Category Archives: Financial markets

Why Bonds Are Behaving Like Risky Assets, by MN Gordon

Bonds are always risky assets. People just forget that after an almost 40-year bull market. From MN Gordon at economicprism.com:

“When the [credit] delusion breaks, people all with one impulse hoard their money, banks all with one impulse hoard credit, and debt becomes debt again, as it always was.  Credit is ruined.”

– Garet Garrett, 1932, A Bubble that Broke the World

Down, Down, Down

Third quarter 2022 ends today [Friday].  We’re entering the year’s home stretch.  Thus, we’ll take a moment to observe where money and markets have been, so we can conjecture as to where they’re going.

To begin, United States stock markets are in an epic battle between bulls and bears.  For most of the year, the bears have been delivering heavy blows.  But the bulls have not taken their punches lying down.  Here’s a quick review of the three major U.S. Indexes…

After peaking out on January 4, 2022, at 4,814.62 the S&P 500 declined 24.46 percent to an interim bottom of 3,636.87 on June 17, 2022.  The DJIA fell approximately 19.71 percent over this time.

The NASDAQ’s decline commenced on November 22, 2021, at a peak of 16,212.23.  It then cascaded to an interim bottom of 10,565.14 on June 16, 2022, for a top to bottom decline of 34.83 percent.

The indexes then rallied into mid-August.  Many investors thought the bear market was over.  They invested accordingly.  But, alas, it was merely a sucker’s rally.  September was ugly.

Continue reading→

The Bear-Market Rally in Stocks, Bonds, Mortgages Wiped Out: Why This Nails the Parallel to the Dotcom Bust, by Wolf Richter

This is a debt contraction, and when debt contracts, assets prices go down. From Wolf Richter at wolfstreet.com:

But this time, there’s over 8% inflation.

The Dow Jones Industrial Average on Friday closed about 300 points below its June 16 low, thereby having more than wiped out the bear-market rally gains. For the Dow, the bear-market rally started on June 17 and ended on August 16. During the two-month rally, the Dow had jumped 14%. By Friday at the close, it was again down 20% from its all-time high.

The S&P 500 Index, on Friday intraday, fell through its closing low of June 16 – the infamous 3,666 – and then bounced a little to close 27 points above the June 16 low, at 3,693. During the two-month bear-market rally through August 16, the index had surged 17%. By Friday, the index was down 23% from its all-time high.

The Nasdaq closed about 2% above its June low. During the two-month rally, it had soared by 23%. Many of my Imploded Stocks that are now trading for a few bucks, had shot up by 50% or more, and a bunch of them doubled, before re-imploding after mid-August.

Continue reading→

This Is the Way the World Ends, by James Howard Kunstler

Stocks are diving and more importantly, interest rates are climbing. Together, the portend an economic crisis. From James Howard Kunstler at kunstler.com:

That “singularity” so many blab about is not what they think it is: the merging of human intelligence with Bill Gates’s Office products, leading to an orgasmic nirvana of infinite memoranda from your HR department concerning new diversity, inclusion, and equity policy. Rather, I speak of the magic moment when the necromancers of finance discover that the proverbial can they’ve been kicking is filled with Schrödinger’s cat food… and the road they’ve been kicking it down actually comes to a dead end up their own highly-credentialed wazoos. Economics will never be the same hereafter.

The bond market has gone south, and that spells The End for the great game of financialization. The bond market is Moby Dick compared to the little blowfish that is the stock market. The global money system is based on bonds, which are… what? That’s right: loans… promises to pay you X at some future moment. So, what happens when a daisy-chain of promises-to-pay gets broken? Or, perhaps more precisely, when all those promises lose their last shred of plausible reality? Why, the money that these broken promises are denominated in loses its essential cred. Trick question: how much is worthless money worth? (Answer: not enough to pay for a can of Schrödinger’s cat food.)

Continue reading→

Seeding PSYOP-POWER-GRID-OUTAGE to Coincide with PSYOP-MARKET-CRASH: Banks Dust Off PSYOP-19 Lockdown Plans to Beat Possible Power Blackouts in London, by 2nd Smartest Guy in the World

Imagine a power outage and a financial crash at the same time in London, one of the world’s major financial centers. From 2nd Smartest Guy in the World at 2ndsmartestguyintheworld.substack.com:

As this substack has previously warned, PSYOP-POWER-GRID-OUTAGE will at some point be deployed to further reinforce and exacerbate the mass induced fear of the global populations.

The City of London, one of the most powerful One World Government Cult nodes along with the Vatican and the various other criminal organizations like the BIS, CRF, WEF, UN et al., is now leading the way in telegraphing and normalizing the “sudden” closure of financial institutions.

The warnings have always been that a global financial crisis will be confirmed when over the weekend the banks declare an emergency such that come Monday there would be a banking holiday with no one able to access their money.

London banks are now seeding this very scenario, cleverly leveraging PSYOP-UKRAINE-INVASION and PSYOP-SUPPLY-CHAIN-SHORTAGES (which includes energy) with PSYOP-CLIMATE-CHANGE for a perfect storm heading into this winter’s VAIDS pandemonium in PSYOP-22.

Continue reading→

“Joe Biden’s” Last Stand, by James Howard Kunstler

“The shit has already hit the fan.” From James Howard Kunstler at kunstler.com:

Historians of the future, grilling spatchcocked plovers over their campfires, will need not ponder for even a New York minute who started World War Three in the rockin’ 2020s. They will point straight to the waxy, furtive, larval figure known as “Joe Biden,” by then judged a moral weevil of such epic low degree that he became an embarrassment to all the other sewer-dwelling denizens of the dank DC underworld, including the roaches, the rats, the humble shipworms eating through sunk oaken foundations of buildings long forgotten, the writhing maggots rinsed from a thousand restaurant dumpsters, the slithering hellgrammites, millipedes, silverfish, pillbugs, termites, dung-beetles, woodlice, and, not least, the scaly lawyers spawned out of the infestation beneath K Street called Perkins Coie LLP. Even these would loathe and disdain the thing that came into this world as “Joe Biden.”

Let us agree that the place called Ukraine was never any of America’s business. For centuries we ignored it, through all the colorful cavalry charges to-and-fro of Turks and Tatars, the reign of the dashing Zaporozhian Cossacks, the cruel abuses of Stalin, then Hitler, and the dull, gray Khrushchev-to-Yeltsin years. But then, having destroyed Iraq, Afghanistan, Libya, Somalia and sundry other places all on a great hegemonic lark, the professional warmongers of our land and their catamites in Washington made Ukraine their next special project. They engineered the 2014 coup in Kiev that ousted the elected president, Mr. Yanyukovich, to set up a giant grifting parlor and international money-laundromat. The other strategic aim was to prepare Ukraine for NATO membership, which would have made it, in effect, a forward missile base right up against Russia’s border. Because, well, Russia, Russia, Russia!

Continue reading→

Debt… And Why The Fed Is Trapped, by Lance Roberts

The Fed is walking a tightrope between hyperinflation and a Greater Depression. From Lance Roberts at The Epoch Times via zerohedge.com:

The massive debt levels provide the single most significant risk and challenge to the Federal Reserve. It is also why the Fed is desperate to return inflation to low levels, even if it means weaker economic growth. Such was a point previously made by Jerome Powell:

“We need to act now, forthrightly, strongly as we have been doing. It is very important that inflation expectations remain anchored. What we hope to achieve is a period of growth below trend.”

That last sentence is the most important.

There are some important financial implications to below-trend economic growth. As we discussed in “The Coming Reversion to the Mean of Economic Growth“:

“After the financial crisis [of 2008–09], the media buzzword became the ‘new normal’ for what the post-crisis economy would be like. It was a period of slower economic growth, weaker wages, and a decade of monetary interventions to keep the economy from slipping back into a recession.

“Post the ‘COVID crisis,’ we will begin to discuss the ‘new new normal’ of continued stagnant wage growth, a weaker economy, and an ever-widening wealth gap. Social unrest is a direct byproduct of this ‘new new normal,’ as injustices between the rich and poor become increasingly evident.

“If we are correct in assuming that PCE [Personal Consumption Expenditures price index] will revert to the mean as stimulus fades from the economy, then the ‘new new normal’ of economic growth will be a new lower trend that fails to create widespread prosperity.”

Continue reading→

The European Central Bank’s Zimbabwean Model, by Declan Hayes

The ECB and EU are trying to inflate Europe’s troubles away. From Declan Hayes at strategic-culture.org:

As the Dutch farmers are showing, that is something worth opposing von der Leyen, Lagarde, Stoltenberg and Europe’s other Quislings and the perches they pontificate from.

Though the function of European, German, Japanese and Zimbabwean central banks is to enable the credibility and efficiency of the financial side of their respective economies so that the real side of their economies may achieve the nation’s broader macro economic goals, NATO’s central banks have obviously and disastrously abandoned those tasks for reasons this article makes apparent. Because Zimbabwe, like Germany’s Weimar Republic before it, has reached annual inflation rates of 90 sextillion per cent a year, Europe should not be emulating the financial and economic basket case of Harare.

Whatever about Zimbabwe, Germany has been famously down this road before and, in a total reversal of earlier post-war policies, seems determined to traverse it again. The European Central Bank, based in Frankfurt, is printing euros as quickly as their colleagues in Zimbabwe are printing Zimbabwean dollars, as the Confederates printed their Greybacks and as Weimar printed their famously worthless marks.

Although Weimar’s woes were many, two of the most pertinent were that the Kaiser borrowed immensely to fund his armies, whose victories were supposed to enable him to repay his nation’s debts, and that the Western allies bled defeated Germany’s resources dry, thus opening the way for Herr Hitler once Weimar fell. Europe’s central banks are following this very policy today. They are doling out billions to ease energy bills, to bribe farmers and, most notoriously, to feed the money laundering Ponzi scheme that is Zelensky’s Kiev junta. The money supply, at more than 15 trillion euros, is at record levels and real interest rates are in negative terrain, pauperizing pensioners but failing to kick start their fuel starved economies. Inflation,.Germany’s bane, is again on the march as too far much money is in search of far too few bags of fire wood; and English toilet paper has increased in price by 50% in the last few months, Albion is really in squeaky bum time.

Continue reading

Zelensky Rings the Bell for NATO’s Last Round, by Declan Hayes

The Zelensky-Ukraine-is-winning charade is being exposed. Under the circumstances anyone who would put a dime in Ukraine expecting a legitimate return isn’t playing with a full deck. From Declan Hayes at strategic-culture.org:

Though Zelensky, like the autistic child he is at heart, can ring all the bells and push all the buttons he wants to, his time is up.

Though Volodymr Zelensky, NATO’s puppet President of the rump Ukrainian state, who recently got to ring the bell to open the day’s trading on the New York Stock Exchange, is not the first D lister to be so honored, the real question is what is the broader significance of bestowing this further honor on that clown.

Ringing the bell to reopen the New York Stock Exchange after the 9/11 terrorist attacks sent a defiant mesage that the U.S. would not be cowed and that Americans would build back better, albeit on the backs of over a million dead Syrian, Iraqi and Afghan children. Although Zelensky said that his corrupt regime would likewise build back better, if American companies would only give him and his mates hundreds of billions of dollars to do so, American companies have to balance risk with return and think with their heads, as they have no hearts. Using that metric, Zelensky might have to return to his old job of playing pianos with his penis and mainstream American companies will have to invest in countries like Russia or China, where there is a return on investment to be made.

Continue reading

Why This Recession Is Different, by Charles Hugh Smith

This different recession is going to be a depression. From Charles Hugh Smith at oftwominds.com:

All of these are structural dynamics that won’t go away in a few months or years.

Let’s explore what’s different now compared to recessions of the past 60 years.

1. Deglobalization is inflationary. Offshoring production to low-cost countries imported deflation (product prices remained flat or declined) and boosted corporate profits.

Deglobalization will increase costs and pressure profits.

Just as cleaning up the environmental damage of rampant industrialization imposed costs on the U.S. economy in the 1970s that generated stagflation (inflation and stagnant growth), reshoring essential supply chains will impose costs, pushing prices higher.

Everything costs more in developed economies due to their high wages and social costs (pensions, healthcare, disability, etc.), high taxes, strict environmental standards and extensive regulations.

Consumers will pay more as supply chains are onshored / secured.

2. Energy will cost more. The price of oil and natural gas will fluctuate and could drop significantly as global demand drops, but in the long run the easy-to-access energy has been depleted and all energy will cost more.

Consumers will pay more regardless of where the goods and services come from

Continue reading→

Here It Comes, by James Howard Kunstler

Count the unvaxxed as lucky indeed. They’re not eligible for the new round of bivalent boosters, which were never tested on humans. Only the vaxxed get to line up. From James Howard Kunstler at kunstler.com:

Labor Day is in the rearview mirror and the long, sickening slide into we-know-not-what (but it can’t-be-good) commences! Well, there are a few things we know, but only in the shaggy outlines because the folks who are supposed to inform us — the news media, the public health gang — like to keep the real action behind a scrim of unicorns cavorting through a rainbow-lit candyland. Of course, we are not all the idiots they want us to be.

Here’s one thing we sort of know: you-all vaxx-happy Wokesters are about to have a new BA-5 bivalent booster laid on you. The Darwin Award season has been extended at least another six months! You’ll be glad to hear it’s been tested in a trial involving eight lab mice, and quickly approved by our FDA. The bad news is that all eight mice got Covid. The worse news is that the booster was wildly inconsistent in producing antibodies among the eight identical mice, meaning the ultimate effect on their immune systems is a crap-shoot — but, hey, they’re only mice.

Continue reading→