-
Re: Tracking the DOW PLUNGE!!!
-
Re: Whither the Market in an Era of Rate Hikes?
Quote:
Originally Posted by
JohnQPublic
Fed is Swapping Zero Interest Rates for Cheap Oil; Turmoil in Markets Result
JohnQPublic
20JAN2016
Stock markets are in a panic selling mode as we speak. There are real issues out there, such as China’s economy and plummeting oil prices. Cheap oil is good, right? Well why are the financial pundits complaining about it. I believe it is because the banks are still leveraged up on derivatives, and the rapid change in oil prices could cause them to collapse.
Zerohedge has even reported that the Dallas Fed told Banks to suspend mark-to-market for energy loans four days ago. We are told oil is dropping because of lack of demand (China), to punish Russia, Saudi refuses to decrease production, etc.
I would like to propose another reason: The Fed need to raise interest rates. It cannot do that without collapsing the derivatives bubble. Unless, that is it can find a substitute for zero interest rates. Could $10/barrel oil be the ticket? If true, at this point, the first prick in the derivatives bubble has been applied by the Fed, and the corresponding collapse of oil prices is occurring. Is it getting out of control? Can the Fed control this process? Only time will tell.
My bet is they think they can but they can't. They have manipulated every market too long, no one has a clue what a real market prize is of anything any longer. They will as desperation climbs, push an endless amounts of money into the market, which will destroy the value of money, actually it never had any, so the perception of value...
-
Re: Whither the Market in an Era of Rate Hikes?
wouldnt be surprised for the ppt to drive it back up 300 or 400 dow pts
chart guys see a major support level broken - today it broke through the two ppt stops from 2015
-
Re: Whither the Market in an Era of Rate Hikes?
-
Re: Whither the Market in an Era of Rate Hikes?
look like the fed gave some free paper to someone ... Markets
Updated: 1:53:10pm ET
-
Re: Whither the Market in an Era of Rate Hikes?
been keeping one eye on cnbc since the thing started a few weeks ago
over that time period the consensus of their guest experts is to continue to hold your stocks, in fact a good time to buy - economy is strong, inflation is low, jobs are plentiful
everyone that's followed their advice has been torched
-
Re: Whither the Market in an Era of Rate Hikes?
-
Re: Whither the Market in an Era of Rate Hikes?
Quote:
Originally Posted by
cheka.
been keeping one eye on cnbc since the thing started a few weeks ago
over that time period the consensus of their guest experts is to continue to hold your stocks, in fact a good time to buy - economy is strong, inflation is low, jobs are plentiful
everyone that's followed their advice has been torched
That is one of the purposes of MSM, to recruit bag holders... The main one though is to fool all the people all the time...
-
Re: Whither the Market in an Era of Rate Hikes?
thanks mad , I looked for the thread It was so far back didn't see it ... Markets
Updated: Jan 20
-
Re: Whither the Market in an Era of Rate Hikes?
World Markets
Asian markets finished sharply lower today with shares in China leading the region. The Shanghai Composite is down 3.23% while Japan's Nikkei 225 is off 2.43% and Hong Kong's Hang Seng is lower by 1.70%.
Asian Indexes
-
Re: Whither the Market in an Era of Rate Hikes?
-
Re: Whither the Market in an Era of Rate Hikes?
Look out, stocks might fall a lot further
By Brett Arends
Published: Jan 21, 2016 8:22 a.m. ET
Share
26
The Dow could fall by 1,000 to 5,000 points and still not be ‘cheap’
http://ei.marketwatch.com//Multimedi...f-0015c588e0f6
http://i.mktw.net/_newsimages/2014_d...Arends_100.png By
BrettArends
Columnist
Hard to believe, but the Dow Jones Industrial Average DIA, -1.51% could fall by another 1,000 to 5,000 points and still not be “cheap” compared with long-term stock-valuation measures.
That’s the stark conclusion from an analysis comparing current stock prices to underlying measures such as per-share revenue, earnings and corporate net worth.
And it suggests that even if we are now overdue for a short-term bounce or rally of some kind, buying heavily into the latest sell-off isn’t the kind of one-way bet that value investors crave.
Stocks are certainly much cheaper than they were a few weeks ago. After the worst start to a new year in Wall Street history, the Dow Jones Industrial Average is down about 10% since Jan. 1. Small-company stocks are now deep in a bear market after falling more than 20% from last spring’s highs.
But cheaper doesn’t necessarily mean cheap.
Even after the sell-off, U.S. stocks are valued at around 1.4 times annual per-share revenue. FactSet says the average since 2001, when it began tracking the data, is 1.3 times revenue. So the Dow could fall another 7%, or over 1,000 points, and still be no lower than its modern-day average.
And the picture looks even worse when you also add in those companies’ soaring debts. According to the Federal Reserve, nonfinancial corporations have increased their total debts since 2007 from $6.3 trillion to over $8 trillion. As FactSet says, total shares plus total debts — the so-called “enterprise value” — of U.S. public companies are now 2.4 times annual per-share revenue, compared with an average of 2.1 times since 2001.
Data from the U.S. Federal Reserve, meanwhile, say U.S. nonfinancial corporate stocks are now valued at about 90% of the replacement cost of company assets, a metric known as “Tobin’s Q.” But the historic average, going back a century, is in the region of 60% of replacement costs. By this measure, stocks could fall by another third, taking the Dow all the way down toward 10,000. (On Wednesday it closed at 15,767.) Similar calculations could be reached by comparing share prices to average per-share earnings, a measure known as the cyclically adjusted price-to-earnings ratio, commonly known as CAPE, after Yale finance professor Robert Shiller, who made it famous.
Even when you compare stocks to the earnings of the past 12 months, it’s hard to say they are in any kind of bargain territory.
At best, depending on how you measure things, you could say they’re no longer wildly expensive.
None of this means the current slump must get worse anytime soon. The only short-term cause of a market selloff is the same: more sellers than buyers. At some point more buyers appear, while some sellers pause for breath. Wednesday afternoon’s turnaround, which saw the Dow erase half of an early 500-point slump, is at least a hopeful sign.
But it certainly casts a cloud over any bargain hunting. And note that these numbers only measure how far the market would have to fall to reach average levels. They do not reflect what would happen if the market did what it has done frequently in the past, and plunged back down to very cheap levels. Maybe that will never happen. Let’s hope. Because when you factor in those numbers, it’s a long way down.
More from MarketWatch
-
Re: Whither the Market in an Era of Rate Hikes?
looks like the beat down on gold and silver will never end .... http://www.kitconet.com/images/sp_en_6.gif
-
Re: Whither the Market in an Era of Rate Hikes?
Quote:
Originally Posted by
Spectrism
Mike Maloney says the Fed has no bullets left. I think they are trying to use cheap oil as a way to extend the range they can play in, and maybe to allow them to raise interest rates (offset zero interest rates with cheap oil). I am not sure exactly how they can do that, but they do have the petro-dollar mechanism and derivatives, plus possibly the cooperation of Obama (who supposedly got Saudi to pump more oil to punish Russia for instance). Petroleum does act more like a currency than say gold does, effectively, today.
http://beforeitsnews.com/financial-m...t-2857864.html
-
Re: Whither the Market in an Era of Rate Hikes?
ppt stopped the sp500 at/near the level of the two attempted selloffs in 2015
they might not be ready to let it go....yet
-
Re: Whither the Market in an Era of Rate Hikes?
George Soros says he shorted S&P 500, went long U.S. Treasurys
Marketwatch
Published: Jan 21, 2016 3:40 p.m. ET
Billionaire hedge-fund investor George Soros on Thursday said he shorted the S&P 500 index and also went long U.S. government bonds. In an interview with Bloomberg Television in Davos, Switzerland, Soros said it remained too early to buy stocks and that he would be surprised if the Federal Reserve raised interest rates again. Soros also said a hard landing for China's economy "is practically unavoidable" but that the country has the resources to manage it.
-
Re: Whither the Market in an Era of Rate Hikes?
Baltic Dry Index + Watchlist
BDIY:IND
354.00
1.00
0.28%
As of 07:59:18 ET on 01/22/2016.
Previous Close
355.00
52Wk Range
354.00 - 1,222.00
1 Yr Return
-50.83%
YTD Return
-25.94%
Before it's here, it's on the Bloomberg Terminal.
1M
1Y
5Y
+
Indicators
Rate of Change
Relative Strength
MACD
Volume
579111315171921
360380400420440460480
01/07445
-
Re: Tracking the DOW PLUNGE!!!
Markets
Updated: 11:16:54am ET
-
Re: Tracking the DOW PLUNGE!!!
-
Re: Tracking the DOW PLUNGE!!!
Starting the week soft in NY. I am surprised they have not blamed it on the blizzard!
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
JohnQPublic
Starting the week soft in NY. I am surprised they have not blamed it on the blizzard!
Oh they will....they will
-
Re: Tracking the DOW PLUNGE!!!
So far down 100 to start the week.
-
Re: Tracking the DOW PLUNGE!!!
-
Re: Tracking the DOW PLUNGE!!!
World Markets
Asian markets finished sharply lower today with shares in China leading the region. The Shanghai Composite is down 6.42% while Hong Kong's Hang Seng is off 2.48% and Japan's Nikkei 225 is lower by 2.35%.
Asian Indexes
http://i.cdn.turner.com/money/.eleme...nClosedKey.gif
World Gainers & Losers
Data as of Jan 25
Latest International News
See All International News
-
Re: Tracking the DOW PLUNGE!!!
EXCLUSIVE: The Secret Behind the Next Global Crash
© AFP 2016/ WANG ZHAO
Columnists15:47 21.01.2016(updated 21:16 21.01.2016) Get short URL
Pepe Escobar
48326241277
The World Economic Forum in Davos is submerged by a tsunami of denials, and even non-denial denials, stating there won’t be a follow-up to the Crash of 2008.
Yet there will be. And the stage is already set for it.
Selected Persian Gulf traders, and that includes Westerners working in the Gulf confirm that Saudi Arabia is unloading at least $1 trillion in securities and crashing global markets under orders from the Masters of the Universe – those above the lame presidency of Barack Obama.
http://cdn5.img.sputniknews.com/imag...1032822336.jpg
© AP Photo/ JOHN MOORE
Fear And Loathing in the House of Saud
Those were the days when the House of Saud would as much as flirt with such an idea to have all their assets frozen. Yet now they are acting under orders. And more is to come; according to crack Persian Gulf traders Saudi Western security investments may amount to as much as $8 trillion, and Abu Dhabi’s as $4 trillion.In Abu Dhabi everything was broken into compartments, so no one could figure it out, except brokers and traders who would know each supervisor of a compartment of investments. And for the House of Saud, predictably, denial is an iron rule.
This massive securities dump has been occasionally corporate media, but the figures are grossly underestimated. The full information simply won’t filter because the Masters of the Universe have vetoed it.
There has been a huge increase in the Saudi and Abu Dhabi dump since the start of 2016. A Persian Gulf source says the Saudi strategy “will demolish the markets.” Another referred to a case of “maggots eating the carcass in the dark”; one just had to look at the rout in Wall Street, across Europe and in Hong Kong and Tokyo on Wednesday.
So it’s already happening. And a crucial subplot may be, in the short to medium term, no less than the collapse of the eurozone.
The Crash of 2016?
So a case could be made of a panicked House of Saud being instrumentalized to crash a great deal of the global economy. Cui bono?
http://cdn5.img.sputniknews.com/imag...1016104801.jpg
© Sputnik/ Mihail Mokrushin
Not the Lowest Point: Russia's Ex-Finance Minister Claims Oil Price May Drop to $16-18 a Barrel
Moscow and Tehran are very much on it. The logic behind crashing markets, creating a recession and a depression – from the point of view of the Masters of the Universe above the lame duck President of the United States — is to engineer a major slow down, cripple buying patterns, decrease oil and natural gas consumption, and point Russia on a road to ruin. Besides, the ultra low oil price also translates into a sort of ersatz sanction on Iran.Still, Iranian oil about to reach the market will be around an extra 500,000 barrels a day by mid-year, plus a surplus stored in tankers in the Persian Gulf. This oil can and will be absorbed, as demand is rising (in the US, for instance, by 1.9 million barrels a day in 2015) while supply is falling.
Surging demand and falling production will reverse the oil crash by July. Moreover, China’s oil imports recently surged 9.3% at 7.85 million barrels a day, discrediting the hegemonic narrative of a collapse of China's economy – or of China being responsible for the current market blues.
So, as I outlined here, oil should turn around soon. Goldman Sachs concurs. That gives the Masters of the Universe a short window of opportunity enabling the Saudis to dump massive amounts of securities in the markets.
The House of Saud may need the money badly, considering their budget on red alert. But dumping their securities is also clearly self-destructive. They simply cannot sell $8 trillion. The House of Saud is actually destroying the balance of their wealth. As much as Western hagiography tries to paint Riyadh as a responsible player, the fact is scores of Saudi princes are horrified at the destruction of the wealth of the kingdom through this slow motion harakiri.
Would there be a Plan B? Yes. Warrior prince Mohammed bin Sultan – who’s actually running the show in Riyadh – should be on the first flight to Moscow to engineer a common strategy. Yet that won’t happen.
http://cdn1.img.sputniknews.com/imag...1031619292.jpg
© AFP 2016/ MARK RALSTON
The New Normal: Low But Stable Oil Prices
And as far as China – Saudi Arabia’s top oil importer — is concerned, Xi Jinping has just been to Riyadh; Aramco and Sinopec signed a strategic partnership; but the strategic partnership that really matters, considering the future of One Belt, One Road, is actually Beijing-Tehran. The massive Saudi dumping of securities ties in with the Saudi oil price war. In the current, extremely volatile situation oil is down, stocks are down and oil stocks are down. Still the House of Saud has not understood that the Masters of the Universe are getting them to destroy themselves many times over, including flooding the oil market with their shut-in capacity. And all that to fatally wound Russia, Iran and… Saudi Arabia itself.
Only a Pawn in Their Game
Meanwhile, Riyadh is rife with rumors there will be a coup against King Salman – virtually demented and confined to a room in his palace in Riyadh. There are two possible scenarios in play:
1) King Salman, 80, abdicates in favor of his son, notorious arrogant/ignorant troublemaker Warrior Prince Mohammed bin Salman, 30, currently deputy crown prince and defense minister and the second in the line of succession but de facto running the show in Riyadh. This could happen anytime soon. As an extra bonus, current Oil Minister Ali al-Naimi, not a royal, would be replaced by Abdulaziz bin Salman, another son of the king.
2) A palace coup. Salman – and his troublemaker son – are out of the picture, replaced by Ahmed bin Abdulaziz (who was a previous Minister of the Interior), or Prince Mohammed bin Nayef (the current Minister of the Interior and Crown Prince.)
Whatever scenario prevails, the British MI6 is intimately aware of the whole pantomime. And the German BND might be. Everyone remembers the BND memo at the end of 2015 that depicted Deputy Crown Prince Mohammed bin Salman as a “political gambler” who is destabilizing the Arab world through proxy wars in Yemen and Syria.
Saudi sources — for obvious reasons insisting on anonymity — stress that as much as 80% of the House of Saud favors a coup.
Yet the question is whether a House reshuffle would change their slow motion hara-kiri. The categorical imperative remains; the Masters of the Universe are ready to bring the whole world down in a major recession basically to strangle Russia. The House of Saud is just a pawn in this vicious game.
The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.
https://www.gstatic.com/images/icons/gplus-32.png
Read more: http://sputniknews.com/columnists/20...#ixzz3yLqYB0dl
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
JohnQPublic
Starting the week soft in NY. I am surprised they have not blamed it on the blizzard!
I figured out around 25 years ago that financial commentators reasons and excuses for market moves were bullshit.
-
Re: Tracking the DOW PLUNGE!!!
Baltic Dry Index Crashes Near Record Low
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
The Baltic Dry Index staged a recovery mid-year, hopefully rising amid promises of stability in China and an 'escape' velocity USA. All that centrally-planned hope and hype faith has been eviscerated on the altar of economic reality. With no ability to directly manipulate the Baltic Dry Index to 'pretend' everything is awesome, it remains among the best 'real' indicators of the state of the global economy… and it's in the toilet…
From hope to nope…
http://www.zerohedge.com/sites/defau...17_bdiy1_0.jpg
The Batlc Dry nears all-time record lows once again…
http://www.zerohedge.com/sites/defau...117_bdiy_0.jpg
In fact, for this time of year, it has never been lower…
http://www.zerohedge.com/sites/defau...17_bdiy2_0.jpg
But apart from that, buy stocks because terrorism rocks and The Fed would not be raising rates unless everything was awesome, right?
Charts: Bloomberg
Bonus Chart: It's not just The Baltic Dry (or the China Containerized Feight Index), HARPEX has also collapsed to 2008 levels…Harpex for the 6,500 and 8,500 TEU ships are at the exact same level as their 2009 lows and trending lower
http://www.zerohedge.com/sites/defau...%20heavy_0.png
But don't worry as talking heads will tell you it is all a supply problem… and nothing to do with demand… MAYBE they'll forget to mention the 'why' there is over-supply – because the freaking manipulations of market-based signals of demand create a massive mal-investment boom in shipbuilding!!!! </rant
-
Re: Tracking the DOW PLUNGE!!!
The global shipping index may provide a clue about how Dow Jones Transportation Index will perform in the coming days.
Security: $TRAN, $BDI
Position: N/A
The Dow Jones Transportation Average (DJTA) is a widely followed gauge of the US transportation sector. It includes several railroads, airlines (both cargo and passenger), marine transportation, and trucking companies. On the global front, the Baltic Dry Index (BDI) tracks worldwide international shipping prices of various dry bulk items including coal, iron ore, and grain.
|
Figure 1 shows a weekly chart of the BDI. Since the beginning of June 2010, the Baltic Dry Index has fallen more than 50%. It has relentlessly moved down for six weeks in a row, and last week, it gapped below its September 2009 support. As of Friday, July 9, it had made a fresh 52-week low, sitting below 2000.
|
| http://technical.traders.com/authors/images/5436.gif |
| FIGURE 1: BDI, WEEKLY. Now it’s at its 52-week low. |
| Graphic provided by: StockCharts.com. |
|
Figure 2 shows a weekly chart of DJTA. It is about 12% off of its 52-week high. Recently, it moved higher with Dow Jones Industrial Average (DJIA) and claimed its 40-week line, which approximates a 200-day moving average.
|
| http://technical.traders.com/authors/images/5436_3.gif |
| FIGURE 2: DJTA, WEEKLY. Unlike BDI, it is closer to its 52-week high. |
| Graphic provided by: StockCharts.com. |
|
Comparing Figures 1 and 2, we see that prior to the market crash in late 2008, BDI had fallen substantially in the June-August 2008 period. During the same time, the DJTA was essentially consolidating. Starting September 2008, BDI intensified its downward move and very soon DJTA also collapsed. Moving forward, BDI made its low in early December 2008 and began to move higher. By March 2009, when DJTA made its low along with the DJIA, the BDI was well off its lows. After that, BDI made its 52-week high in the middle of November 2009. The DJTA showed a lag on this front as well and made its 52-week high much later in April 2010.
At present, when BDI is in a severe decline week after week, the DJTA appears to be insulated. One view why is that lower international shipping rates are due to more ships in the market to haul cargo. But recent chart patterns clearly show that BDI tends to lead the DJTA. To protect any long position in the transportation sector, the BDI should be closely followed. If it continues on its downward journey in the coming days, then chances are high the DJTA will follow suit.
|
|
-
Re: Tracking the DOW PLUNGE!!!
are that a zerohedge link, mick?
-
Re: Tracking the DOW PLUNGE!!!
at the top of the post it tell you that
-
Re: Tracking the DOW PLUNGE!!!
That BDI chart is from Nov2015. The BDI already went under the record low since then.
Fear in the market;
https://www.youtube.com/watch?v=KO8ZgbVDudw
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
Spectrism
That BDI chart is from Nov2015. The BDI already went under the record low since then.
$354 right now.
-
Re: Tracking the DOW PLUNGE!!!
Baltic Dry Index + Watchlist
BDIY:IND
354.00
0.00
0.00%
As of 08:00:55 ET on 01/25/2016.
Previous Close
354.00
52Wk Range
354.00 - 1,222.00
1 Yr Return
-49.64%
YTD Return
-25.94%
Before it's here, it's on the Bloomberg Terminal.
1M
1Y
5Y
+
Indicators
Rate of Change
Relative Strength
MACD
Volume
Previous Close
354.00
52Wk Range
354.00 - 1,222.00
1 Yr Return
-49.64%
-
Re: Tracking the DOW PLUNGE!!!
China needs some help at the moment, its economy grew too fast, the markets in Europe, the US, the UK did not produce much income for China, because those countries are having a lot of problems,” she noted, adding that in a situation when some western banks might be failing again, or having a meltdown, similar to that of 2008, such cooperation might be very beneficial. http://sputniknews.com/world/2016012...-alliance.html
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
mick silver
China needs some help at the moment, its economy grew too fast, the markets in Europe, the US, the UK did not produce much income for China, because those countries are having a lot of problems,” she noted, adding that in a situation when some western banks might be failing again, or having a meltdown, similar to that of 2008, such cooperation might be very beneficial.
http://sputniknews.com/world/2016012...-alliance.html
China didn't grow too fast, they were given an instant manufacturing base. This was at the expense of the jobs in Amerika, which were the underpinning of the American marketplace. Now that the marketplace has been crippled, China cannot sell as much of their crap as they had planned.
Also, China has been over building with borrowed (fake) money. They over stocked many commodities and overbuilt cities that were not needed. Instead of letting a free market manage what was needed, the central government controlled everything into a disaster plan.... that is, a planned disaster.
-
Re: Tracking the DOW PLUNGE!!!
January 25, 2016 Stock Buybacks and the Wall Street Sharktank: “A Whole Lotta Stealin’ Goin’ On”
by Mike Whitney by
http://uziiw38pmyg1ai60732c4011.wpen..._108346709.jpg
Let’s say you lend your brother-in-law, Pauli, 5,000-bucks so he can get his fledgling construction business off-the-ground. Then, you find out a week later that ‘good-old Pauli’ has shot the wad playing the horses at Long-acres and buying cocktails for his loafer-friends at Matt’s Mad Dog tavern? Would you feel like you’d been ripped off?
Sure you would. But when some slick corporate fraudster pulls the same scam, no one even raises an eyebrow.
What am I talking about?
I’m talking about the way that corporate bosses are allowed to take the hard-earned money from Mom and Pop investors and divide it among their freeloading shareholder friends via stock buybacks. You see, buybacks have been driving the market higher for the better part of six years, and every year the amount of cash diverted into this swindle gets bigger and bigger. According to Research Affiliates:
“In 2013, S&P 500 companies….spent $521 billion on buybacks. In 2014 that amount rose to $634 billion and moved higher still to $696 billion when total repurchases by all publicly traded companies in the U.S. market are included.” (“
Are Buybacks an Oasis or a Mirage?“, Research Affiliates)
“Last year, the corporations in the Russell 3000, a broad U.S. stock index, repurchased $567.6 billion worth of their own shares—a 21% increase over 2012, calculates Rob Leiphart, an analyst at Birinyi Associates, a research firm in Westport, Conn. That brings total buybacks since the beginning of 2005 to $4.21 trillion—or nearly one-fifth of the total value of all U.S. stocks today.” (“Will Stock Buybacks Bite Back?“, Wall Street Journal)
Whatever the exact figure may be, we’re talking serious money here, something in the neighborhood of a half trillion dollars per year. And it’s all being used for the sole purpose of jacking stock price so voracious CEOs and their shareholders can make a killing. Not one dime of this money is going into expanding operations, hiring more employees, Research and Development or improving productivity. The lone objective of this farce is to inflate stock prices to Hindenburg proportions in order to line the pockets of filthy-rich one percenters.
And that’s just the half of it. The part I’ve left out is the part about how much debt these corporations are loading onto their balance sheets in order to feather their own nests. Take a look at this from Bloomberg:
“It’s official, using proceeds from debt sales to send cash to stockholders has never been more popular.
Standard & Poor’s 500 Index companies listed buybacks or dividends among the use of proceeds in $58 billion of bond deals in the past three months, the most on record, according to data compiled by Bloomberg and Sundial Capital Research Inc. More than $460 billion in repurchases were announced during the first five months of 2015, on pace to top last year’s record.” (“
Debt Gone Wild” – Debt Funded Stock Buybacks Soar“, Advisor Perspectives)
So let’s do the math: $58 billion in three months translates into $232 billion per year, which means that a heckuva a lot of the money that’s being given back to shareholders is being borrowed from–you guessed it– Mom and Pop, the suckers who’ll be left holding the bag when the whole system goes bust again in the not-too-distant future.
And why have Mom and Pop been buying all these crappy corporate bonds that are just adding to executive compensation instead of building stronger companies for a brighter future??
Because of the damn Fed, that’s why. The Fed has been holding rates underwater for seven years to keep the money flowing to Wall Street and to force smalltime investors (who have been trying to scrape by on their withering retirements) to look for a higher return on their savings then they’re getting on their risk-free fixed-income investments. In other words, the Fed has put a gun to their heads and forced them back into the Wall Street sharktank.
It’s all a question of incentives, right? If you keep rates low enough, long enough, “they will come”….and get fleeced again for that matter. Which is exactly the way the system is designed to work. Low rates mean more pigs to the slaughter. Period. Now check this out from the Fiscal Times:
“Not only are investors willing to buy more debt, they’re also attaching fewer conditions. Rating service Moody’s tracks covenant quality, essentially a measure of standards that bond issuers must meet, and reported Thursday that the latest reading remains near record highs, which indicates weak restrictions.”
(“
Why Corporate Debt Is Hitting Record Levels“, The Fiscal Times)
Well, that’s just great.
So, Mom and Pop got into bonds thinking, “I don’t trust stocks after the last crash, so I’ll load up on bonds cuz they’re safer”, right? Only now they see they’ve been led into a minefield where they might not get out in one piece. Some bond funds have already suspended redemptions, which means investors can’t withdraw their money. I’m dead serious. It’s like the Hotel California, “You can check out, but you can’t leave.” Not with your money at least. So you can kiss that retirement “Goodbye” and start filling out that job app for Taco Time now before the spot is taken by some other struggling graybeard.
Don’t you think companies should have to sign an oath to investors that they will NOT use their investment to divvy up among their shareholders? I do. And, besides, if a CEO doesn’t have a plan for reinvesting profits in his own business, then he shouldn’t be the CEO, right?
No one buys a bond thinking some corporate jerkoff is going to use the money to goose stock prices. That’s just pulling the wool over people’s eyes. Like I said earlier, no one in their right mind is going to lend brother-in-law Pauli 5K so he can blow it at the races or the tavern. Nor are they going to hand over their paltry retirement-savings to some shifty CEO who wants to use it to buy a bigger yacht or install a fountain at his palatial vacation retreat in the Hamptons. That’s not why people invest money.
This whole stock buyback-thing shouldn’t even be an issue, mainly because we used to have rules that prohibited the practice before the Deregulator in Chief, Ronald Reagan, took office and everything went to hell in a handbasket. Check it out:
“Prior to the Reagan era, executives avoided buybacks due to fears that they would be prosecuted for market manipulation. But under SEC Rule 10b-18, adopted in 1982, companies receive a “safe harbor” from market manipulation liability on stock buybacks if they adhere to four limitations.” (“SEC Admits It’s Not Monitoring Stock Buybacks to Prevent Market Manipulation“, Dave Dayen,
Intercept)
As a result, Big Business keeps piling on more and more debt, creating more and more instability, and paving the way for another agonizing financial crisis.
Yes, I realize you’ve all heard that nonsense about “the strength of US corporations” and their “fortress balance sheets” that are bulging with $2 trillion in excess cash. Sorry to break the news to you, but it’s all baloney. Take a look at this from Bloomberg:
“Corporate leverage is now at its highest level in a decade, according to a new analysis from Goldman Sachs….
Years of low interest rates and eager investors have encouraged Corporate America to go on a shopping spree. On its list are share buybacks and dividend hikes to reward equity investors, as well as a series of merger and acquisition deals, all funded through a generous bond market. Since cash flow has not kept up with the boom in bond sales, the splurge has left Corporate America with its highest debt load in about 10 years, according to the bank…..
“The spectre of rising rates, potential global disinflation (dare we say ‘deflation’?), declining operating profits and wider credit spreads continues to create near-term consternation for weak balance sheet stocks,” the analysts conclude.” (“
Goldman Sachs Says Corporate America Has Quietly Re-levered“, Bloomberg)
And reread that last paragraph slowly and try to savor what the author is really saying. He’s saying that everything has changed; the Fed is taking its foot off the gas, earnings are shrinking, credit is tightening and the whole rickety infrastructure that keeps this Ponzi house of cards upright is about to collapse. Not today. Not tomorrow. But soon.
Which brings us to our final point, which is that there’s been no recovery. It’s all a big fraud. There was no restructuring of debt, no rebuilding of household wealth, no rebound in wages, incomes or employment. (excluding shitty-paying, part-time, service-sector jobs.) The whole lie has been predicated on a failed monetary policy that has created gigantic, system-devouring asset bubbles in stocks, bonds, corporate debt, derivatives, ETFs, REITs… you-name-it, it’s inflated. The Fed has created the same mess it created last time, and the time before that, and the time before that, and the time before that….
Anyway, you get the picture. What was that saying about “Old dogs and new tricks”?
That goes double for the Fed.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
mick silver
at the top of the post it tell you that
Are that a zerohedge post, mick? :confused:
-
Re: Tracking the DOW PLUNGE!!!
Quote:
Originally Posted by
Horn
Are that a zerohedge post, mick? :confused:
I noticed it didn't say also. C'mon Mic put down that chewing tobacco and get with the program!
-
Re: Tracking the DOW PLUNGE!!!
World Markets
North and South American markets finished mixed as of the most recent closing prices. The IPC gained 0.42%, while the S&P 500 led the Bovespa lower. They fell 1.09% and 0.89% respectively.
North and South American Indexes
http://i.cdn.turner.com/money/.eleme...nClosedKey.gif
World Gainers & Losers
Data as of Jan 27
Latest International News
See All International News
-
Re: Tracking the DOW PLUNGE!!!
Baltic Dry Index + Watchlist
BDIY:IND
337.00
8.00
2.32%
As of 07:59:26 ET on 01/28/2016.
Previous Close
345.00
52Wk Range
337.00 - 1,222.00
1 Yr Return
-49.40%
YTD Return
-29.50%
man I would like to see a chart back in 2007 an 2008 . dam this is dropping off the charts http://www.bloomberg.com/quote/BDIY:IND
