Wall Street Jitters ….. Or Wall Street Collapse? And A Prediction You Can Bank On!!!!

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Well, that was quite a ride today, no?  And, those who follow such things know it wasn’t just Wall Street, it was darn near every stock market in the world!  

Here’s Fox’ take on this …

Wall Street Slammed Amid Global-Growth Fears

U.S. equity market capped a tumultuous trading day solidly in negative territory after shedding about $812 billion in market value.

The Dow Jones Industrial Average wiped out 588 points, or 3.58% to 15871. The S&P 500 dropped 77 points, or 3.94% to 1893, while the Nasdaq plunged 179 points, or 3.82% to 4526.

All ten S&P 500 sectors were in negative territory, with energy declining the most, dropping 5.18% on the session.

Today’s Markets

The Dow saw its biggest-ever intraday point drop on Monday at the opening bell as it plunged 1,089 points. By the close of trade, all three major U.S. averages were in correction territory.

A weekend to digest growing global economic-growth concerns failed to settle nerves on Wall Street as U.S. equities extended a selloff in global markets amid heightened fear about significant deterioration in China. The concern came as traders wondered if there will be another shoe to drop from Chinese officials looking to stem the market’s bleeding. The world’s second-largest economy moved two weeks ago to devalue its currency, the yuan, on the heels of continued weakness in its economic data.

Peter Kenny, chief market strategist at Clearpool Group, called the action in global markets dramatic and gut wrenching.  

China is definitely the No. 1 cause for concern globally and Europe is not far behind,” Kenny said. “The speed at which this market has moved sharply lower is an indication panic is driving all investment decisions. If you haven’t positioned yourself for volatility and seasonal weakness, you’re behind the 8 ball.”

China’s Shanghai Composite Index plummeted more than 9% during the session Monday, and closed down 8.5% pushing equity markets in Asia to give up their 2015 gains. Hong Kong’s Hang Seng tumbled 5.17%, while Japan’s Nikkei dropped 4.61%.

As the carnage spread, European equity markets didn’t fare much better, though major averages there gained back some lost ground before the close of trade. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, declined  5.02%, plunging further into correction territory after notching its worst week in four years last week. The German Dax shed 4.31%, while the French CAC 40 sank 5.12%, and the UK’s FTSE 100 dropped 4.33%. ……

There’s quite a bit more in the article, which I recommend people reading, especially if you have significant money tied up on either commodities or equity markets.  Commodities didn’t do much better.  Oddly, or, perhaps not so oddly, 10 year US Treasury notes were the buy, today. 

But, are the jitters because China had a bad hair day?  Well, yes, and no, but, mostly no.  It’s because of what they really know, all the while trying their hardest to pretend it isn’t real.

One of the quotes emboldened …..

China is definitely the No. 1 cause for concern globally and Europe is not far behind …”

Well, yeh, sure, but, China’s difficulties and Europe’s have not been secret.  They’ve been well known for quite some time now.  I’ve written about both, often.  So, why did this happen today?

Here’s another part of the story, which I didn’t quote above ….

As the major averages plunged, so too did 20 of 30 stocks in the Dow, including Chevron (CVX), Caterpillar (CAT), Wal-Mart (WMT), and Apple (AAPL) which hit fresh 52-week lows before bouncing back into positive territory. 

Why did CVX, CAT, WMT, and AAPL have such a hard time today?  Because of China?  Well, yes!  But, again, China’s problems haven’t been a secret.  The investments in such companies is because of their perceived ability to grow into other markets.  All of the above mentioned have reached or are near market saturation in the US, that is to say, any future growth these companies may have will most likely occur outside the US because in their present iteration, they’ve just about grown as much as they can in the US.  They’re concerned that China won’t be the place they can grow, and, neither do they have any other significant short-term prospects.

The fact of the matter is that globally, all of our equity stocks are seriously overvalued.  And, all of the serious stock traders know this.  This is why the DJIA started the day 1000 points down.  The traders know the day is coming and it isn’t far off!  As the article notes, the traders had all weekend to mull this over, but, the sell orders stood!  It is noteworthy that as the day progressed, about 85% of the original sale orders were offset by buy orders!  That is to say, the DJIA started down 1089 pts at about 15450 or so.  But, as the day progressed, much of the original down was made back up to the point of about 16350, just after 1 PM EST.  In a matter of less than 3 hrs, it dropped back down to 15871. 

All of the traders know all of our stocks are seriously overvalued!  It isn’t that we have a bubble, everything is bubbled! 

My prediction you can take to the bank! 

So, I said in my title that I’d make a prediction, and I will.  But, it was mostly just click bait!  Long time readers will already know the things I’m about to state. 

Will the crash continue tomorrow, or will this simply be a correction?  I’ve no idea.  Disappointed in the prediction?  No one can gauge what the lemming traders will do, and the lemmings all wait on one another before they move.  Today demonstrated that they’re willing to move, and move quickly.  Again, they all know the stock markets are significantly over-valued and even after today, they all still are.  When the dismal state of the US economy is one of the shining beacons of the global economy, we’re all in a world of hurt.  

Now, here’s my real prediction(s) …… the Fed will not raise interest rates anytime in the near future

The markets may crash before the Fed even has a chance to decide, but, any raise will ensure a larger sell-off than today, ….. GLOBALLY!    Remember, the US economy is twice as large as the second largest.  While unimaginable, the US economy is performing better than most other economies.  Most global economies are significantly tethered to the availability of US investment, beit by outright investment or purchases. 

My other prediction is that the stock market will crash, and soon.  How soon?  I really have no idea.  This slide could continue tomorrow, or, it may not.  But, the lemmings have demonstrated that they’re at the ready to sell.  All it would take is one more significant bit of news, such as the US raising interest rates, or a major economy coming in under projection and off they’ll go.

Now, my advice to the hyper-smart economists, bankers, and politicians ….. in order to fix this mess and make sure our next recession isn’t as bad as the last one (it’s still the same recession) is to demand more money to be printed and have our central banks buy crap bonds with the money printed!!!!  That fixes everything!  

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13 Responses to Wall Street Jitters ….. Or Wall Street Collapse? And A Prediction You Can Bank On!!!!

  1. omanuel says:

    I do not understand economics, but today’s financial markets may be fake:

    https://behindertvertriebentessarz.wordpress.com/2015/08/24/everything-is-fake-top-40-pieces-of-fakery-in-our-world-wake-up-world/?c=1982

    http://libertyblitzkrieg.com/2015/08/24/did-the-bank-of-england-just-admit-financial-markets-arent-real/

    Destroyed like the very foundations of nuclear and solar physics after Stalin emerged in control of

    1. Japan’s successful atomic bomb plant at Konan, Korea in August 1945, and

    2. The crew of an American B29 bomber held in Aug-Sept 1945 for negotiations to

    Unite nations and the national academies of sciences on 24 October 1945

    https://dl.dropboxusercontent.com/u/10640850/STALINS_SCIENCE.pdf

    I do not understand economics but I know modern society was built on falsehoods after WWII.

  2. Latitude says:

    LOL!!….touche

    Not going to raise interest rates in our life time….that was the bet I took 6 years ago…and it’s still holding
    Even with rates this low….the housing market still stinks…one little bump up and they are going to kill it

  3. DirkH says:

    ” So, why did this happen today?”

    Well that happens in a war.
    1) Yuan devaluation for 3 days
    2) Port explosion in China
    3) Accident at US Uranium depletion factory
    4) 2nd explosion in Chinese port
    5) US Ammunition depot in Japan explodes
    6) Markets snap

    This is at best the first step in an Elliot wave (a fractal wave). Today the DAX dead-cat-bounces.
    I guess we get a jittery stabilization and when everyone feels fine again the trapdoor opens again for step 2 , twice as hard.

  4. geran says:

    Phony money (credit) drives speculation. In the recent past, market collapses have been saved with more phony money. At some point, someone, out there, in the shadows, will ask for “tangible collateral”.

    That’s when the “fun” begins.

  5. DirkH says:

    China achieved their Yuan devaluation by dumping 100bn USD of US treasuries. These are the “liquidity outflows” the press has talked about.
    http://www.zerohedge.com/news/2015-08-25/devaluation-stunner-china-has-dumped-100-billion-treasurys-past-two-weeks
    Usually you get bombed for that kind of Petrodollar rejection. Well what I am saying they DID get bombed, two times.

    So who’s gonna absorb that? My take is it was the BOJ, we’ll see later. And, China will dump more to make October the perfect bloodfest.

    • DirkH says:

      This drives up interest rates: As supply of treasuries rises, their price drops, which means a higher interest rate must be paid on new issuance to still be able to place them into the market.
      The 100bn dump by China has already created half the effect of a 0.25% rate hike by the Fed.
      Or in other words: Rejection of US debt is starting.

      • suyts says:

        Fed vice chairman just said their not going to raise the interest rates…… which is related to the price we pay to issue our bonds. Couple that with the strong buys of US bonds in response to the drop in the China market, and demand is keeping up with supply and no impetus to change. …..

        In the short term, the US bond interest rate will decrease. Right now, the interest rates don’t matter. It’s the valuation of the Dollar vs just about any other currency, today.

        Today, even if the interest rate is zero on the US bond, I could make a fortune on the currency exchange. Buy them in Yuans today, and then cash them out in Dollars tomorrow! Or, buy them in Pesos, or Euros, or Yens …..

        • DirkH says:

          “Today, even if the interest rate is zero on the US bond, I could make a fortune on the currency exchange. Buy them in Yuans today, and then cash them out in Dollars tomorrow! Or, buy them in Pesos, or Euros, or Yens …..”

          Ach… things are not that easy… So would you cash in and out all the time? If you identify such a trend, would it not be cheaper to ride it all the way? But, if you ride it all the way, you’d be invested in US bonds for a long time…. and as we have seen, China just wacked the price of them…

          I wouldn’t touch a US bond with a 10 pole stick. Illiquid market. Like a small cap. Progressively looking like a dotcom startup with no business model and no intention of ever paying a dividend. Ask your pensioners how they like ZIRP. It’s a worthless piece of paper. (as will become clearer as we go down this route)

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