Soaring margin debt (and plunging cash balances) trigger a sell signal at BAML, which says the last time this big a move happend was April 2010 - just ahead of a 2-month, 16% decline in SPY. Alongside this is short-term sentiment which has risen to levels consistent with selloffs in the past. [View news story]
Tack: You are absolutely right. High margin debt does not cause stocks to fall. What causes stocks to fall? Human emotion; fear. Does there need to be a trigger? No. The lead seller sells and then the second seller sells, and then the third; and fear sets into the markets. And then a lot of people want to sell, afraid they will lose their gains. Then comes margin calls. And then we have a rolling collapse of the markets. The markets would not fall so hard so fast without this massive amount of margin. Yes, margin doesn't cause stocks to fall, but it makes the fall much worse. It also makes the institutions holding the debt more likely to fail. It's a house of cards. High margin is why brokerages fail also.
I think it's never different this time. The cycles are there for our benefit.
Plato wrote: "The laws of nature are the thoughts of God."
You can never just have one side of a trade. We have physical/material evolution and then we have spiritual evolution, which is painful and which is about losing and recovering something we have lost, our humility.
This is the story of Earth.
Other planets have other cycles and other laws. When you go to another planet, you have to learn the new laws and the new cycles.
IS THIS THE BEGINNING OF THE BIG SELL-OFF WE'VE ALL BEEN EXPECTING AND PERHAPS DREADING? [View instapost]
Yes. We have to get rid of the Federal Reserve. That's the first thing we need to do.
I love your comment on 'a new clean straight jacket. Is that the best we can hope for? As long as the banks are running the world, I'm afraid so.
I think the TBTF banks need to be restructure along the lines of the Public Utilities System. We don't need megabanks. We need banks that provide steady service to the world, not manic-depressive boom-bust cycles which makes ua all feel like millionaires one day and like paupers the next.
Love your comments generally, Freddy. Have to disagree about the depth of this depressions. Catastrophic economy reversals come EVERY 36 years. This one runs from 2001 through 2019 -- and with the debt load we (and the world) has run up from 1983-2009....there is not way this cannot be a HUGE catastrophe economy. Nothing we could have done would have averted this. We could have begun raising interest rates slowly and steadily in 2001 and avoided the Housing Bubble, the commodity bubble, and the current Bernanked last gasp bubble, which would have give us a hard landing but not as hard a landing as we are heading for with all this dead to collapse.
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
I will read it. Does this mean we are following in Japan's footsteps? And does this mean we are going to try to spread our deflation out over 60 years instead of the normal 18?
My impression, after reading several of your enightening articles, is that the banks are still insolvent (through derivatives exposure at 50-1 leverage or 100-1 leverage) and lower housing prices will implode the banks and level Western civilization. Is that how you are reading this?
The banks have a gun to the head of Bernanke and he's doing what he's told to do?
Thank you for this post. No bottom until 2019. Appreciate your reasoning. The Fed is desperate to create another housing bubble. That's all they know. They think 'growth' and inflation are the only story and don't see that everything in nature has to rest, has to deflate. They keep pumping, pumping, trying to protect the banks that will still be gored in housing takes another leg down, which it will. It is destined for another big leg down.
Monday Market Mayhem: Cyprus Declares 'A Nuclear War On Savings And Wealth' [View article]
Arrest them all. Arrest Bernanke for stealing our 20%. And arrest the Cypriots and their European banking superiors also. They are all crooks. If we accept this as 'business as usual', then we deserve what we get. Fascist state-capitalism, followed by world war.
If this starts a run on European ban deposits, Cam, you might become very excited indeed.
I've read three of your articles in the past two weeks. The theme in all of them is: "Don't get excited. Everything is...healing." Are you Richard Russell in disguise, Cam?
Still calm about China? I think this might get you a bit excited before long. Your four pillars of China, the Four Banks, are all cracking. The stronger the US Dollar gets, the weaker Chinese stocks get. And the Euro's dismantling will surely make the Dollar stronger.
American Industry Collapsing Into Q2 [View article]
Deere's Second Quarter Earnings Preview [View article]
Soaring margin debt (and plunging cash balances) trigger a sell signal at BAML, which says the last time this big a move happend was April 2010 - just ahead of a 2-month, 16% decline in SPY. Alongside this is short-term sentiment which has risen to levels consistent with selloffs in the past. [View news story]
APPLE STILL HAS NOT BOTTOMED. [View instapost]
Plato wrote: "The laws of nature are the thoughts of God."
You can never just have one side of a trade. We have physical/material evolution and then we have spiritual evolution, which is painful and which is about losing and recovering something we have lost, our humility.
This is the story of Earth.
Other planets have other cycles and other laws. When you go to another planet, you have to learn the new laws and the new cycles.
Thanks for your comment.
IS THIS THE BEGINNING OF THE BIG SELL-OFF WE'VE ALL BEEN EXPECTING AND PERHAPS DREADING? [View instapost]
I love your comment on 'a new clean straight jacket. Is that the best we can hope for? As long as the banks are running the world, I'm afraid so.
I think the TBTF banks need to be restructure along the lines of the Public Utilities System. We don't need megabanks. We need banks that provide steady service to the world, not manic-depressive boom-bust cycles which makes ua all feel like millionaires one day and like paupers the next.
Housing can never again become a roulette wheel.
Things can change. But WE have to change them.
IS THIS THE BEGINNING OF THE BIG SELL-OFF WE'VE ALL BEEN EXPECTING AND PERHAPS DREADING? [View instapost]
IS THIS THE BIG SELLOFF WE'VE ALL BEEN EXPECTING? [View instapost]
Is The U.S. Economy In Trouble? [View article]
Downgrading Down Under [View article]
Downgrading Down Under [View article]
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
My impression, after reading several of your enightening articles, is that the banks are still insolvent (through derivatives exposure at 50-1 leverage or 100-1 leverage) and lower housing prices will implode the banks and level Western civilization. Is that how you are reading this?
The banks have a gun to the head of Bernanke and he's doing what he's told to do?
ARE CHINESE STOCKS CRASHING? WHAT DOES THIS TELL US ABOUT WHERE WE ARE HEADING? [View instapost]
Housing - Misguided Optimism Continues Unabated [View article]
Monday Market Mayhem: Cyprus Declares 'A Nuclear War On Savings And Wealth' [View article]
Don't Get Too Excited About Cyprus [View article]
I've read three of your articles in the past two weeks. The theme in all of them is: "Don't get excited. Everything is...healing." Are you Richard Russell in disguise, Cam?
Still calm about China? I think this might get you a bit excited before long. Your four pillars of China, the Four Banks, are all cracking. The stronger the US Dollar gets, the weaker Chinese stocks get. And the Euro's dismantling will surely make the Dollar stronger.
Don't get too comfortable.