Possibly very interesting week for the DJIA and S&P coming up

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One small excerpt from just one of the many articles you will find (now even emerging into the previously totally clueless mainstream financial media "rah-rah boys" territory) about the reality of the "Great Chinese Miracle":

So now we get to ground zero of the global Ponzi. That is the monumental pile of construction and debt that is otherwise known on Wall Street as the miracle of “red capitalism”. In truth, however, China is not an economic miracle at all; its just a case of the above abandoned Athens (2004 Olympics) stadium writ large.

The McKinsey graph on China tells it all. For the moment, forget about leverage ratios, debt carrying capacity and all the other fancy economic metrics. Does it seem likely that a country which is still run by a communist dictatorship and which was on the verge of mass starvation and utter impoverishment only 35 years ago could have prudently increased its outstanding total debt (public and private) from $2 trillion to $28 trillion or by 14X in the short span of 14 years? And especially when half of this period encompassed what is held to be the greatest global financial crisis of modern times.

And don’t forget that most of this staggering sum of debt was issued by a “banking” system (and its shadow banking affiliates) which is bereft of any and every known mechanism of financial discipline and market constraints on risk and credit extension. In effect, it is simply a vast pyramidal appendage of the Chinese state in which credit is conjured from thin air by the trillions, and then cascaded in plans and quotas down through regions, counties, cities and towns.

When it reaches its end destination it finances the building of anything that local politicians, bureaucrats and red capitalists can dream up. That includes factories, roads, ports, subways, bridges, airports, malls, apartments and all the rest of the construction projects being undertaken on Beijing’s Noah’s ark.

Undoubtedly, the plentitude of ghost cities, malls, apartment buildings and factories that are everywhere now evident in China do not look much different than Greece’s Olympic stadiums did circa 2006—-that is, gleaming but silent. It will take another decade for the weeds to spring up and the rust and decay to become visible.

So it might be a good time to get a grip on the China Ponzi. There is virtually not a single honest price in the entire $28 trillion tower of debt shown below. When loans to coal mine operators got in trouble, for example, the so-called “bankers” at the big state banks simply invited their clients in the side door where they paid back the “bank” with a trust loan at 18% interest—-which “loan” was then resold to bank customers at 12%.

Hence, no NPLs and no need for new loss provisions. Indeed, China’s big state banks book billions of profits each quarter—notwithstanding the absurd extent of the nation’s credit pyramid.

Likewise, how did the local party cadres use the loans that cascaded down the system to their town? Why they established non-governmental development agencies—thousands of them—- that paid hugely inflated prices for city lands in order to build empty luxury apartments and zoos that are bereft of both people and animals. Meanwhile, local governments run huge GDP enhancing budgets that are funded by the false revenue of hyper-bloated land sales.

The skunk in the woodpile is self evident even in the simplified chart below. At least prior to the 2008 crisis, it could be said that part of the China boom was being financed by the Fed and other DM central banks which enabled their domestic consumers to borrow themselves silly, thereby fueling the China export boom. That’s pretty much over in terms of growth owing to the tepid recoveries and outright economic stagnation in the US, Europe and Japan.

But never mind. The aging black-haired men who learned their economics from the Mao’s Little Red Book had a solution. They would lift GDP and jobs by their own bootstraps, dispensing virtually unlimited credit to build public pyramids, otherwise known as infrastructure, at rates not seen since the Egyptian pharaohs.

Thus, since the eve of the crisis in 2007, China’s GDP has doubled, expanding by $5 trillion in 7 years. But as shown below, it took a $21 trillion expansion of debt outstanding to accomplish that outcome.

That’s right. The China Ponzi took on $4 of debt for every new dollar of freshly constructed GDP. And “constructed” is exactly the correct term because all of this new debt funded a orgy of construction—-much of which is for public facilities that will never produce enough user revenues to service the debt or which are essentially owned by local governments which have no tax revenue.
 
In the immediate aftermath of the 9-11 terrorist attacks, there was a nationwide hysteria among many citizens based upon fears that automobile fuel supplies would soon disappear. People were lined up at service pumps topping off their fuel tanks and generally behaving irrationally. I think it's a good bet that something similar and far worse could result on our soil in the event of a major catastrophe such as a plague, volcanic eruption or a total economic meltdown. Every year in recent memory, we are treated to a Black Friday lunacy at our shopping malls in advance of a celebration that is supposed to be about the Prince of Peace. There has also been a dramatic increase in the militarization of local police forces. And we have arsonists like Alex Jones and Reverend Al to contend with.

Desperate people do desperate acts in times of desperation. Governments respond accordingly. https://en.wikipedia.org/wiki/Bonus_Army
 
EDIT: Sorry about the huge graphics, that's just how they appear when linked to, apparently.

Things are REALLY getting interesting to watch for a change now that reality is FINALLY peeping through into the mainstream, ALL stuff that non-mainstream sources have been warning about nearly since 2008.

Here are the two main, huge U.S. DEBT bubbles (besides the obvious bond and equity bubbles) that have been inflated to replace the housing DEBT bubble which has also been reflated a bit, significantly so in areas (mainly NYC, FL, and CA) where Chinese buyers are looking for a place for their money and a possible future refuge (see the citizenship article) now that the real estate bubble there (among many other things) is bursting:

School-Loan Reckoning: 7 Million Are in Default
Figure translates into about 17% of all borrowers being severely delinquent
Aug. 21, 2015

https://www.wsj.com/articles/about-...l-student-loans-in-at-least-a-year-1440175645

NA-CG916_STUDLO_16U_20150821180905.jpg


Don't Look Now, But The Subprime Auto Bubble May Be Bursting
Aug 13, 2015

https://www.zerohedge.com/news/2015-08-13/dont-look-now-subprime-auto-bubble-may-be-bursting

Well, it’s official: the cat is out of the bag on what’s "driving" (no pun intended) record US auto sales.

Average loan term for new cars is now 67 months — a record.
Average loan term for used cars is now 62 months — a record.
Loans with terms from 74 to 84 months made up 30% of all new vehicle financing — a record.
Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
The average amount financed for a new vehicle was $28,711 — a record.
The average payment for new vehicles was $488 — a record.
The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

Losses on car loans taken out by bad-credit borrowers are continuing to climb, thanks in part to the flood of rookie auto finance companies that have entered the market in recent years. You can see the rise in subprime borrowers struggling to make car payments in monthly data on bond deals sold on Wall Street. So-called subprime auto asset-backed securities (ABS) bundle together car loans and then sell them to big investors. July reports show that annualized net losses on such bonds—a measure of the cost of bad debt—rose 1.45 percentage points over the past year to reach 6.6 percent last month, according to Nomura analysts.


Note that this is EXACTLY the same thing that happened with sub-prime housing loans where "lesser established issuers" issued loans to people that shouldn't have gotten them and then passed along those loans to Too Big To Fail banks (now even bigger) on Wall Street where they were packaged up, given phony ratings, and sold to the world.

How Chinese millionaires buy U.S. citizenship
May 14, 2015

https://www.pbs.org/newshour/updates/chinese-millionaires-buy-u-s-citizenship/

"To qualify for the so-called EB-5 visa, an investor must inject $500,000 into a project or business that will create 10 new jobs in a high unemployment or rural area. The visa has become so popular among Chinese millionaires looking for a ticket to citizenship that for the first time since it was introduced 24 years ago, the government has run out of available slots… until October."

FINE BY ME! The more wealthy people here, many of them entrepreneurs, the better.

China lowered its official GDP growth to 6.3%. Ummmm, still a bit too high. Try more like -1.1% as independently estimated:

China’s economy may be in worse shape than people think
Aug 27, 2015

https://www.marketwatch.com/story/chinas-economy-may-be-in-worse-shape-than-people-think-2015-08-27

MW-DT189_Everco_20150827151002_NS.png


The Great Wall Of Money

https://hindesightletters.com/docum...r_Aug__2015_The_Great_Wall_of__Money_TR_1.pdf

Excerpt:

China is in severe trouble and that trouble has already been reverberating around EM exporters for a number of years. It is just one of many dollar currency peg countries that have experienced tightening conditions because of higher US interest rate guidance and dollar strength. An unwelcome addition to their own domestic issues, but always a circular outcome, as they are inextricably linked to the US by their Bretton Woods II relationship. By devaluing and thus de-stabilising the 'nominal' anchor for Asian exchange rates, they will crush the growth engine of the developed countries on whose consumption they so rely on.

Since 2009, we have forecast and documented the unwinding of the Bretton Woods II currency system. Financialisation of our economies and markets, which escalated post-2008 at the instigation of governments and central bankers, is going to go into full reverse for all asset classes.

The Yuan movement may well send more Chinese capital floating across the globe into financial assets and real estate, such as those at Pink Floyd's and London's iconic Battersea Power Station, but it will be short-lived. The debt deleveraging which has been engulfing Emerging Markets has just begun to turn into a ranging inferno, which will eventually burn down all, especially overpriced global assets.

Since the GFC, 'The Great Wall of Money' that Bretton Woods II has furnished via its vendor-financing relationship, has masked the deleveraging of our world economy. The Great Wall is about to collapse and fall.
 
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Some escape through hobbies, others through music....

[video=youtube;d-diB65scQU]https://www.youtube.com/watch?v=d-diB65scQU[/video]
 
Some escape through hobbies, others through music...
Yep, don't waste time and damage your health worrying about things you can do absolutely nothing about, just be aware of what's actually going on. That's difficult because on most topics that involve the status quo distribution of your money (tax dollars, your portion of debt from bailouts, the zero sum game of the equity markets where your 401ks reside along with pension fund investments, etc.) the official narratives don't even match reality. However, they can easily get away with that because the mechanisms involved are often complex and far less than obvious.
 
Another potentially very interesting week coming up for the same reasons I gave above, only worse. Will the Chinese government and/or the Fed do or even just hint at the umpteenth intervention to temporarily sustain the unsustainable, fixing nothing systemically at the cost of making the eventual long downturn or crash even worse (analogy in image immediately below)? Stay tuned as worldwide economic realities possibly encroach upon the fantasy facade... finally. Only after that can economic conditions actually and sustainably improve via market forces instead of central bank monetary games attempting to delay a huge correction that must happen.

3


Downward pressures on the price of oil will increase further as the sanctions on Iran have been lifted and they want to sell a whole bunch of oil into an already oversupplied market (due to falling demand and overproduction) to raise badly needed foreign exchange cash.

A newly uncovered, potentially large sub-prime-crisis-like contagion trigger risk due to US oil producer debt:

Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears
16 Jan 2016

We can now make it official, because moments ago we got confirmation from a second source who reports that according to an energy analyst who had recently met Houston funds to give his 1H16e update, one of his clients indicated that his firm was invited to a lunch attended by the Dallas Fed, which had previously instructed lenders to open up their entire loan books for Fed oversight; the Fed was shocked by with it had found in the non-public facing records. The lunch was also confirmed by employees at a reputable Swiss investment bank operating in Houston.

This is what took place: the Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses which would exceed the current tier 1 capital tranches.

In other words, the Fed has advised banks to cover up major energy-related losses.

Why the reason for such unprecedented measures by the Dallas Fed? Our source notes that having run the numbers, it looks like at least 18% of some banks commercial loan book are impaired, and that’s based on just applying the 3Q marks for public debt to their syndicate sums.

In other words, the ridiculously low increase in loss provisions by the likes of Wells and JPM suggest two things: i) the real losses are vastly higher, and ii) it is the Fed's involvement that is pressuring banks to not disclose the true state of their energy "books."

Naturally, once this becomes public, the Fed risks a stampeded out of energy exposure because for the Fed to intervene in such a dramatic fashion it suggests that the US energy industry is on the verge of a subprime-like blow up.


big.chart


Watch this on Monday:

Shanghai Composite Index

https://www.marketwatch.com/investing/index/SHCOMP?CountryCode=CN

And although our markets are closed on MLK day, futures can be seen here:

https://www.marketwatch.com/investing/future/ymh6

https://www.marketwatch.com/investing/future/esh6

https://www.marketwatch.com/investing/future/nqh6

https://www.marketwatch.com/investing/future/clg6

EDIT:

Just found out another factor for next week's markets; China releases its fantasy GDP figure:

No one believes China's growth, but...
October 19, 2015

https://money.cnn.com/2015/10/19/investing/china-economy-gdp/

"China just told the world that its economy is growing at 6.9%. Almost no one believes that."


Chinese Officials Admit They Faked Economic Figures
December 14, 2015

Local officials from China’s key Northeast region have reportedly admitted that they faked economic data over the past few years when the real numbers were much lower.

Several officials have said they’ve significantly overstated data ranging from fiscal revenue and household income to GDP, and that this was a reason why the drop in the figures appears to have been so dramatic this year, reported China Daily while citing further reports from China’s state-run Xinhua News Agency.

“If the past data had not been inflated, the current growth figures would not show such a precipitous fall,” one official was quoted as saying.


That's rich, "If we hadn't been lying then, the drop now wouldn't look so bad." They're still lying as show by many indirect units of measure that aren't easily manipulated:

ChinaRailFreight.jpg


ChinaGDPVersusData.png


Beyond the Headlines: Five Things to Watch in China's GDP Report
January 17, 2016

https://www.bloomberg.com/news/arti...es-five-things-to-watch-in-china-s-gdp-report

While Chinese stocks have whipsawed investors, growth in the world’s second-largest economy is still forecast to come in (miraculously yet again - Winston) just under the government’s 7 percent target (because the Chinese Communist Party has been so accurate at hitting targets in recent market history - Winston).

The nation’s fourth quarter and full-year gross domestic product report will be released Tuesday at 10 a.m. in Beijing, or 9 p.m. Monday on Wall Street (closed). Economic growth for the quarter and year were both 6.9 percent, according to a Bloomberg survey of economists as of late Friday.

The stakes are high, and not just for policy makers’ credibility: Data showing a sharper slowdown may spur more fiscal and monetary stimulus, while a stronger reading may provide a tonic for jittery global markets concerned about China’s outlook.


Let's see what happens to the markets when/if they lie again this Monday while the US markets are closed. BTW, the first thing I'd watch for in China's GDP figure is anything over 5%; that would totally set off my BS alarm.

And, speaking of respected organizations that don't have a freaking clue about what they're talking about, here are the continuously and year by year radically revised International Monetary Fund projections of world growth:

IMF%20World%20Oct%202015.jpg


It's people like that and their equally clueless pals in central banks who are trying to centrally plan the world economies.
 
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Yep, the Chinese Communist Party lies once again. Imagine that. Only idiots (and some mainstream financial media talking heads... oops, I guess that's the same thing) believe their figures:

What is China's actual GDP? Experts weigh in
19 Jan 2016

https://www.cnbc.com/2016/01/19/what-is-chinas-actual-gdp-experts-weigh-in.html

Excerpts:

Although there has never been definitive evidence that Chinese economic data is exaggerated (yes, there is, as I linked to above - W), the widely-held theory says that China's National Bureau of Statistics will overstate growth in a stability-minded effort to hide the truth about a slowing economy. So instead of relying on government reports, China-watchers analyze other metrics for a more complete picture of the country's GDP.

"Nobody knows for sure, but when we look at things that are harder numbers to fudge... our estimate is growth probably about 3.5 percent versus (their claimed - W) roughly 7," said Gary Shilling, president of economic research firm A. Gary Shilling and Co.

Not only does China's NBS refuse to respond to inquiries, Straszheim said, but the statistics unit will announce only its total GDP growth figure — not the components of that number. "If you don't have the components, how can you have a total? And if you have the components, which would add to the total, why are they not publicly available?" Straszheim asked.

Billionaire distressed asset investor Wilbur Ross, meanwhile, told CNBC's "Squawk Box" that he sees China's actual growth at about 4 percent on a similar basket of metrics.

The "reason is that if you look at physical indicators — rail car loadings, truck loadings, cement consumption, steel consumption, exports, natural gas consumption, electricity consumption — none of those are consistent with 6.8 or 6.9," he explained.

Straszheim said his group uses data from sources it regards as largely independent from government pressure, pointing to commodity consumption among other measures.

"It doesn't take a rocket scientist to figure out the growth in old China for the past year or so has been somewhere around zero — it's nothing like 6.8 percent," Straszheim said, explaining that the "new" China of services and consumer spending is tough to measure in the absence of robust data from the private sector.


-----

World faces wave of epic debt defaults, fears central bank veteran
Situation worse than it was in 2007, says chairman of the OECD's review committee
(and who caused this? central bank monetary manipulations that greatly encouraged it... - W)

https://www.telegraph.co.uk/finance...debt-defaults-fears-central-bank-veteran.html

"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS). (it is estimated that central banks have about 30% of their manipulative weapons left, so I'd never be certain enough to call the timing of the next crash or just a long, slow decline; if I could, I'd be a billionaire - W)

-----

And, finally, here's news from today about one of the government's supposed market regulatory watchdogs here in the U.S.:

CFTC Has Decade Of Audit Opinions Withdrawn After Massive "Error" Uncovered
01/20/2016

As regular readers are likely aware, we like to give the CFTC a helping hand whenever possible.

For seven years, we’ve warned about the danger the market faces from the parasitic “strategies” of predatory HFTs and nefarious vacuum tubes and finally, the Commission as well as the DOJ listened, subsequently confirming that such practices are indeed illegal.

So concerned is the CFTC about rooting out any and all corruption and market manipulation that the Commission conducted an extensive investigation into the cause of 2010’s infamous flash crash on the way to uncovering the “mastermind” behind the madness that sent the Dow plunging nearly 1,000 points in minutes.

So impressed were we at the Commission’s dedication to preserving the integrity of our beloved “markets” that we sought last year to help the CFTC uncover further instances of manipulation in a series of articles (see here, here, and here) designed to help hapless regulators spot the very same type of tactics they swear Navinder Sarao used on the way to engineering the collapse of the entire US equity market from his basement.

Of course we jest and to the extent we believed there might be a shred of honesty and/or dignity buried somewhere in the bowels of the government body tasked with policing the derivatives market, our hopes were dashed on Tuesday when we learned that the Commission’s auditor has withdrawn “nearly a decade” of financial opinions after discovering that the books may be cooked.

“The Commodity Futures Trading Commission understated liabilities by $194 million in fiscal 2014 and $212 million the following year,” Reuters reports, citing KPMG documents. “The understatements are the equivalent to more than 75 percent of the CFTC's $250 million annual budget.”

Apparently, the agency conveniently avoided accounting for the full cost of leasing facilities in Washington, Chicago, New York, and Kansas City.

The government doesn’t see fit to give the Commission its own buildings, so the CFTC is forced to rent. “In its annual financial statements, the regulator was only accounting for a year's worth of rent payments,” Reuters says, before noting that KPMG claims the regulator is in violation of GAAP and may have run afoul of “the federal Anti-Deficiency Act, which prohibits government agencies from obligating or expending federal funds in excess of the amount available.”

“This is not the first time leasing issues have come up at the CFTC,” Reuters goes on to note. “In 2014, the inspector general criticized it for wasting taxpayer money on underutilized office space in Kansas City.” The inspector general's review of the Kansas City office space Reuters references is embedded below and anyone in need of some mid-week levity is encouraged to read it. In short, the inspector found that the CFTC was set to waste $3.6 million in taxpayer funds on vacant office space.

So essentially, the CFTC is not only renting space it doesn't need (because apparently there's not enough manipulation going on across markets to warrant fully staffing the Commission's various offices<sarcasm), it's also under-reporting its rental costs.

Put more simply: the Commission is disappearing rent it's paying for space it isn't using.

Needless to say, this begs the question of what else in the agency's books is fabricated or shall we say "manipulated", but fortunately for US citizens who have "invested" their tax dollars in the Commission, there's someone you can call for help... the CFTC!
 
Great interview video (Jan 17, 2016) with Nomi Prins, former managing director at Goldman-Sachs, Senior Managing Director at Bear Stearns, senior strategist at Lehman Brothers, analyst at the Chase Manhattan Bank, and author of two best selling finance related books. He predictive track record since becoming a financial journalist is outstanding. This is a fantastic video for anyone who wants to come up to speed on what's actually going on in only 30 minutes. I agree with absolutely everything she says in this video because it is strictly based upon FACTS.

[video=youtube;R7puB7g8qHA]https://www.youtube.com/watch?v=R7puB7g8qHA[/video]
 
Winston

As I have written before, you can't eat gold, silver or currency. These item are tools you can use to purchase water, food, commodities and other material goods.

The stock markets do not necessarily reflect the economy, either domestically or internationally, but rather the opinion that ordinary people have of the value of various commodities and commercial entities, and 50% of the time these opinions are wrong, because the reality is that for every investor that looses money, another makes money. It's really a net sum zero game.

This is a major election year in the US. Why? Because it is constitutionally mandated that every 8 years at a minimum, the elected executive and his administration must be changed, and this is one of those years. The political affiliations who seek power have to find a reason to convince you why they should be elected, and their opposition should not, regardless of the true geopolitical or economic facts, and we go though this tribal dance every 4 or 8 years.

The facts are that the major cost of living in the modern industrialize world has been the cost of energy, and for the short term, > 1 year, the cost of energy will be down by 60%-70%. We represent 5% of the global population and consume about 20% of the world's energy. https://yearbook.enerdata.net/ The US produces >12.1% of the worlds petroleum, 11.6% of the world coal, and >20% of the world's natural gas. https://www.iea.org/publications/freepublications/publication/KeyWorld_Statistics_2015.pdf and we actually make more energy than we consume. I fail to see why this is bad for Americans.

We also are a net exporter of food, so we can feed ourselves. Is that bad?

We also have a large industrial base. It is not running at 100% of capacity, basically because we can buy certain commodity items less expensively than we can produce it domestically, but this is not bad either, because it enables other countries to obtain US currency to purchase our high values items.

I don't know about your situation, but if you are the average working stiff, you probably drive about 20K miles a year with 12K to 15K spend commuting to work. If your vehicle averaged 20 mph on your commute you burned 600 to 800 gallons of gas just to go to work. At $4 a gallon that was $2,400 to $3,200 per year. Now at $2 a gallon, you have and additional $1,200 to $1,600 per year of free money to spend, and it doesn't end there. Everything you consume needs fuel to make and transport to you. You need fuel to heat, air-condition and power your home. The average American probably will save $2,500 this year in reduced energy cost. That about a $1.25 per hour pay raise. So your are better off with lower fuel prices.

Several percent of the population is involved in oil exploration. They are taking a hit, but the other 98% are enjoying the benefits of lower fuel costs, so overall it a good thing. It's also defunding the majority of the world's terrorist activities as they are obtaining their finances from high oil prices, so that a benefit of low oil prices as well.

You will find that after this artificial stock market devaluation has ended, that an amazing flow of foreign investment capital has entered the US economy, because our economy is stronger than any other large government in the world.

The point is that you shouldn't just listen to the empty heads and the politicians on TV predicting gloom and doom for us. The real economics data says exactly the opposite. Remember the old adage, buy low and sell high. The gold sell off has happened over the past few years, and now the sheep are selling stock. You can't eat gold but the wealth of a country is it's economy, and by all objective references, the US economy is still the world's strongest, and safest. Hang tight or buy.

Bob
 
Here is my theory on why stock prices are falling. I think its because more institutions want to sell stocks than buy stocks right now. Only a theory, I may be wrong......
 
That's partially right, but you have to look at the cause. IIRC 85% of the market is in 401K mutual funds and the general public does not really understand how or why the markets really work. The 401K participants see the price of oil fall, and listen to the talking heads and think they are going to loose (they forget their 401K is a long term investment) and instruct the institutions to sell their stock. The institutions have no choice, they have to sell which drops the market. All the investors do is to insure they will loose because the markets usually recover 5%-10% quickly and as they are out of the market, they don't get their funds back.

That's what market volatility is all about. Unfortunately the talking heads always refer to the number of point the DJIA goes up or down, and rarely mention the percentage. When the DJIA average was at 10,000 points and it went down 1000 points, that was a 10% value drop. When the DJIA went down 1000 points from 18,000 points is was only a 5.5% drop. That wasn't mentioned so folks remembered absolute values of the last big drops which disregards the grown in the intervening 8 years and panic. Stocks and mutual funds represent a percentage ownership of a company or companies and not necessarily a cash value, and the inexperienced investor fails to realize they don't loose any ownership value unless they sell their shares when the market is low and then they incur a non-recoverable financial loss.

Bob
 
You can't eat gold but the wealth of a country is it's economy, and by all objective references, the US economy is still the world's strongest, and safest. Hang tight or buy.

Bob

Times like this are where fortunes are made not lost. Some companies are now on sale, they may get even cheaper. Do not let this opportunity pass you by. Keep cool. Some examples

Cummins (CMI) - Price 50% off from recent highs. Current P/E 9. Debt. $1.65B, Operating cash flow last year $2B. Current dividend yield $4.5%. You want to feed the population? Food is going to transported on trucks with Cummins diesels. Cummins provides the motive power for many recession proof activities. If you have a 3-5 year horizon pile into this company's stock.

ExxonMobil (XOM) - Dividend yield @ 3.69%, super strong balance sheet. After the marginal oil producers get shaken out from this oil crash guess who is going to acquire the best assets at fire sales prices? Again for in 3-5year investment horizon its silly not to invest in this stock. If oil crashes further you will be able to pick up more shares even cheaper....

Many more examples....
 
Winston

As I have written before, you can't eat gold, silver or currency. These item are tools you can use to purchase water, food, commodities and other material goods.

The stock markets do not necessarily reflect the economy, either domestically or internationally, but rather the opinion that ordinary people have of the value of various commodities and commercial entities, and 50% of the time these opinions are wrong, because the reality is that for every investor that looses money, another makes money. It's really a net sum zero game.
All true, however, when it comes to the influence of individuals on the stock market, that is virtually nil. It's claimed that 70-80% of the trading is now done by large High Frequency Trader (HFTs) firms who game the market (placing, then immediately withdrawing bids to alter price direction) and who even set up laser comm systems direct to the market servers to shave as much latency off of their connections as possible, trading entirely based upon computer algorithms.

Most of the rest is institutional investors and companies buying back their own shares (2.5 TRILLION worth so far IIRC) to lower the number of outstanding shares and thereby artificially lower their stock's Price/Earnings ratio, making it appear that they're doing much better than they are, rather than investing that money in expanded facilities for additional production (since they're not stupid enough to believe the economy is actually, sustainably improving). The small investor is a blip in all of this.

The markets have always been rigged against the little guy, but they are far more so than they ever have been before. Also, they are not in any way trading on economic fundamentals, they are mostly trading on what central banks even HINT at what they'll do every time there is a market downturn, just as today, Mario Draghi just hinted at more EU QE (it hasn't worked so far, just the opposite, so it must be that you're not doing enough of it and not that that your economic theory is GARBAGE, right?). EDIT: and THAT near total reliance on central banks rather than economic fundamentals is what has developed over the last thirty years, reaching the absolute MANIA levels it has now reached leading to the saying "The Fed has your back" meaning "buy, buy, buy" regardless of reality because a downturn simply won't be ALLOWED:

https://blogs.marketwatch.com/thete...lobal-market-turmoil-puts-pressure-on-draghi/

and China's comment that they might float the yuan:

https://www.marketwatch.com/story/china-serious-about-dropping-dollar-peg-official-2016-01-21

Both of those efforts are just prolonging the entirely artificial high in equities while the world economy declines into recession, likely to be very, very deep, with some very large EM countries like Brazil already in a technical depressions.

What Nomi Prins described in the above video is EXACTLY the world economic realty. We've now had three decades of central banks preventing for political reasons the completion of business cycles where absolutely essential bankruptcies take place, that being the primary, highly beneficial Darwinian effect within Capitalism. The exponential debt supercycle is nearing its end, regardless of attempts to stop it. Debt simply can't be added fast enough to keep it going. When the real, sustained decline begins or how rapid it will be I have no idea and anyone who tells you they do don't either.

Although I disagree with the title of the column below as I don't think they are entirely out of tricks (just look at today when mere HINTS from central banks in Europe and China saved the Dow from another bad day, up 260 right now), this discusses the effect of market psychology that you mentioned:

Central Banks Are Out of Tricks
January 21, 2016

https://www.oftwominds.com/blogjan16/out-of-tricks1-16.html
 
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The basis of our current problem is actually quite simple. The law of exponents is the FUNDAMENTAL FLAW of our worldwide system where money is created only through the issuance of debt.

Note how the unsustainable slope of the debt growth curve was reset to a lower value by the global economic crisis, a mere blip in the graph. It should have been allowed to reach a much lower value, but wasn't:

fredgraph.png


Note how the situation is different than ever before, rates at near zero for a historically unprecedented period of time in a futile attempt to stimulate borrowing and increase debt:

fredgraph.png


Not enough people realize the power (pun intended) of this:

[video=youtube;F-QA2rkpBSY]https://www.youtube.com/watch?v=F-QA2rkpBSY[/video]
 
Four blood moons.
Had to look that one up. Well, no, not the Apocalypse I think and many believe, including me, that the U.S. will be better off than the rest of the world during this downturn for the reasons I mentioned above back in July 2015 when I started this thread. However, wars are always a possibility in really bad economic times. Once the debt curve goes back where it belongs via MARKET FORCED bankruptcies, things can get back to strong growth.
 
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