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Wall Street today

News on this page

Earlier news - much older page


zerohedge 21 April 2017


Clickable Chart of the Dow from 1896 to 2007

It cannot be that bad, can it?



On 10 March 2000 the Nasdaq index spiked
BBC 10/3 2005
BBC chart FTSE 1987-2008

The Nasdaq Composite Index collapsed from its March 2000 high of 5,100 to 1,700 by February 2001 and to a low of about 1,100 by August 2002. (diagram Nasdaq) - Diagram Dow
After recovering to 2,150 at the beginning of this year, it stands at about 1,900--just about 37 percent of its peak level three and a half years ago.
(John Makin, AEI, 22/9 2004)

It is always a mistake to confuse a cycle with a trend.
In the case of corporate earnings, it is worse than a mistake, it is a huge blunder.
The intense cyclicality of corporate earnings is the most important reason why the unadjusted p/e ratio is a worthless indicator of value.

Martin Wolf


Michael Nystrom

Optimists about the stock market





Recession
Amity Shlaes
Torsten Sverenius
John Plender
Stephen Roach
Robert J. Shiller

Why people don't understand

Martin Wolf

China -

Société Générale strategist, and well known permabear, Albert Edwards warns
that the past few sessions of falling prices seen in high-yield bonds and stocks of highly indebted companies
could suggest excessive leverage might be “the key area of vulnerability that could bring down the inflated pyramid scheme that the central banks have created.”
MarketWatch 16 November 2017

Edwards says U.S. corporation’s net debt-to-earnings ratios, one common way to assess corporate leverage, has more than doubled since the 2007-’09 financial crisis, but junk-bond credit spreads, the premium investors demand for owning riskier debt versus safer Treasurys, has narrowed

Full text


Albert Edwards, US profits are actually declining.
John Authers, FT 9 June 2017

Albert’s key point is to base on the official government NIPA (National Income and Profit Accounts), which show total profits within the economy. They are released as part of regular GDP data, and we have just had a new edition.

NIPA profits are broader than straight corporate profits, and less vulnerable to management by CFOs.

When companies no longer have confidence in strong profits, they tend to cut back on their investment and that harms economic growth.

Once we look at the differing performance of domestically generated profits and international profits, it begins to look as though S&P companies’ earnings owe almost everything to growth overseas

Full text


"Investors Should Be Petrified" Of The Coming Ice Age:
Here Are Albert Edwards' Scariest Charts
zerohedge 7 June 2017

The big Ice Age call was that the tight positive correlation between equity yields and bond yields that market participants had enjoyed since 1982, driven by ever-lower inflation, would break down

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If you’re buying stocks today, says noted permabear Albert Edwards,
you need a psychiatric evaluation.
Sue Chang, MarketWatch Sept 19, 2016


Could it really have arrived? Are global stocks about to tank in an all consuming way?
Indeed, is this the moment Albert Edwards has been waiting for since 1996?
Of course, Edwards is perhaps London’s best-known doom-monger when it comes to stocks.
FT Alphaville Monday, March 5th, 2007

Albert Edwards: "Let Me Tell You How This All Ends"
The weak dollar, Edwards warns, should be seen as merely a shuffling of deckchairs on the Titanic before the global economy sinks below the icy waves.
via Englund blog 8 May 2016

Albert Edwards at zerohedge


news

We’re in bubble territory again, but this time might be different
Martin Wolf, FT 10 November 2017


The Fangs have delivered spectacularly in the past couple of years.
originally named for the initials of Facebook, Amazon, Netflix and Google, and now typically also including Apple and Microsoft

John Authers, FT 8 November 2017

Full text

“Fangs” — Facebook, Amazon, Netflix and Google —
and for a slightly wider group that added Microsoft, Salesforce, eBay, Starbucks and Priceline to create the “Nifty Nine”.
Both groups gained more than 60 per cent for the year.
John Authers, FT 3 January 2016


Financial Crises
The Economist Essay


How big is the risk of another Black Monday equities crash?
FT 17 October 2017


Only at the peak of those two bubbles /“roaring 20s” and the dotcom mania of the late 1990s/
has America’s S&P 500 been higher as a multiple of earnings measured over a ten-year cycle.
The Economist 7 October 2017

Rarely have creditors demanded so little insurance against default, even on the riskiest “junk” bonds. And rarely have property prices around the world towered so high.

American house prices have bounced back since the financial crisis and are above their long-term average relative to rents. Those in Britain are well above it. And in Canada and Australia, they are in the stratosphere.

In his classic, “The Intelligent Investor”, first published in 1949, Benjamin Graham, a Wall Street sage, distilled what he called his secret of sound investment into three words: “margin of safety”.

Full text at https://www.economist.com/news/leaders/21730019-ultra-loose-monetary-policy-coming-end-it-best-tread-carefully-asset-prices-are


Can We See A Bubble If We're Inside The Bubble?
Charles Hugh Smith via zerohedge, 16 June 2017

If you visit San Francisco, you will find it difficult to walk more than a few blocks in central S.F. without encountering a major construction project.

This is of course a modern analog of the Gold Rush in the 1850s, and the previous tech/building boom in the late 1990s: an enormous influx of income drives a building boom and a mass influx of treasure-seekers, entrepreneurs, dreamers and those hoping to land a good-paying job in Boomland.

We know how every boom ends--in an equally violent bust. Yet in the euphoria of the boom, it's easy to think this one will last longer than the others.

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Current PE may be extremely elevated by the standards of the 1970s,
but it is only slightly elevated by the standards of the past few decades.
says Jeremy Grantham, MarketWatch 3 June 2017

Increased globalization, which increased the value of U.S. brands, paved way for tremendous growth in size, allowing firms to accumulate power and influence over politics and policy along the way.
The result is that corporate profitability is achieved without corresponding growth, which helps explain the reluctance by large corporations in the last several years to boost capital expenditures.

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Equities are stretched by any measure.

Shiller CAPE ratio has reached 29.3 - the highest in 130 years, leaving aside 1929 and the dotcom bubble.
Ambrose 18 May 2017

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The key point is this:
with so much growth already baked into financiers’ forecasts a sudden recession would create a nasty shock.
Gillian Tett, FT 18 May 2017

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Doom

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If global stocks aren’t close to all time highs because of expectations of future growth,
profits to rise, and a generally strong sense the global economy is headed massively higher…
then maybe its time to quietly exit.
Take the cash, hide it in the mattress and wait for the next/coming storm to pass.
Bill Blain via zerohedge May 15th 2017

I’ve said many times before that the markets are being awfully complacent – why are they so high?
Just because bond yields are so low is not a good answer.
Bond yields are low because of QE distortion

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The smart money is record ‘short’ in stocks, and the dumb money is record ‘long’
Simon Maierhofer, MarketWatch 6 April 2017

While trend followers are all in, commercial hedgers (“smart money”) are “all out.”
In fact, hedgers have racked up more short positions than at any other time in history

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It feels like 2008 again
In 2017 total household debt will reach its previous peak of $12.68 trillion,
which it reached in the third quarter of 2008.
MarketWatch 3 April 2017

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Global fund managers say stock markets are more overvalued today than at any time this century,
but are continuing to buy equities aggressively, betting the day of reckoning is a way off yet.
Ambrose Evans-Pritchard 21 March 2017

A crash in the global bond markets remains a concern as inflation gathers pace.
Capital flight from China and a yuan devaluation have almost dropped off the radar screen.
Only the deflationary diehards still fret about ‘secular stagnation’.

Full text


Don’t look now, but the market’s big money is eyeing the exit
MarketWatch 21 March 2017


A popular options-market gauge of so-called black swan, or difficult to predict, events
is drawing the attention of some bears on Wall Street as it trades at record levels.
MarketWatch 21 March 2017

The CBOE Skew Index SKEW which measures the relative cost of purchasing out-of-the money put options on the S&P 500 index finished at a record of 153.34 on March 17,
Put options confer the right, but not necessarily an obligation, to sell an asset at a specific price and time,
while calls give the owner the right to buy an underlying asset

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Doom

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This is the most dangerous and overvalued stock market on record
— worse than 2007, worse than 2000, even worse than 1929.
Or so warns Wall Street soothsayer John Hussman in his scariest jeremiad yet.
MarketWatch 14 March 2017

As of Friday, more than one-third of stocks are already below their 200-day moving averages.”
Don’t be fooled by the booming headline indexes. More NYSE stocks hit new 52-week lows last week than new 52-week highs, he notes.
In a nutshell: Run.

Full text

Fund manager and prominent bear John Hussman is warning investors once again of the potential for a big market plunge
In the note, Hussman acknowledges that he’s proven “fallible” since 2009
MarketWatch 29 September 2014


Eight Years Of Bull Ends Tomorrow
David Stockman. Posted On Tuesday, March 14th, 2017


Why Robert Shiller Is Worried About the Trump Rally
Still about 30 percent below its high in 2000, stocks are almost as expensive now as they were on the eve of the 1929 crash.
Bloomberg 14 March 2017

Like the fable of the boy who cried wolf, Harris says pessimistic forecasters have so badly over-estimated the consequences of big events -- the rolling European debt crisis since 2010, the U.S. debt-ceiling standoff in 2011, Brexit in 2016 -- that traders have become conditioned to ignore them.

Even when bears are right, the past eight years have shown that central banks are more than willing to save the day when markets fall.

Full text

More by Robert J. Shiller

Doom

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The present outbreak of euphoria contains a number of distinct, bubble-like characteristics.
Markets are leaving themselves virtually no room for disappointment.
There is unfortunately a real possibility that Mr Trump will be unable to deliver on his tax cutting and infrastructure spending plans
Jeremy Warner, Telegraph 2 March 2017

All of sudden, Wall Street financiers no longer feel like pariahs. Instead, they’ve been embraced and invited into key positions in the White House. Oddly for someone who is said to be a “populist”,

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Be Prepared for a Bear Market, Bloomberg 6 February 2017

Between 11 January 1973 and 6 December 1974, Dow Jones lost over 45% of its value.


But anyway, in macro, most models use Rational Expectations,
so let's think of "behavioral" as just meaning "non-RE".
I'm seeing macro people taking behavioral ideas more seriously.
Noahpinion 15 January 2017

Full text

behavioral economics
the dread moment when scientists learn that up is down, black is white and everything they thought they understood about the world is wrong.
Noah Smith Bloomberg 1 June 2015

Rational Expectations

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In nominal terms, the Dow is up 70% from its peak in January 2000.
The Dow is up only 19% in real (inflation-adjusted) terms since 2000.
A 19% increase in 17 years is underwhelming.

The national home price index that Case and I created is still 16% below its 2006 peak in real terms.
But hardly anyone focuses on these inflation-corrected numbers.
Robert J. Shiller, Project Syndicate 18 Jnuary 2017


Robert Shiller presidential address to the American Economic Association.
It was something out of the usual — as we should expect from as fertile, contrarian and original thinker as Shiller
— namely a plea for economists to take seriously the importance of “narrative epidemics”.
That is to say, be aware of the stories people tell one another about the economy, because they may have real effects.
Martin Sandbbu, FT 12 January 2017


Party Like It’s 19,990
So. Is the smart money with ETFs?
the most successful investment innovation of our time.
John Authers FT 21 December 2016

The blog kept by the fund manager John Hussman is much followed, even if it is also much derided.
He has been incorrectly bearish on US stocks for much of the post-crisis era.
But it would be unwise to ignore him.

More Hussman

investopedia.com/markets/etfs/

Full text

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Being journalists, and with a need to act as watchdogs, we have tended to err on the side of the negative and to ask “what could possibly go wrong?” There are no apologies for that.

The cyclically adjusted p/e (CAPE), a 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,”

says Alan Newman in his Stock Market Crosscurrent letter (source: CNBC).
MarketWatch 20 December 2016

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Tail risks wagging the dog with Wall Street fear gauge
Markets, in moments of extreme stress, are prone to reset their expectations for the future
violently, rather than in a smooth and orderly manner.
Miles Johnson, FT 21 November 2016

Full text

Soros: General Theory of Reflexivity


It is possible that asset prices will come down gradually,
implying a slowdown rather than a collapse of spending and economic activity.

US households now own $21 trillion of equities, so a 35% decline in equity prices to their historic average
would involve a loss of more than $7.5 trillion.
Martin Feldstein, Project Syndicate 26 October 2016

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Det är en del, företrädesvis fastighetsmäklare och bankekonomer, som försöker intala sig själva och oss andra att bostadspriserna kan plana ut.
Men bostadsbubblor, liksom andra bubblor, har en mycket karaktäristisk form. Det brukar, alltid, se ut så här.
Englund blog 25 mars 2012

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Oops, they did it again —
stocks flirt with lofty levels not seen in 15 years
MarketWatch 13 Oct 2016 9:43

The recent selloff notwithstanding, stocks are pricey.

Indeed, the last time the average S&P 500 stock was this expensive, Britney Spears was the hottest name in pop music
and the market was on its doomed path toward the meltdown that came to be known as the dot.com bust.

Valuation is near levels seen during the tech-bubble era, according to Savita Subramanian,
an equity and quantitative strategist at Bank of America Merrill Lynch.

Full text

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News


The big bank bloodbath:
losses near half a trillion dollars
MarketWatch 7 July 2016


The claim that you can capitalize the stock market at an unusually high PE multiple owing to ultra-low interest rates,
therefore, implies that deep negative real rates are a permanent condition, and that governments will be able to destroy savers until the end of time.

The truth of the matter is that interest rates have nowhere to go in the longer-run except up

David Stockman 5 July 2016


Median stock is currently trading in the 99th percentile of historical valuations
ZeroHedge 29 June 2016


Global bear market moves closer after Brexit
It could be that the tipping point for markets will come
when the great mass of investors concludes that the wizards of central banking are emperors with no clothes
and that anaemic global growth provides inadequate support for current equity valuations.
John Plender, FT 28 June 2016

Full text

John Plender


Why do the frogs of Wall Street stay in the boiling pot? Stockman.
Och Englund om de borgerliga grodorna som inte är lustiga att se.
Englund blog 14 maj 2016


2016: The End Of The Global Debt Super Cycle
ZeroHedge, 1 April 2016

The day after the 1987 crash (Oct. 20, 1987) Alan Greenspan, Chairman of the Fed, announced to the world that
The Fed stood ready to provide whatever liquidity was needed by the banking system
to prevent the crash from turning into a systemic financial crisis.

That was the day the Fed “put” was born.

Fed Funds Rate drop from 6.5% to 1% from 2000 to 2003.
This in effect morphed the tech stock bubble into a housing bubble.

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News


Why I am reading Stockman and Varoufakis
Englund blog 26 March 2016


In Defense of Globalization
The current climate is far too permissive of share-repurchase programs
Jim O'Neill, Project Syndicate 17 January 2017

Jim O'Neill is a former chairman of Goldman Sachs Asset Management and former Commercial Secretary to the UK Treasury, is Honorary Professor of Economics at Manchester University and former Chairman of the Review on Antimicrobial Resistance.

Policymakers can take action to alleviate anxieties about globalization.

For starters, the seemingly endless growth of profits as a share of global GDP must stop.
Anyone who thinks this sounds radical needs to brush up on economics.
Higher profits should attract new market entrants, which would then erode incumbents’ profits through competition.
The fact that this isn’t happening suggests that some markets have been rigged, or have simply failed. Policymakers need to address this with stronger regulation in some areas.

For example, as I have previously argued, the current climate is far too permissive of share-repurchase programs.

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Globalisation

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There’s Only One Buyer Keeping S&P 500’s Bull Market Alive
- $165 billion Buyback
Bloomberg Business, March 14, 2016


I’m confident we would see improvement on all fronts
if we got GDP growth back up to 4% for a few years.
John Mauldin, March 7, 2016


Goldman Sachs
“Our model suggests SPX calls are more attractive than at any time over the past 20 years”.
David Stockman, 7 March 2016


The next global financial crisis could start with U.S. stocks.
Satyajit Das, MarketWatch 2 March 2016


The real, less respectable reason why companies engage in buybacks,
namely to boost earnings per share by shrinking the equity.
John Plender, FT 1 March 2016

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John Plender at IntCom


1929 - The Crash
Thursday, October 24, the Wall Street Stock Exchange crashes
Fuelled by frenetic speculation, and by the idea that everyone can get rich without limits
Curiositystream

Watch here

More about 1929



Click


Exchange-Traded Fund (ETF)
Investopedia


On The Impossibility Of Helicopter Money, And Why The Casino Will Crash
S&P 500 companies posted Q2 2016 earnings for the latest 12 month period at $86.66 per share.
So at the August bubble high the market was being valued at a lunatic 25.1X.
David Stockman, August 17, 2016


Irrational exuberance begins to surface in US stock market
The multiple of 18 times next year’s projected earnings at which the S&P 500 currently trades...
is at its highest since 2002
John Authers, FT 17 August 2016

outstripping any level it reached during the credit bubble, or when the Federal Reserve was pumping up asset prices with QE bond purchases.

Full text


Crash Course: Stocks and other investments are wildly overvalued
The mispricing of assets across world markets has reached epidemic proportions.
Satyajit Das, MarketWatch Feb 25, 2016


Rather than inflation creating stagnation, we have deflation dragging the economy to stagnation.
Back then, a 37% and 49% decline in equity prices wasn’t called a crash but instead a bear market.
Don't expect a crash — expect a continued bleed.
L.A. Little, MarketWatch Feb 21, 2016

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Stagflation

Secular Stagnation

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News


Chilling ways the global economy echoes 1930s Great Depression era
MarketWatch Feb 19, 2016

Financial author Edward Chancellor recently called attention to a paper
written by Claudio Borio, head economist at the Bank of International Settlements,
that provides a fuller picture of the causes of the Great Depression.

The paper’s thesis is that “financial elasticity” characterizes both the pre-Depression global economy and today’s global economy.
Elasticity refers to the buildup of capital imbalances such as money flows into emerging markets because of low rates in developed markets.

American investors brought their dollars home after the Fed hiked rates in 1928.

In 1930, several South American countries devalued their currencies and defaulted on their debt. The crisis spread to Austria, Germany, and eventually to Britain, a heavy lender to Central Europe.
Britain eventually devalued its currency, but in the U.S. the Fed actually raised rates in late 1931 to stem gold outflows.
A banking panic ensued

Borio’s paper was written in August 2014, so it’s difficult to know what advice he’d have for the Federal Reserve today

The international monetary and financial system: its Achilles heel and what to do about it
Claudio Borio, Working Papers No 456, August 2014

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1929

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News


More news about the stock market is now also on my blog



Detta Wall Street diagram för den 10 februari 2016 kan bli historiskt
Rolf Englund blog 11 februari 2016


Draghi, Dennis, Wolodarski och Tomas Fischer
700 Days In No Man’s Land -- Why They Can’t Keep It Up
David Stockman, January 23, 2016

BTFD - That baleful refrain was led this time around by no less than the posse of oligarchs and apparatchiks assembled at Davos.
Thus, when Mario Draghi, the world’s most ludicrous monetary dunce, let on that there were “no limits” on how much fraudulent credit could be emitted by the ECB’s printing press, he surely spoke a frightening truism.

Yet the world largest asset gather, Larry Fink, founder of $4.5 trillion BlackRock, gushed with an endorsement:
“We’ve seen over the last few years you have to trust in Mario,” Laurence Fink, chief executive officer of BlackRock Inc., said in Davos.
“The market should never, as we have seen now, the market should not doubt Mario.”

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”The sky is the limit”, sa chefen för Riksbanken
Medan Finland lät marken flyta den 8 september, bedrev Sverige sitt eget valutakrig i ytterligare drygt två månader.
Under den tiden plågades hushåll och företag av extrema räntor.
En marsch mot Poltava, som finansmannen Tomas Fischer uttryckte saken.
Peter Wolodarski, signerat, DN 9 september 2012

David Stockman at IntCom

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News


David Stockman On CNBC:
This Is A Dead Cat Bounce—-We’re At Peak Debt Headed For Recession
via Rolf Englund blog 2016-01-23


Dow could fall 5,000 points and still not be ‘cheap’
MarketWatch Jan 21, 2016

Full text

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News


A host on bubblevision this afternoon noted that the S&P 500 is now down $2 trillion for the year and
wondered if his panel could explain “what’s happened since January 1st?”
The implication, of course, was that since no new recessions have started that the market’s worst ever start of the year was surely overdone.
David Stockman 20 January 2016

Already in the first two and one-half weeks of trading this year, Amazon and Google are down nearly $60 billion each.
The FANGsas a group have lost $160 billion of market cap, or more than 33% of their entire 2015 bubble eruption.

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David Stockman at IntCom

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News


The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.
"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).
Ambrose Evans-Pritchard, in Davos 19 Jan 2016

The next task awaiting the global authorities is how to manage debt write-offs - and therefore a massive reordering of winners and losers in society - without setting off a political storm.

Mr White said Europe's creditors are likely to face some of the biggest haircuts.
European banks have already admitted to $1 trillion of non-performing loans:
they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed.

Full text

William White, until recently economic adviser to the Bank for International Settlements
has resisted heroically the temptation to say: “I told you so.”
Samuel Brittan, Financial Times, August 14 2008

Why have markets reached their exposed position? The answer is that success breeds excess.
This is the argument of a fascinating new paper from William White, economic adviser to the Bank for International Settlements.
Martin Wolf, Financial Times 24/5 2006

Doom

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News


Dow futures fall more than 300 points as oil, Asia selloff rattle investors
Sara Sjolin, MarketWatch Jan 20, 2016

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The bear market in stocks has finally arrived
Michael Sincere, MarketWatch Jan 20, 2016

Stage 1: Denial, Stage 2: High Anxiety, Stage 3: Fear, Stage 4: Panic

Right now, we’re in the denial stage.

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Soon Comes The Deluge
David Stockman • January 19, 2016


News

China Stocks Enter Bear Market as State-Fueled Rally Evaporates
Bloomberg News, January 15, 2016


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AMZN and its three other FANG amigos had accounted for a $530 billion gain in market cap
while the other 496 stocks in the S&P 500 had declined by even larger amount.

That is, the apparently flat S&P 500 index of 2015 was hiding an incipient bear—–owing to a market narrowing action like none before.
Compared to the Fabulous FANGs (Facebook, Amazon, Netflix and Google)
David Stockman, January 13, 2016

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Apart from a few stocks, the US markets are in a slump with fears post-crisis rally has run its course

John Authers, FT 3 January 2016

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News


http://englundmacro.blogspot.se/2016/04/famous-skeptic-socgens-albert-edwards.html


One person who is particularly bearish is the incomparable Albert Edwards. SocGen’s “uber bear” (or, more appropriately, “realist”)
is out with a particularly alarming assessment of the situation facing markets in the new year.
The Fed's pursuit of negligently loose monetary policies since 2009 is a misguided attempt to boost economic growth via asset price inflation and we will now reap the whirlwind
zerohedge 13 January 2016

Full text

Could it really have arrived? Are global stocks about to tank in an all consuming way?
Indeed, is this the moment Albert Edwards has been waiting for since 1996?
Of course, Edwards is perhaps London’s best-known doom-monger when it comes to stocks.
FT Alphaville Monday, March 5th, 2007

Some strategists are more cataclysmic.
Not invited to Jackson Hole was Albert Edwards, Société Générale’s famously bearish global strategist,

who warned this week the crisis would not be confined to emerging market economies with yawning current account deficits.
“I see this as the beginning of a process where the most wobbly domino falls
and topples the whole, precarious, rotten, risk-loving edifice that our policy makers have built,” he wrote in a note.
Financial Times, August 30, 2013

Albert Edwards at zerohedge

ZIRP and QE were terrible mistakes
Rolf Englund blog 4 January 2016




SocGen: brace for a 2008-style crash and US stocks to fall by 75pc
Notorious "uber bear" Albert Edwards warns that the world is about to "reap the whirlwind" of the US Fed's quantitative easing
Peter Spence, Telegraph Economics Correspondent, 13 January 2016

“The impossible trilogy of maintaining an independent domestic monetary policy and a semi-fixed exchange rate
while loosening capital account restrictions is hitting home,” he said.

Den 21 november 1985 vid ett-tiden fick jag /Lars Wohllin/ - som chef för Stadshypotek - meddelandet om att Riksbanken hade upphävt alla utlåningsrestriktioner.
Jag tittade på mina medarbetare och undrade om man på Riksbanken verkligen förstod vad man gjorde.
Click

Chinese companies have prepared themselves for a further fall in the yuan, Mr Edwards claimed, putting the country in “a better position to transmit a massive deflationary shock”.

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Edwards at FT Alphaville


But I do hope this time around the Queen won’t ask, as she did in November 2008, why nobody saw this coming!
http://ftalphaville.ft.com/2016/01/13/2150068/if-i-am-right-the-sp-would-fall-to-550-a-75-decline-from-the-recent-2100-peak/


RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis,
warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.
Ambrose Evans-Pritchard, 11 Jan 2016

The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008.
“Sell everything except high quality bonds. This is about return of capital, not return on capital.
In a crowded hall, exit doors are small,” it said in a client note.

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Cataclysm

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News


One source of comfort is that the retail money, often called the dumb money by Wall Street,
is not all by itself in the wilderness of figuring out this market right now.
“Everyone is the dumb money. Not even the billionaires have any idea what’s going to happen next,”
says Greg Guenthner of the Daily Reckoning blog.
MarketWatch 12 January 2016

Hedge funds returned 1.56% last year, the lowest since 2011, according to Eurekahedge, so they sure didn’t have it all buttoned up either.

And what’s the point of panic when you can’t predict a crash anyway?
Robert P. Seawright, chief investment officer for Madison Avenue Securities says even in 1987 there was really no big “smoking gun.”

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1987

Daily Reckoning blog

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News


Market Watch 11 January 2016


As with the first Shanghai Surprise, the stark reaction to this week’s Chinese events reveals deep lack of confidence in the health of the western corporate sector.
Even if the situation now stabilises — as it did for several months back in 2007 —
the message of concern, in both west and east, is clear.
John Authers, FT 8 January 2016

Full text

Yet there were some very high numbers for a group of four companies that have come to be known as the “Fangs” — Facebook, Amazon, Netflix and Google —
and for a slightly wider group that added Microsoft, Salesforce, eBay, Starbucks and Priceline to create the “Nifty Nine”.
Both groups gained more than 60 per cent for the year.
John Authers, FT 3 January 2016

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News



Earlier version of this page


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