On the heels of continued uncertainty in global markets, the Godfather of newsletter writers, 91-year-old Richard Russell, warned investors to be completely out of the stock market. He also covered everything from major markets, including gold and silver, to the memory of his 21st birthday during World War II.
Richard Russell: “The Fed is still wrestling with the idea of raising rates. Ironically, raising rates could help business. A rate rise would allow the small banks to make needed loans to small business. When small business gets moving, inflation could move up, which explains why gold is creeping higher.
In terms of gold, silver is currently better value than at the beginning of the bull market in 2001. In November of 2001, when silver bottomed, the Gold/Silver ratio was about 66 compared to 78 today. In other words, gold has actually outperformed silver since the beginning of this precious metals bull market.
It is actually the historical norm for gold to outperform silver for most part of a bull market, except for the very last part. For example, this happened in the 70s, when gold was up on silver from the beginning of the bull market (let’s say about 1971) until almost the very end (about October 1979). So, during an almost ten-year bull market, silver only overtook gold about three months before the end.
Submitted by Tyler Durden on 09/01/2015 - 16:31 With indicators from macro-fundamentals (e.g. retail sales, core capex, inventory-to-sales) to market-oriented measures (VIX levels and backwardation, HY credit spreads, commodity prices) all flashing various colors of dead canary in the coal-mine red, we thought today's colossal spike in the Arms (TRIN) Index was a notable addition.
Submitted by Tyler Durden on 09/01/2015 - 14:41 Just two days before the September 3 ECB governing council meeting and press conference, ABN Amro released the genie from the bottle, when its head macro strategist Nick Kounis said the he now sees "a much bigger risk that the ECB will step up QE as soon as this week’s meeting. We see this probability at around 40%, so it is an increasingly close call.
Submitted by Tyler Durden on 09/01/2015 - 14:11 As QE3 came to an end, World Stocks plunged back to economic reality before The Fed's Jim Bullard promised 'moar QE' if things get really bad. Well things have got really bad... JPMorgan's Global Manufacturing PMI just dropped to its lowest since July 2013.. and the 'wedge' between economic reality and market perception is closing rapidly.
Submitted by Tyler Durden on 09/01/2015 - 16:03
Submitted by Tyler Durden on 09/01/2015 - 16:43 After the worst day since last November's OPEC meeting, WTI crude is falling further tonight as API reported a huge 7.6 million barrel inventory build. This is the biggest build (compared to DOE data) since early April!
Friends, as we continue to document the collapse from every angle, today we received the following note from Bill Holter in response to the Zero Hedge article which reads VIX ETFs Are In Crisis Mode.
As Zero Hedge notes, “That’s what happens when there are 64 million shares short and only 52.3 million shares outstanding…”
Bill took a moment to flush this news out a bit further for our readers. He writes:
Briefly and in plain English I would like to explain this to you. The “VIX” index, otherwise known as the fear “index” has been a major tool of the PPT and Associates in supporting the stock market. A “low” number is indicative of little fear while a high number shows more fear.Read More
Submitted by Tyler Durden on 09/01/2015 - 15:50 But but but... US economy is solid... curve will steepen... NIM... banks... bullish... buy... except that the market's perception of the credit risk in US financials is at 19-month wides. With counterparty risk rising, is it any wonder financial stocks are crashing?
For the first time in China’s modern history, the national legislature has introduced a “debt ceiling” for local government debt, setting it at 16 trillion yuan (more than $2.5 trillion) for this year.
This decision was made on Saturday when the National People’s Congress Standing Committee approved a motion proposed by the State Council, or Cabinet.
Observers say this may be the first move by the central government to set a quota system for the debt that is allowed for the governments of all provinces, municipalities and autonomous regions.
Submitted by Tyler Durden on 09/01/2015 - 15:35 The discussion of why "this time is not like the last time" is largely irrelevant. Whatever gains that investors have garnered during the recent bull market advance will be wiped away in a swift and brutal downdraft. However, this is the sad history of individual investors in the financial markets as they are always "told to buy" but never "when to sell."
Bloomberg was out today heralding the “new bull market” in oil. I herald it as Bloomberg’s new bullmarket in bullshit. The price of oil is determined in the short run by a lot of factors besides the law of economics. The spike up today in the price oil was most likely technically driven by hedge funds covering large short positions put on over the past couple of weeks. The short-cover trigger was likely a big bid put into the market by the Too Big To Fail banks backed by the Fed.
Make no mistake about it, the Federal Reserve in conjunction with the big banks have “blood money” motivation to try and keep the price of oil propped up.
Faith in the American system of government is at an all-time low, as reflected in recent polls. This is a trend that has been developing for more than a decade, according to Gallup.
One of the primary reasons why Americans are losing so much faith – and never regaining it – has a lot to do with the cynical abuse heaped upon the masses by the governing elite and, in particular, not being able to get an honest answer from our politicians.
Consider the issue of Social Security.
For years non-partisan agencies that serve Congress have been sounding alarms that, over the long term and based on today’s rules of taxation and financing, Social Security and Medicare as we know it are not sustainable, as even the Social Security Administration has pointed out recently:
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Submitted by Tyler Durden on 09/01/2015 - 15:20 The latest set of Clinton e-mails released by the State Department reveals another 125 exchanges that contain classified information, establishing further (for anyone who still had doubts) that sensistive information was indeed transferred over Clinton's home e-mail server and leading to two rather obvious questions: 1) will Clinton be held accountable?, and 2) will her campaign be able to hold the 2016 Presidential bid together amid a rising tide of public mistrust?
Submitted by Tyler Durden on 09/01/2015 - 15:06 Where the great oil crash hits close to home for most Americans, is when firms such as Houston based ConocoPhillips announce that the E&P giant is about to terminate 10%, or 1,800 people, of its global workforce, in the next several weeks as it copes with low oil prices. "Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.”
Submitted by Tyler Durden on 09/01/2015 - 14:30 Call it the rigor mortis of the robo-machines. About 430 days ago the S&P 500 crossed the 1973 mark for the first time - the same point where it settled today. In between there has been endless reflexive thrashing in the trading range highlighted below. As is evident, the stock averages have not “climbed” the proverbial wall of worry; they have jerked and twitched to a series of short-lived new highs, which have now been abandoned. Surely most thinking investors have left the casino by now. So what remains is chart driven trading programs, racing madly up, then down, then back up again - rinsing and repeating with ever more furious intensity.