR.99
Re: The Coming Financial Meltdown
Are We Being Set Up For A Crash? Stocks Bubbles Of 1929, 2000 And 2007 Repeating
Will the financial bubble that has been rapidly growing ever since Donald Trump won the election suddenly be popped once he takes office? Could it be possible that we are being set up for a horrible financial crash that he will ultimately be blamed for?
The U.S. dollar has been surging, companies are announcing that they are bringing jobs back to the U.S., and we are witnessing perhaps the greatest post-election stock market rally in Wall Street history.
In fact, the Dow, the Nasdaq and the S&P 500 all set new all-time record highs last week. What we are seeing is absolutely unprecedented, and many believe that the good times will continue to roll as we head into 2017.
What has been most surprising to me is how well the stocks of the big Wall Street banks have been doing. It is no secret that those banks poured a tremendous amount of money into Hillary Clinton's campaign, and Donald Trump had some tough things to say about them leading up to election day.
So you wouldn't think that it would be particularly good news for those banks that Trump won the election. However, we seem to be living in "Bizarro World" at the moment, and in so many ways things are happening exactly the opposite of what we would expect. Since Trump's victory, all of the big banking stocks have been skyrocketing...
Financial stocks in particular have been on fire. Citigroup (C) and JPMorgan Chase (JPM) are up about 20% since Donald Trump defeated Hillary Clinton -- and that makes them laggards!
Morgan Stanley (MS) has gained more than 25%. So has troubled Wells Fargo (WFC), despite the lingering fallout from its fake account scandal. Bank of America (BAC) is up more than 30%.
And so is Goldman Sachs (GS) -- the former employer of both Treasury Secretary nominee Steven Mnuchin and Trump chief strategist Steve Bannon.
But are these stock prices justified by the fundamentals?
Of course not, but during times of euphoria the fundamentals never seem to matter much. Stocks were incredibly overvalued before the election, and now they are ridiculously overvalued.
Earlier today, a CNBC article pointed out that the cyclically-adjusted price to earnings ratio has only been higher than it is today at three points in our history...
"The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble," Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.
Newman said even if the market's earnings increase by 10 percent under Trump's policies "we're still dealing with the same picture, overvaluation on a very grand scale."
And of course a historic stock market crash immediately followed each of those three bubbles.
So are we being set up for a huge crash in early 2017?
There are some out there that believe that this is purposely being orchestrated. For example, Mike Adams of Natural News believes that the markets "will be deliberately and destructively imploded under President Trump"...
Right now, the U.S. stock market is surging, with the Dow leaping toward 20,000, a number rooted in fiscal insanity and delusional expectations. There are no fundamentals that support a 20,000 Dow, but fundamentals have long since ceased to matter in a financial world hyperventilating on debt fumes while hallucinating about utopian economic models that will soon prove to generate fools instead of real wealth.
Today I'm going on the record with a prediction that I'll offer with near absolute certainty: The rigged markets that now seem to defy gravity will be deliberately and destructively imploded under President Trump for all the obvious reasons. There will be financial chaos like we've never seen before: Investors leaping off tall buildings, banks declaring extended "holidays" that freeze transactions, and California pensioners slitting their wrists after they discover their promised pension funds were just vaporized by incompetent bureaucrats.
On the other hand, there are others that believe that Trump is just walking into a very bad situation and that a crash would be inevitable no matter who was president.
History tells us that there is no possible way that stock prices can stay at this irrational level indefinitely. But for now a wave of optimism is sweeping the nation, and many of those that are caught up in it will get seriously angry with you if you try to inject a dose of reality into the conversation.
But like I said yesterday, let's hope that the optimists are correct. A survey that was just taken of 600 business executives found that 62 percent of them were optimistic about the U.S. economy over the next 12 months.
Incredibly, that number was sitting at just 38 percent the previous quarter.
For the moment, business leaders seem to be quite thrilled that we have a business executive in the White House.
Hopefully Donald Trump's business experience will translate well to his new position. And it is certainly my hope that he is as successful as possible.
But even during the campaign Trump talked about how stocks were in a giant bubble, and the euphoria that we have seen since his election victory has just made that bubble even larger.
Throughout U.S. history, every giant financial bubble has always ended very badly, and this time around will not be any exception.
Trump may get the blame for it when it bursts, but the truth is that the conditions for the coming crisis have been building for a very, very long time.
Read more at http://www.prophecynewswatch.com/articl ... sSvi6Zl.99
Will the financial bubble that has been rapidly growing ever since Donald Trump won the election suddenly be popped once he takes office? Could it be possible that we are being set up for a horrible financial crash that he will ultimately be blamed for?
The U.S. dollar has been surging, companies are announcing that they are bringing jobs back to the U.S., and we are witnessing perhaps the greatest post-election stock market rally in Wall Street history.
In fact, the Dow, the Nasdaq and the S&P 500 all set new all-time record highs last week. What we are seeing is absolutely unprecedented, and many believe that the good times will continue to roll as we head into 2017.
What has been most surprising to me is how well the stocks of the big Wall Street banks have been doing. It is no secret that those banks poured a tremendous amount of money into Hillary Clinton's campaign, and Donald Trump had some tough things to say about them leading up to election day.
So you wouldn't think that it would be particularly good news for those banks that Trump won the election. However, we seem to be living in "Bizarro World" at the moment, and in so many ways things are happening exactly the opposite of what we would expect. Since Trump's victory, all of the big banking stocks have been skyrocketing...
Financial stocks in particular have been on fire. Citigroup (C) and JPMorgan Chase (JPM) are up about 20% since Donald Trump defeated Hillary Clinton -- and that makes them laggards!
Morgan Stanley (MS) has gained more than 25%. So has troubled Wells Fargo (WFC), despite the lingering fallout from its fake account scandal. Bank of America (BAC) is up more than 30%.
And so is Goldman Sachs (GS) -- the former employer of both Treasury Secretary nominee Steven Mnuchin and Trump chief strategist Steve Bannon.
But are these stock prices justified by the fundamentals?
Of course not, but during times of euphoria the fundamentals never seem to matter much. Stocks were incredibly overvalued before the election, and now they are ridiculously overvalued.
Earlier today, a CNBC article pointed out that the cyclically-adjusted price to earnings ratio has only been higher than it is today at three points in our history...
"The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble," Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.
Newman said even if the market's earnings increase by 10 percent under Trump's policies "we're still dealing with the same picture, overvaluation on a very grand scale."
And of course a historic stock market crash immediately followed each of those three bubbles.
So are we being set up for a huge crash in early 2017?
There are some out there that believe that this is purposely being orchestrated. For example, Mike Adams of Natural News believes that the markets "will be deliberately and destructively imploded under President Trump"...
Right now, the U.S. stock market is surging, with the Dow leaping toward 20,000, a number rooted in fiscal insanity and delusional expectations. There are no fundamentals that support a 20,000 Dow, but fundamentals have long since ceased to matter in a financial world hyperventilating on debt fumes while hallucinating about utopian economic models that will soon prove to generate fools instead of real wealth.
Today I'm going on the record with a prediction that I'll offer with near absolute certainty: The rigged markets that now seem to defy gravity will be deliberately and destructively imploded under President Trump for all the obvious reasons. There will be financial chaos like we've never seen before: Investors leaping off tall buildings, banks declaring extended "holidays" that freeze transactions, and California pensioners slitting their wrists after they discover their promised pension funds were just vaporized by incompetent bureaucrats.
On the other hand, there are others that believe that Trump is just walking into a very bad situation and that a crash would be inevitable no matter who was president.
History tells us that there is no possible way that stock prices can stay at this irrational level indefinitely. But for now a wave of optimism is sweeping the nation, and many of those that are caught up in it will get seriously angry with you if you try to inject a dose of reality into the conversation.
But like I said yesterday, let's hope that the optimists are correct. A survey that was just taken of 600 business executives found that 62 percent of them were optimistic about the U.S. economy over the next 12 months.
Incredibly, that number was sitting at just 38 percent the previous quarter.
For the moment, business leaders seem to be quite thrilled that we have a business executive in the White House.
Hopefully Donald Trump's business experience will translate well to his new position. And it is certainly my hope that he is as successful as possible.
But even during the campaign Trump talked about how stocks were in a giant bubble, and the euphoria that we have seen since his election victory has just made that bubble even larger.
Throughout U.S. history, every giant financial bubble has always ended very badly, and this time around will not be any exception.
Trump may get the blame for it when it bursts, but the truth is that the conditions for the coming crisis have been building for a very, very long time.
Read more at http://www.prophecynewswatch.com/articl ... sSvi6Zl.99
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Blue Frost
- SUPER VIP
- Posts: 98099
- Joined: May 14th, 2012, 1:01 am
- Location: Yodenheim
Re: The Coming Financial Meltdown
I think it's already melted down.
They can write i owe so much, but I owe nothing since I pay my debts, and don't have any.
Most of that is personal debt anyhow.
They can write i owe so much, but I owe nothing since I pay my debts, and don't have any.
Most of that is personal debt anyhow.
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
Re: The Coming Financial Meltdown
Hopefully Trump can turn this around. I believe a lot of people see Trump as America's hope. I just finished reading The Art Of The Deal. Donald Trump is one very smart man.
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Blue Frost
- SUPER VIP
- Posts: 98099
- Joined: May 14th, 2012, 1:01 am
- Location: Yodenheim
Re: The Coming Financial Meltdown
He is smart, and since government is a business he has the background more than most have.
"Being alone isn't what hurts. It's when the people around you make you feel alone" ~ Naruto Uzumaki, an Anime Character
Re: The Coming Financial Meltdown
If this is true then what is Justin Trudeau doing throwing Canadian tax payers money around like a madman ? I imagine that his handlers want Canada's economy to crash. I highly doubt that our substitute drama teacher Prime minister Trudeau really has the brains to think up anything himself.
Is A Great Crash Coming? The Laws Of Economics Cannot Be Defied Forever
Current stock market valuations are not sustainable. If there is one thing that I want you to remember from this article, it is that cold, hard fact.
In 1929, 2000 and 2008, stock prices soared to absolutely absurd levels just before horrible stock market crashes.
What goes up must eventually come down, and the stock market bubble of today will be no exception.
In fact, virtually everyone in the financial community acknowledges that stock prices are irrationally high right now.
Some are suggesting that there is still time to jump in and make money before the crash comes, while others are recommending a much more cautious approach.
But what almost everyone agrees on is the fact that stocks cannot go up like this forever.
On Tuesday, the Dow, the S&P 500 and the Nasdaq all set brand new record highs once again. Overall, U.S. stocks are now up more than 10 percent since the election, and this is probably the greatest post-election stock market rally in our entire history.
But stocks were already tremendously overvalued before the election, and at this point stock prices have reached a level of ridiculousness only matched a couple of times before in the past 100 years.
Only the most extreme optimists will try to tell you that stock prices can stay this disconnected from economic reality indefinitely.
We are in the midst of one of the most outrageous stock market bubbles of all time, and as MarketWatch has noted, all stock market bubbles eventually burst...
The U.S. stock market at this level reflects a combination of great demand, great complacency, and great greed. Stocks are clearly in a bubble, and like all bubbles, this one is about to burst.
If corporations were making tremendous amounts of money, rapidly rising stock prices would make logical sense.
But that is not the case at all. Corporate earnings for the fourth quarter of 2016 were actually quite dismal, and this disconnect between Wall Street and economic reality is starting to really bug financial analysts such as Brian Sozzi...
The S&P 500 has gone 89 straight sessions without a 1% decline. Considering that Corporate America didn't exactly light up on the top and bottom lines during the fourth quarter, such a streak is rather troublesome.
Granted, the stock market is a forward-looking mechanism that appears to be trading on hopes that Trump's unannounced stimulus and tax plans will be lifting economic growth in 2018.
Even so, the inability of investors to at least acknowledge persistent struggles among companies and ongoing chaos in Washington is starting to become disturbing.
It is a basic fact of economics that stock prices should accurately reflect current and future earnings.
So if corporate earnings are at the same level they were at in 2011, why has the S&P 500 risen by 87 percent since then? The following comes from Wolf Richter...
The S&P 500 stock index edged up to an all-time high of 2,351 on Friday. Total market capitalization of the companies in the index exceeds $20 trillion. That's 106% of US GDP, for just 500 companies! At the end of 2011, the S&P 500 index was at 1,257. Over the five-plus years since then, it has ballooned by 87%!
These are superlative numbers, and you'd expect superlative earnings performance from these companies. Turns out, reality is not that cooperative.
Instead, net income of the S&P 500 companies is now back where it first had been at the end of 2011.
The cyclically adjusted price-to-earnings ratio was originally created by author Robert Shiller, and it is widely regarded as one of the best measures of the true value of stocks in existence.
According to the Guardian, there have only been two times in our entire history when this ratio has been higher.
One was just before the stock market crash of 1929, and the other was just before the bursting of the dotcom bubble...
Traditionally, one of the best yardsticks for whether shares are over-valued or under-valued has been the cyclically adjusted price earnings ratio constructed by the economist Robert Shiller.
This ratio is currently at about 29 and has only twice been higher: in 1929 ahead of the Wall Street Crash, and in the last frantic months of the dotcom bubble of the late 1990s.
We can definitely wish for the current euphoria on Wall Street to last for as long as possible, but let there be absolutely no doubt that it is going to end at some point.
It would take a market decline of 40 or 50 percent to get the cyclically adjusted price-to-earnings ratio back to a level that makes economic sense.
Let us hope that the market does not make such a violent move very rapidly, because that would likely be absolutely crippling for our financial system.
Markets tend to go down a lot faster than they go up, and every other major stock market bubble in U.S. history has ended very badly.
And this bubble is definitely overdue to burst. The bull market that led up to the great crash of 1929 lasted for 2002 days, and this week the current bull market will finally exceed that record.
Trying to pick a specific date for a market crash is typically a fruitless exercise, but market watchers are becoming very concerned about some of the signs that we are now seeing.
For example, the "CCT indicator" is currently showing "the lowest bullish energy ever"...
The first factor is the CCT indicator. This indicator is a proprietary internal measurement of the general volume of the New York Stock Exchange.
The measurements take into account the institutional participation as a ratio of the overall volume. Also measured is the duration of heavy block buying in rallies.
The sum total of all the measurements now shows the lowest bullish energy ever -- even lower than in 2008, just before the market crash.
In other words, this current bull market appears to be completely and utterly exhausted.
The laws of economics cannot be defied forever. Traditionally, commodity prices and stock prices have tended to move in unison.
And this makes perfect sense, because commodity prices tend to rise when economic conditions are good, and in such an environment stock prices are typically going to move up.
But now we are in a time when commodity prices and stock prices have become completely disconnected.
In order to bring this ratio back into line, the S&P 500 would need to fall by about 1000 points, and such a decline would cause a level of financial chaos that would be absolutely unprecedented.
This current stock market bubble has lasted much longer than many of the experts originally anticipated, but that just means that the eventual crash will likely be that much more devastating.
In the end, you don't need to know all of the technical details in this article.
But what you do need to know is that current stock market valuations are not sustainable and that a great crash is coming.
It may not happen next week or next month, but it is going to happen. And when it does happen, it is likely to make what happened in 2008 look like a Sunday picnic.
Read more at http://www.prophecynewswatch.com/articl ... RKdBeex.99
Is A Great Crash Coming? The Laws Of Economics Cannot Be Defied Forever
Current stock market valuations are not sustainable. If there is one thing that I want you to remember from this article, it is that cold, hard fact.
In 1929, 2000 and 2008, stock prices soared to absolutely absurd levels just before horrible stock market crashes.
What goes up must eventually come down, and the stock market bubble of today will be no exception.
In fact, virtually everyone in the financial community acknowledges that stock prices are irrationally high right now.
Some are suggesting that there is still time to jump in and make money before the crash comes, while others are recommending a much more cautious approach.
But what almost everyone agrees on is the fact that stocks cannot go up like this forever.
On Tuesday, the Dow, the S&P 500 and the Nasdaq all set brand new record highs once again. Overall, U.S. stocks are now up more than 10 percent since the election, and this is probably the greatest post-election stock market rally in our entire history.
But stocks were already tremendously overvalued before the election, and at this point stock prices have reached a level of ridiculousness only matched a couple of times before in the past 100 years.
Only the most extreme optimists will try to tell you that stock prices can stay this disconnected from economic reality indefinitely.
We are in the midst of one of the most outrageous stock market bubbles of all time, and as MarketWatch has noted, all stock market bubbles eventually burst...
The U.S. stock market at this level reflects a combination of great demand, great complacency, and great greed. Stocks are clearly in a bubble, and like all bubbles, this one is about to burst.
If corporations were making tremendous amounts of money, rapidly rising stock prices would make logical sense.
But that is not the case at all. Corporate earnings for the fourth quarter of 2016 were actually quite dismal, and this disconnect between Wall Street and economic reality is starting to really bug financial analysts such as Brian Sozzi...
The S&P 500 has gone 89 straight sessions without a 1% decline. Considering that Corporate America didn't exactly light up on the top and bottom lines during the fourth quarter, such a streak is rather troublesome.
Granted, the stock market is a forward-looking mechanism that appears to be trading on hopes that Trump's unannounced stimulus and tax plans will be lifting economic growth in 2018.
Even so, the inability of investors to at least acknowledge persistent struggles among companies and ongoing chaos in Washington is starting to become disturbing.
It is a basic fact of economics that stock prices should accurately reflect current and future earnings.
So if corporate earnings are at the same level they were at in 2011, why has the S&P 500 risen by 87 percent since then? The following comes from Wolf Richter...
The S&P 500 stock index edged up to an all-time high of 2,351 on Friday. Total market capitalization of the companies in the index exceeds $20 trillion. That's 106% of US GDP, for just 500 companies! At the end of 2011, the S&P 500 index was at 1,257. Over the five-plus years since then, it has ballooned by 87%!
These are superlative numbers, and you'd expect superlative earnings performance from these companies. Turns out, reality is not that cooperative.
Instead, net income of the S&P 500 companies is now back where it first had been at the end of 2011.
The cyclically adjusted price-to-earnings ratio was originally created by author Robert Shiller, and it is widely regarded as one of the best measures of the true value of stocks in existence.
According to the Guardian, there have only been two times in our entire history when this ratio has been higher.
One was just before the stock market crash of 1929, and the other was just before the bursting of the dotcom bubble...
Traditionally, one of the best yardsticks for whether shares are over-valued or under-valued has been the cyclically adjusted price earnings ratio constructed by the economist Robert Shiller.
This ratio is currently at about 29 and has only twice been higher: in 1929 ahead of the Wall Street Crash, and in the last frantic months of the dotcom bubble of the late 1990s.
We can definitely wish for the current euphoria on Wall Street to last for as long as possible, but let there be absolutely no doubt that it is going to end at some point.
It would take a market decline of 40 or 50 percent to get the cyclically adjusted price-to-earnings ratio back to a level that makes economic sense.
Let us hope that the market does not make such a violent move very rapidly, because that would likely be absolutely crippling for our financial system.
Markets tend to go down a lot faster than they go up, and every other major stock market bubble in U.S. history has ended very badly.
And this bubble is definitely overdue to burst. The bull market that led up to the great crash of 1929 lasted for 2002 days, and this week the current bull market will finally exceed that record.
Trying to pick a specific date for a market crash is typically a fruitless exercise, but market watchers are becoming very concerned about some of the signs that we are now seeing.
For example, the "CCT indicator" is currently showing "the lowest bullish energy ever"...
The first factor is the CCT indicator. This indicator is a proprietary internal measurement of the general volume of the New York Stock Exchange.
The measurements take into account the institutional participation as a ratio of the overall volume. Also measured is the duration of heavy block buying in rallies.
The sum total of all the measurements now shows the lowest bullish energy ever -- even lower than in 2008, just before the market crash.
In other words, this current bull market appears to be completely and utterly exhausted.
The laws of economics cannot be defied forever. Traditionally, commodity prices and stock prices have tended to move in unison.
And this makes perfect sense, because commodity prices tend to rise when economic conditions are good, and in such an environment stock prices are typically going to move up.
But now we are in a time when commodity prices and stock prices have become completely disconnected.
In order to bring this ratio back into line, the S&P 500 would need to fall by about 1000 points, and such a decline would cause a level of financial chaos that would be absolutely unprecedented.
This current stock market bubble has lasted much longer than many of the experts originally anticipated, but that just means that the eventual crash will likely be that much more devastating.
In the end, you don't need to know all of the technical details in this article.
But what you do need to know is that current stock market valuations are not sustainable and that a great crash is coming.
It may not happen next week or next month, but it is going to happen. And when it does happen, it is likely to make what happened in 2008 look like a Sunday picnic.
Read more at http://www.prophecynewswatch.com/articl ... RKdBeex.99
Re: The Coming Financial Meltdown
I have thought about trying the stock market out a little bit but more out of curiosity than trying to make big bucks. Who knows, maybe I will get into it after I understand it a lot better. At the moment the stock market is for other people to fret about. I just hope that I won't have to endure Canada's economy crashing like it did on Rosh Hashana 2008.
Could the Stock Market Be Headed for a Nuclear Implosion?
A majority of investors have suddenly turned bullish following Trump’s presidential election. Both Warren Buffett and Prem Watsa are bullish on the Trump administration’s policies, which are supposed to strengthen the American economy. Stocks have had their run, and many pundits believe they’re quite expensive at current levels and, going forward, returns are likely to be modest.
I think the Trump rally still has a lot of room to run, and so do many other investors, but escalating tensions in North Korea could put this rally in serious jeopardy. Nuclear war and the stock market are never a good combination, and there’s a real chance that stocks could experience a violent sell-off if the situation in North Korea escalates further.
Last week, the Americans dropped the “mother of all bombs” over Afghanistan, and this freaked out investors; the S&P 500 pulled back by a substantial amount. Then the North Korean military parade showed off its missiles, which really spooked investors around the world.
What should you do in response to this rising tension?
If the tension turns into war, then stocks could potentially fall into a bear market, but that doesn’t mean you should sell all your stocks immediately. Many bullish investors dumped their defensive stocks in favour of cyclical ones, so they could maximize their returns from cyclical upswings that were likely to happen. Defensive stocks are out of favour right now, but I think they’re going to become more popular as the average investor gets fearful at the potential for war.
These kinds of events that impact the stock market are unpredictable, and it’s always a good idea to have a balanced portfolio to prepare for the next stock market crash. It’s going to happen eventually, and trying to time when it’ll happen usually never works.
You should have a good chunk of defensive names in your portfolio such as Alimentation Couche Tard Inc.(TSX:ATD.B) and utilities such as Canadian Utilities Limited(TSX:CU), so you can play defence when the stock market takes an ugly turn. These names will still get hit, but probably not as hard as some of the more cyclical plays out there.
Nobody knows what’s going to happen regarding the North Korea situation, but one thing I do know is that the fear gauge could skyrocket further, and stocks could take a huge hit over the next few months if more bombs continue to drop. It’s important to take a step back and look at the big picture. Don’t panic. Panicking has never helped anyone, and it could cause you to make impulse decisions.
Instead, ask yourself how protected you are from a sudden decline in stock prices. Did you sell a majority of your defensive names in favour of cyclical names? If so, then you probably want to put those defensive names back in your portfolio and hang on for the next few months. Make sure you keep cash on hand because if America goes to war, stocks will plummet, and you’ll want to scoop up beaten-up shares while they’re out of favour.
Stay smart. Stay cautious. Stay Foolish.
http://www.msn.com/en-ca/money/topstori ... ailsignout
Could the Stock Market Be Headed for a Nuclear Implosion?
A majority of investors have suddenly turned bullish following Trump’s presidential election. Both Warren Buffett and Prem Watsa are bullish on the Trump administration’s policies, which are supposed to strengthen the American economy. Stocks have had their run, and many pundits believe they’re quite expensive at current levels and, going forward, returns are likely to be modest.
I think the Trump rally still has a lot of room to run, and so do many other investors, but escalating tensions in North Korea could put this rally in serious jeopardy. Nuclear war and the stock market are never a good combination, and there’s a real chance that stocks could experience a violent sell-off if the situation in North Korea escalates further.
Last week, the Americans dropped the “mother of all bombs” over Afghanistan, and this freaked out investors; the S&P 500 pulled back by a substantial amount. Then the North Korean military parade showed off its missiles, which really spooked investors around the world.
What should you do in response to this rising tension?
If the tension turns into war, then stocks could potentially fall into a bear market, but that doesn’t mean you should sell all your stocks immediately. Many bullish investors dumped their defensive stocks in favour of cyclical ones, so they could maximize their returns from cyclical upswings that were likely to happen. Defensive stocks are out of favour right now, but I think they’re going to become more popular as the average investor gets fearful at the potential for war.
These kinds of events that impact the stock market are unpredictable, and it’s always a good idea to have a balanced portfolio to prepare for the next stock market crash. It’s going to happen eventually, and trying to time when it’ll happen usually never works.
You should have a good chunk of defensive names in your portfolio such as Alimentation Couche Tard Inc.(TSX:ATD.B) and utilities such as Canadian Utilities Limited(TSX:CU), so you can play defence when the stock market takes an ugly turn. These names will still get hit, but probably not as hard as some of the more cyclical plays out there.
Nobody knows what’s going to happen regarding the North Korea situation, but one thing I do know is that the fear gauge could skyrocket further, and stocks could take a huge hit over the next few months if more bombs continue to drop. It’s important to take a step back and look at the big picture. Don’t panic. Panicking has never helped anyone, and it could cause you to make impulse decisions.
Instead, ask yourself how protected you are from a sudden decline in stock prices. Did you sell a majority of your defensive names in favour of cyclical names? If so, then you probably want to put those defensive names back in your portfolio and hang on for the next few months. Make sure you keep cash on hand because if America goes to war, stocks will plummet, and you’ll want to scoop up beaten-up shares while they’re out of favour.
Stay smart. Stay cautious. Stay Foolish.
http://www.msn.com/en-ca/money/topstori ... ailsignout
Re: The Coming Financial Meltdown
Tucker Carlson in this fairly short speech shows how puppet Dementia Joe is doing the same things to set the USA for a crash like puppet Justin Trudeau’s been doing for eight years in Canada. I hope that I’m wrong but could this crash have to happen before these two evil leaders get voted out of office ? https://www.zerohedge.com/political/abr ... ng-america