Posts Tagged ‘stock market crash’

JPMorgan vs. Goldman Sachs: Why the Market Was Down 7 Days in a Row

JPMorgan vs. Goldman Sachs: Why the Market Was Down 7 Days in a Row

Courtesy of Ellen Brown at Web of Debt

Murray RothbardWe are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Rubin/Geithner). The bodies left strewn on the battleground could include your pension fund and 401K.

The late Libertarian economist Murray Rothbard wrote that U.S. politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.

In 2000, the Rockefellers and the Morgans joined forces, when JPMorgan and Chase Manhattan merged to become JPMorgan Chase Co. Today the battling banking titans are JPMorgan Chase and Goldman Sachs, an investment bank that gained notoriety for its speculative practices in the 1920s. In 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund similar to a Ponzi scheme. The fund failed in the stock market crash of 1929, marring the firm’s reputation for years afterwards. Former Treasury Secretaries Henry Paulson and Robert Rubin came from Goldman, and current Treasury Secretary Timothy Geithner rose through the ranks of government as a Rubin protégé. One commentator called the U.S. Treasury “Goldman Sachs South.”

Goldman’s superpower status comes from something more than just access to the money spigots of the banking system. It actually has the ability to manipulate markets. Formerly just an investment bank, in 2008 Goldman magically transformed into a bank holding company. That gave it access to the Federal Reserve’s lending window; but at the same time it remained an investment bank, aggressively speculating in the markets. The upshot was that it can now borrow massive amounts of money at virtually 0% interest, and it can use this money not only to speculate for its own account but to bend markets to its will.

But Goldman Sachs has been caught in this blatant market manipulation so often that the JPMorgan faction of the banking


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Stock Market Crash – Year One in Review – The Gathering Storm

Happy anniversary market crash! 

One year ago, in September, the market started falling in earnest.  A lot of people were caught by surprise by that drop as many thought we had just had a major correction and the worst was over.  We had bounced off 10,800 on July 14th and had made it all the way back to touch 12,000 on August 14th but that day I warned my members in the morning post:

We’re really through the looking glass when you see investors stampede right back into oil and other commodity stocks at the first sign of a bounce off a 20% drop.  I guess they’ve never seen a pullback off 20% before so it makes sense that Cramer would hit the BUYBUYBUY button on anything that smells like crude.  I wish I had access to the tapes of all these same idiots telling you to BUYBUYBUY housing stocks and mortgage companies when they made their first bounce on the way to 80% losses.

It’s not just oil that is expensive, now it has to compete for consumer dollars with food and airline fares and tobacco prices and consumer goods etc.  Oil was able to bubble up because people were enjoying a robust economy and it was the ONLY thing that was rising out of control.  Metals began to follow it as that didn’t affect the average person but then companies had to start passing on the increased costs and the banks stopped lending money and the consumers were forced to stop using their home’s equity (if there was any left) like a piggy bank and *poof,* suddenly there isn’t enough money for oil.  This isn’t going to change because there’ s a hurricane or a shut down pipeline or anything else.

Oil was trading at a still ridiculous $115 a barrel that day, down from $147 on July 1st but still choking the life out of the economy.  We were very bearish on oil and natural gas ($14 at the time) as the fundamentals simply didn't support the price of oil at $115 as much as they didn't support $147 a month earlier.  I had gone negative on oil too early though, as we thought $120 was surely the top back in May.  Sometimes fundamentals can get you too ahead of the market.  Our man Ben was between
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Hussman on Post-Crash Dynamics

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In this article, Mish refers to a post by John Hussman reprinted here several days ago.

Hussman on Post-Crash Dynamics

Crash Zeppelin LZ18Courtesy of Mish

John Hussman is nearly always a great read and his post on Post-Crash Dynamics is no exception. Here are a few snips.

If you look carefully at the economic data that shows improvement, and correct for the impact of government outlays, it is difficult to find anything but continued deterioration in private demand and investment. What we do see is a government that has run what is now a trillion dollar deficit year-to-date, representing some 7% of GDP. That sort of tab will undoubtedly buy some amount of Cool-Aid, but it has been something of a disappointment to watch how eagerly investors have guzzled it down. This is like somebody borrowing money from their Uncle and then celebrating that their income has gone up.

Moreover, it might be enticing to look at a chart of the S&P 500 and envision a quick return to 2007 highs and beyond, but it is important to recognize that those highs were based on profit margins about 50% above historical norms, combined with an elevated P/E multiple of about 19 against those earnings. Even if the economy is poised for a sustained recovery here, the belief that those joint outliers will be quickly re-established goes against historical precedent.

Post-Crash Dynamics

click on chart for sharper image

When markets crashes are coupled with changes in the fundamentals that supported the preceding bubble – as we observed in the post-1929 market, the gold market of the 1980′s, and the post-1990 Japanese market, and currently observe in the deflation of the recent debt bubble – they typically do not recover quickly. Indeed, the hallmark of these post-crash markets is the very extended sideways adjustment that they experience, generally for many years.

The above chart shows the length of time stock markets may go nowhere following a crash. The annotations in bright red are mine, and the picture is not a pretty one. I have posted a similar chart of the Nikkei many times.

Two Lost Decades

The Japanese Stock Market is about 25% of what it was close to 20 years ago! Yes, I know, the US is not Japan, that deflation can’t happen


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Zero Hedge

Bomb Found In Mailbox At George Soros's Westchester Home

Courtesy of ZeroHedge. View original post here.

An employee of billionaire investor George Soros discovered a bomb placed in a mailbox at Soros’s Westchester County home on Monday. The explosive device was later "protectively detonated" by an FBI bomb squad after the employee moved it to a wooded area. 

According to ...



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Phil's Favorites

The risk of 'cascading' natural disasters is on the rise

 

The risk of 'cascading' natural disasters is on the rise

Deadly debris flows came to Los Angeles after heavy rain pounded wildfire-scarred land. AP Photo/Reed Saxon

Courtesy of Farshid Vahedifard, Mississippi State University and Amir AghaKouchak, University of California, Irvine

In a warming world, the dangers from natural disasters are changing. In a ...



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Chart School

Weekly Market Recap Oct 21, 2018

Courtesy of Blain.

After the heavy selling the week prior there was sure to be an oversold bounce and indeed last Tuesday brought much of that.  It is always interesting to see what happens after that bounce – often in this bull market, once the indexes turn back up they move like a freight train.  This time – thus far at least – the action has been less aggressive.  Selling on Thursday took the S&P 500 right back down to the 200 day moving average and rally attempts Friday were fruitless.  In whole the S&P 500 barely budged for the week.

Yields on the 10 year have thus far held their own “breakout” level:

The Chinese market had an interesting Friday with an “...



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Insider Scoop

Morgan Stanley Downgrades A Fleet Of Freight Stocks

Courtesy of Benzinga.

Related UNP 8 Biggest Price Target Changes For Monday Benzinga's Top Upgrades, Downgrades For October 22, 2018 ...

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Kimble Charting Solutions

Stock Market Crash Deja Vu? Keep An Eye On This Pattern!

Courtesy of Chris Kimble.

Just over 3 weeks ago, I shared a chart looking at the divergence that has been brewing under the surface of the S&P 500 (NYSEARCA:SPY). Since that post, the S&P 500 finds itself in a deep pullback, with other key stock market indices hitting correction territory at their lows.

Today we provide another look at the divergence and highlight why it’s time for investors to pay closer attention. In the chart below, we compare today’s setup to 2000 and 2007 and the market crashes that followed.  Note, though, that we have NOT broken trend support yet.

Similar to today, in 2000 and 2007 the S&P 500 made a...



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Digital Currencies

Grocers: Get ready to join the blockchain party

 

Grocers: Get ready to join the blockchain party

Five people died and more than 200 got sick during a 2018 E. coli outbreak, the largest in more than a decade. The bacteria was traced to contaminated romaine lettuce. (Shutterstock)

Courtesy of Sylvain Charlebois, Dalhousie University

In the wake of this year’s large E. coli outbreak, Walmart notified its leafy green suppliers that they must be using blockchain technology to trace their products before the end of 2019.

Walmart, one of the world’s largest retailers, has be...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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