by ilene - September 2nd, 2015 2:53 am
Courtesy of Dana Lyons' Tumblr
August 6-month lows have had a tendency to be broken in the coming months, prior to a year-end bounce.
After getting kicked in the teeth in August, the stock market is starting out September by getting stomped on the head. Following the historic rebound to end last week, investors were hoping that the worst was behind them. As we noted regarding such rebounds yesterday, however, perhaps we should not be surprised by renewed weakness. And adding further evidence to support the “retest” scenario versus the “V-bottom” scenario, today’s post looks at 6-month lows in the S&P 500 occurring in August and the resultant performance through the end of the year.
Going back to 1950, this is the 13th year in which the S&P 500 has reached a 6-month low (on an intraday-basis), the most of any month besides July and October. Here are the 13 years:
How did the S&P 500 react to these August lows? Here is a chart showing the performance of the index from September 1 through year-end in each of the years listed above (FYI, the chart indicates performance based on the % above or below the August low).
First of all, apologies for the busy chart. Second of all, are there any patterns consistent enough to take into consideration when navigating the next 4 months? Well, that’s up to you, but there are a few notable tendencies among the sample of 12 prior instances.
- 10 of the 12 years saw the S&P 500 drop below the August at some point before the end of the year.
- Only 1982 and 2004 saw the S&P 500 hold above the August low through year-end.
- The median low-point among the entire sample was -3.7% below the August
by Zero Hedge - September 2nd, 2015 2:04 am
Submitted by George Washington.
Former CIA boss and 4-star general David Petraeus – who still (believe it or not) holds a lot of sway in Washington – suggests we should arm Al Qaeda to fight ISIS.
He’s not alone …
As we’ve previously shown, other mainstream American figures support arming Al Qaeda … and ISIS.
And we actually ARE supporting ISIS to some extent.
Truly, America’s foreign policy is insane.
The Alarming Regularity of 6 and 7-Sigma Events Illustrates Why a Deep Understanding of Banker-Induced Fraud is a Necessity
by Zero Hedge - September 2nd, 2015 1:50 am
Submitted by smartknowledgeu.
In today’s SmartKnowledgeU_Vlog_005, we discuss why an intelligent investment strategy is impossible without incorporation of market & banker fraud analysis, something that we have incorporated heavily into our strategies since we launched our company in mid-2007. Understanding market fraud allowed us to position our portfolio short the US stock market before the fall out occurred these past few weeks, as we even publicly posted this warning about an “imminent” US market collapse to our twitter account on 19 August, 2015, just one day before the US stock markets began free-falling.
In addition to shorting US markets and closing out positions at very quick and substantial gains, our understanding of banker pricing fraud in gold and silver futures markets also allowed us to short gold and silver into the US stock market free fall and quickly close out our short gold and short silver positions respectively for very quick +5.27% and +16.24% gains. In our latest vlog below, we discuss why understanding the meaning behind these 5, 6, 7, and even 16-sigma events that are occuring with alarming regularity in global financial markets has been critical to maintaining positive yields this year in the short-term, will be critical to maintaining strongly positive yields over the long-term, and is necessary in formulating intelligent low-risk strategies to cope with the massive asset and market volatility that we have been experiencing, and that will likely accelerate in future months.
to watch the above vlog, please click the image above
About the Vlogger: JS Kim is the Managing Director and Chief Investment Strategist of SmartKnowledgeU. His Crisis Investment Opportunities newsletter has respectively outperformed the Philadelphia Gold & Silver Index, the Australian ASX200, the London FTSE and the US S&P 500 by +125.53%, +76.92%, +69.07% and +27.63% (investment period from inception on 15 June, 2007 until present day on 2 September, 2015). For more information and access to our annual returns, please visit smartknowledgeu.com
by Zero Hedge - September 1st, 2015 10:45 pm
Submitted by Tyler Durden.
“If the freedom of speech be taken away, then dumb and silent we may be led, like sheep to the slaughter.”—George Washington
The architects of the American police state must think we’re idiots.
With every passing day, we’re being moved further down the road towards a totalitarian society characterized by government censorship, violence, corruption, hypocrisy and intolerance, all packaged for our supposed benefit in the Orwellian doublespeak of national security, tolerance and so-called “government speech.”
Long gone are the days when advocates of free speech could prevail in a case such as Tinker v. Des Moines. Indeed, it’s been 50 years since 13-year-old Mary Beth Tinker was suspended for wearing a black armband to school in protest of the Vietnam War. In taking up her case, the U.S. Supreme Court declared that students do not “shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.”
Were Tinker to make its way through the courts today, it would have to overcome the many hurdles being placed in the path of those attempting to voice sentiments that may be construed as unpopular, offensive, conspiratorial, violent, threatening or anti-government.
Consider, if you will, that the U.S. Supreme Court, historically a champion of the First Amendment, has declared that citizens can exercise their right to free speech everywhere it’s lawful—online, in social media, on a public sidewalk, etc.—as long as they don’t do so in front of the Court itself.
What is the rationale for upholding this ban on expressive activity on the Supreme Court plaza?
“Allowing demonstrations directed at the Court, on the Court’s own front terrace, would tend to yield the…impression…of a Court engaged with — and potentially vulnerable to — outside entreaties by the public.”
Translation: The appellate court that issued that particular ruling in Hodge v. Talkin actually wants us to believe that the Court is so impressionable that the justices could be swayed by the sight of a single man, civil rights activist Harold Hodge, standing alone and silent in the snow in a 20,000 square-foot space in front of the Supreme Court building wearing a small sign protesting the toll the police state is taking on the lives of black and Hispanic Americans.…
by Zero Hedge - September 1st, 2015 10:15 pm
Submitted by Tyler Durden.
Earlier today, Deutsche Bank – who last week won the sellside race to coin a new term for the unfolding EM FX reserve unwind – took a close look at the end of the “Great Accumulation” and what it means for asset prices and DM monetary policy going forward. Here was Deutsche Bank’s “profound” takeaway:
Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD. Many studies have found that reserve buying has reduced both bund and US treasury yields by more than 100bps.
Declining FX reserves should place upward pressure on developed market yields given that the bulk of reserves are allocated to fixed income.
This force is likely to be a persistent headwind towards developed market central banks’ exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy. The path to “normalization” will likely remain slow and fraught with difficulty.
But that, as it turns out, is not all.
As you might imagine, EM capital flows have tracked the Fed, BOJ, and the ECB’s balance sheets quite closely (albeit with a lead) in the post-crisis, QE-dominated world.
What’s interesting however, is that there now appears to be a disconnect:
What accounts for that, you ask? Well, according to DB (and this isn’t exactly surprising) the simple fact is that EM inflows/outflows are far more dependent on the Fed than they are on the BOJ and ECB and that means that a dovish Kuroda and Draghi will be no match for an even semi-hawkish Fed and that could be very bad news for EM flows considering how far ahead the Fed is in terms of approaching a rate hike cycle and considering, as we noted earlier, that DB’s previous answer to the EM FX reserve liquidation quandary was that perhaps “other central banks [will] come in to fill the gap that the PBoC is leaving [as] China’s QT would need to be replaced by higher QE elsewhere, with the ECB and BoJ being the most notable candidates”. From DB:
Given the reliance of EM reserves on QE-enabled financial flows since the 2008 crisis, the speed of reversal should be a key driver of reserves trends going forward. EM capital flows have indeed
by Zero Hedge - September 1st, 2015 9:45 pm
Submitted by dazzak.
CIRCLING THE DRAIN:
So last weeks turmoil is seemingly not over yet…..Was it simply a storm in a teacup brought on by another one of those market tantrums that erupt every now and again to keep everyone on their toes and eventually evaporate? Or was it a significant tremor giving pre warning of a major earthquake to follow?
WAX ON WAX OFF;
Historically September and October are not very good months for stocks and there are fundamental arguments for both sides.
The fact is that there is a lot more to worry about than to be confident of.
There are clearly real concerns both internally and externally that the China’s growth rate is running at closer to 5% than 7%, Brazil and Russia are in recession,
Emerging market countries are suffering massive capital outflows and are burdened with huge dollar debts, Abenomics is not delivering inflation in Japan, the Eurozone is an invalid, Greece is a month away from another potential exit crisis, Europe faces a migrant crisis and the Middle East is unstable.
There is plenty of reason to be concerned especially when the global economy is in the anaemic state it is despite a zero interest rate environment and huge injections of QE. At the height of last week’s crisis the proposed responses if the rout continued were for more of the same — QE in China to be added to more QE in Japan and Europe. There was even a suggestion from the president of the Minneapolis Fed that the week’s developments potentially justified “adding accommodation”. All this despite evidence that the impact of each new injection is diminishing and creating side effects that are sowing the seeds of the next financial crisis.
THE CHARTS DON’T LIE
We broke ,we rallied to the multi year trend line and now we have retreated again…..
Weekly S&P chart:
You really dont need to be a rocket scientist;
What I have not liked from the recent move is that the fixed income market that one would expect to flatten from his point has if fact steepened…this has been down to apparent Chinese liquidation of treasury positions;
YIELDS UP / STOCKS DOWN……
With everything for sale…the next 2 months could be quite hairy
by Zero Hedge - September 1st, 2015 9:45 pm
Submitted by Tyler Durden.
Not a week goes by without the Pentagon carping about an ominous Russian "threat".
Chairman of the Joint Chiefs of Staff Martin Dempsey entered certified Donald “known unknown” Rumsfeld territory when he recently tried to conceptualize the “threat”; “Threats are the combination, or the aggregate, of capabilities and intentions. Let me set aside for the moment, intentions, because I don’t know what Russia intends.”
So Dempsey admits he does not know what he’s talking about. What he seems to know is that Russia is a “threat” anyway — in space, cyber space, ground-based cruise missiles, submarines.
And most of all, a threat to NATO; “One of the things that Russia does seem to do is either discredit, or even more ominously, create the conditions for the failure of NATO.”
So Russia “does seem” to discredit an already self-discredited NATO. That’s not much of a “threat”.
All these rhetorical games take place while NATO “does seem” to get ready for a direct confrontation with Russia. And make no mistake; Moscow does view NATO’s belligerence as a real threat.
It’s PGS vs. S-500
Assuming there would even be a lethal Russia-NATO confrontation, Russian tactical nuclear weapons would knock out all NATO airports in less than twenty minutes. Dempsey – cryptically – admits as much.
What he cannot possibly admit is if a decision had been made in Washington, a long time ago, preventing NATO’s infinite expansion, Russia’s concerted move to upgrade its nuclear weapon arsenal would have been unnecessary.
Geopolitically, the Pentagon has finally seen which way the – strategic partnership – wind
Chinese Stocks Open Down Hard As PBOC Strengthens Yuan By Most Since 2010 & Default Risk Hits 2-Year High
by Zero Hedge - September 1st, 2015 9:21 pm
Submitted by Tyler Durden.
From the moment Japan opened, USDJPY buying took off (standard 100 pip rip on absolutely no news whatsoever) as yet another manipulated market breathed new life into equity longs dreams. That 'help' combined with the fact that, as SCMP's George Chen reports, 50 China brokerages will jointly contribute 100 bln RMB capital to the government margin finance agency to start "new round of market rescue" provided some stability after US markets' collapse. However, tonight's big news appears to be a major crackdown on leverage as MNI notes regulators ordering brokerage houses to clear all non-official margin trading services – not just halting new clients but also closing existing accounts. Chinese stocks are opening modestly lower as PBOC fixes Yuan stronger for the 4th day in a row. Finally, China credit risk has spiked to 2-year highs as traders increase positions dramatically. The manipulation will continue through tomorrow at least when Parade Week peaks, so buckle up.
Japan "rescued"… "Mysterious"? – Large USD/JPY Buyer Seen Before Nikkei Index Opened: Traders
Though some weakness at the Chinese open:
- *FTSE CHINA A50 SEPT. FUTURES DROP 0.7% IN SINGAPORE
- *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 2.2% TO 2,939.8
- *SHANGHAI COMPOSITE INDEX SET TO OPEN 4.4% LOWER
And then PBOC Strengthens Yuan:
- *CHINA SETS YUAN REFERENCE RATE AT 6.3619 AGAINST U.S. DOLLAR
- *CHINA RAISES YUAN REFERENCE RATE FOR FOURTH DAY
And loses controil of money markets:
- *CHINA OVERNIGHT MONEY-MARKET RATE RISES 18 BPS TO 2%
This is the biggest 4-day strengthening in 5 years!
But tonight's big news appears be a major clampdown on margin trading (as MNI reports),
China's stock market regulator has issued a circular ordering brokerage houses to clear all non-official margin trading services jointly provided with a third party — not just halting new clients but also closing existing accounts.
Chinese brokerage houses were allowed to offer margin trading services in 2010 but strong stock market performance since last year saw many third parties also providing margin trading services with help from brokerage houses. Beijing realized the potential threat of these fast-growing margin trading services, particularly unofficial ones, and started to push for market deleveraging in late-June this year, contributing to the stock market rout which saw Shanghai Composite
by Zero Hedge - September 1st, 2015 8:40 pm
Submitted by Tyler Durden.
Will Fed chief Janet Yellen pull the trigger to raise interest rates in September or not? Only the soothsayers at Jackson Hole know for sure. But while the world awaits the decision, ponder this. What do the following have in common?
- Asset bubbles fueled by monetary policy.
- Unsustainable sovereign debts threatening government bankruptcies.
- Government economic “cures” worse than the diseases they are supposed to treat.
- Questionable GDP statistics.
- Recurring bank bailouts.
Figured it out yet? They are all driven by an overweening state religion called macroeconomics.
Friedrich Hayek said it best. “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
A pity this simple, yet profound insight remains at the fringes of a field that continues to wreak havoc in the hands of those who imagine they can design economic outcomes.
Think about it. We are currently watching global stock markets gyrate toward breakdown trying to anticipate the whims of a cloistered professor who never launched a business, never met a payroll, never shipped a product, and never won an election, yet has been empowered to determine the price of money. What’s even stranger is that people consider this normal. Ask yourself: Why do we wait on pins and needles for Janet Yellen to set interest rates yet laugh at the idea that kings once set the “just price” for a loaf of bread?
That’s where Hayek’s curious task comes in.
The human inclination to seek order in a seemingly chaotic world has long been exploited by generations of pundits, professors, and politicians eager to convince us they can impart certainty to the unknowable.
Note that I say the unknowable, not the unknown. Science has proven quite adept at exploring the unknown. That’s because as science progresses, falsifiable hypotheses that fail to make accurate predictions get discarded in favor of alternatives that do. No so in macroeconomics, whose prognostications bear an uncanny resemblance to predicting the nature of the afterlife. Rather than make continuous progress, the same discredited macroeconomic theories tend to cycle in and out of fashion depending on which court economists have the upper hand…
by Zero Hedge - September 1st, 2015 8:12 pm
Submitted by Tyler Durden.
Wonder no more…
Get back to work Mr. Kuroda…
But remember – it’s Chinese stocks that are “manipulated” – that is all.