Market Crash Looming

[Zippyjuan]

We did not have bread line only because there were record number of millions on food stamps . The actual employment numbers were worse last crash than the Great Depression . Going from five people for each job available to 6 .

The unemployment rate in the Great Depression hit 25%. During the Great Recession, it peaked at 10%. Besides social programs, it was much harder then also because families typically had just one breadwinner. If Dad was out of work, the whole family was. Today, there are many two income families. If one loses his/ her job, there is another person still bringing home money. There was no comparison between the two events.

[devil21]

Today's market gyrations looked very unstable. Yields continued up. No rate hike announced but who really believes anything out of the Fed at this point?

[Krugminator2]

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

[devil21]

-666

[dannno]

I wouldn't wanna be anywhere near the Super Bowl this weekend...

[devil21]

I wouldn't wanna be anywhere near the Super Bowl this weekend...

That we can agree on 100%.

[oyarde]

Gold still 1332 . I am just gonna keep on rollin' .

[r3volution 3.0]

$1 trillion budget deficits far as the eye can see, Fed starting to unwind its balance sheet, CPI rising, dollar index dropping...

I'd expect interest rates to keep rising until/unless the Fed reverses course and starts printing again (even worse, at least long term).

Suffice it to say, I don't envy the incoming Fed Chair. He won't finish his first term without a severe crisis.

[Jan2017]

-666

Groundhog Day, 2018 recap

The FBI and CIA Failed Coup Against Trump Unravels
Dow plunges 666


Let's do it again

[devil21]

Gold still 1332 . I am just gonna keep on rollin' .

The smashdown on silver was noteworthy. Big players are loading up on physical in the shadows. The s/g ratio is getting to the point of absurdity. 80:1

[AZJoe]

"There are two bubbles: We have a stock market bubble, and we have a bond market bubble." - Alan Greenspan, January 31, 2018.

[Zippyjuan]

Market drop blamed on the report showing wages were higher- raising inflation fears (and higher interest rates). It was also the last day Janet Yellen was the Fed Chairman.

https://www.investors.com/news/econo...bs-in-january/

Big Wage Gain Sinks Stocks, Bonds

Wall Street was caught off guard on Friday as the Labor Department reported average hourly wage growth of 2.9%, the fastest since 2009 and a pretty sharp break from the kind of Goldilocks readings markets enjoyed throughout 2017.

The Dow Jones industrial average, S&P 500 index and Nasdaq composite sold off on the stock market today, despite a 6% surge in Amazon.com (AMZN) after its fourth-quarter earnings beat. The 10-year Treasury yield jumped to a 4-year high of 2.84%, as markets continue to ratchet up the odds of three Federal Reserve rate hikes in 2018.

But the market reaction to the jobs report may be overdone. While faster wage growth may be on the way, helped by the combination of a tight labor market and corporate tax cuts that companies like Walmart (WMT), Starbucks (SBUX) and Wells Fargo (WFC) have credited for new wage hikes, Friday's report offers plenty of reasons to doubt whether wages really accelerated last month. Here are three:

More at link.

[r3volution 3.0]

Market drop blamed on the report showing wages were higher- raising inflation fears (and higher interest rates).

The rise in rates is what's crushing stocks, but that rise didn't begin with the wages print.

The 10Y UST is up 80 basis points in the last 5 months, 40 YDT, and 10+ in the last 5 days.

This is partly attributable to price inflation/dollar decline, but more to increased supply from the Treasury and Fed, IMO.

The trend accelerated right after the tax bill passed (--> higher deficits, more supply).

[Krugminator2]

Market drop blamed on the report showing wages were higher- raising inflation fears (and higher interest rates). It was also the last day Janet Yellen was the Fed Chairman.

Absolutely none of that stuff is relevant to anything. It played no role in the market dropping. Not even a little bit. Every time the market has a big move up or down in a day, Yahoo Finance, Bloomberg, CNBC, etc always come up with a rationalization. They are never correct. It is financial news porn.

Here is a correct headline. "Market up a Zillion Percent Reaching most Overbought condition in History. Profit Taking Causes Pullback."

[Zippyjuan]

The rise in rates is what's crushing stocks, but that rise didn't begin with the wages print.

The 10Y UST is up 80 basis points in the last 5 months, 40 YDT, and 10+ in the last 5 days.

This is partly attributable to price inflation/dollar decline, but more to increased supply from the Treasury and Fed, IMO.

The trend accelerated right after the tax bill passed (--> higher deficits, more supply).

In the last five months of reporting (end of August to end of January), the Fed holdings of US Treasuries went from $2.465 trillion to $2.436 trillion- a net reduction of $29 billion (they have been reducing their holdings not by selling off securities but by not renewing some of their expiring ones). https://fred.stlouisfed.org/series/TREAST

That is an insignificant amount considering there are over $20 trillion of them out there.

The trend accelerated right after the tax bill passed (--> higher deficits, more supply).

The tax bill has not actually taken effect yet so it has not yet had an effect on debt- though it definitely will.

[r3volution 3.0]

In the last five months of reporting (end of August to end of January), the Fed holdings of US Treasuries went from $2.465 trillion to $2.436 trillion- a net reduction of $29 billion (they have been reducing their holdings not by selling off securities but by not renewing some of their expiring ones). https://fred.stlouisfed.org/series/TREAST

That is an insignificant amount considering there are over $20 trillion of them out there.

The tax bill has not actually taken effect yet so it has not yet had an effect on debt- though it definitely will.

Markets are forward looking Zippy.

The Fed's going to keep unwinding (or so the markets think) and the Treasury's going to keep increasing bond issuance.

[Zippyjuan]

Markets are forward looking Zippy.

The Fed's going to keep unwinding (or so the markets think) and the Treasury's going to keep increasing bond issuance.

The Fed already began unwinding. They are just doing so slowly so as to not disrupt markets. If inflation picks up, they may move faster. That is why the rising wages possibly leading to higher inflation led to fears the Fed may tighten more.

[r3volution 3.0]

The Fed already began unwinding. They are just doing so slowly so as to not disrupt markets. If inflation picks up, they may move faster. That is why the rising wages possibly leading to higher inflation led to fears the Fed may tighten more.

That's a factor (as I said), but I don't see how you could call it the major factor given the 5 months of consistently rising rates in the bond market (which obviously can't be attributed to Friday's wage print). And the wage gain was small anyway, and coupled with a drop in hours worked. IMO, the emphasis on the wage report in the media is about ignoring the real, much larger, much more important, much more politically awkward cause: massive deficits incoming.

2018's going to prove that this bubblicious economy and spendthrift government simply cannot function without Fed money printing. Rates are going to rise, growth is going to slow, and the Fed is going to have to reverse course. QE4 by Q1 2019, I'll predict. Then things get really interesting..

[devil21]

They can make the computer controlled markets say whatever they want on whatever day they want. None of the fundamentals matter anymore.

[r3volution 3.0]

Dow futures down ~200

[r3volution 3.0]

[r3volution 3.0]

[r3volution 3.0]

10Y UST 2.87(!)

Tommorow's going to be a bloodbath.

[r3volution 3.0]

Some bottom buying now, might be a headfake tomorrow...

[r3volution 3.0]

...or not, who knows, but the long term top's in, IMO.

Couple days, a week or two, a month.

Barring some change in fiscal policy from this government, the bond market's going down.

[r3volution 3.0]

Europe's about to open, looks ugly

[r3volution 3.0]

Europe opens a little over 1% lower, Dow futures follow, UST hangs out and does nothing (not really a good sign, should be "flight to quality")

[r3volution 3.0]

Dow futures back down to -200

I'm not saying tommorow's going to be another black Monday, but it's very possible, esp. if the bond market keeps $#@!ting the bed.

Stocks are dumb money; they just follow bonds (slightly less dumb money).

[r3volution 3.0]

The key thing, that every Wall Street hooligan is watching right now is the 10Y.

If it breaks 2.9, watch out.

...it's currently flipping around in response to Europe.

[r3volution 3.0]

PM's now getting a bid