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Stock Market Crash! (merged) Pt. 9

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash! (merged) Pt. 9

Unread postby EdwinSm » Wed 14 Aug 2019, 02:08:24

Good news: the headlines have Germany and Growth in them 8O 8) .

The figures are very small (nowhere near crash territory) but they still have to put a positive spin on them anyway. :mrgreen:


German economy slips back into negative growth

Germany's economy shrank during the April-to-June period of this year.

A decline in exports dampened growth, according to official data, which comes amid concerns of a global slowdown.

Gross domestic product (GDP) fell by 0.1% compared with the previous quarter, according to the Federal Statistics Office.

That takes the annual growth rate down to 0.4%. Germany, Europe's largest economy, narrowly avoided a recession last year.

https://www.bbc.com/news/business-49342012
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Wed 14 Aug 2019, 02:36:19

The Eurozone grew by 0.2 percent. Yes, my friends that's a positive GDP print. No recession here.

Well... it's growt in euro terms...in dollar terms the Eurozone is down some 25 percent since the GFC.

https://pbs.twimg.com/media/EB6OSVVXkAA ... me=900x900
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Wed 14 Aug 2019, 04:41:19

The German economic engine is contracting. Europe is in deep trouble
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby GHung » Wed 14 Aug 2019, 09:29:16

Last month US markets once again hit a little-known but highly relevant ceiling which has spelled market trouble numerous times in the recent past, most famously during the major market bubble bursts in 2000 and 2007. Investors should recall what happened then, take note and brace themselves for the possible implications.
What is that ceiling? It's when overall stock market capitalization vs. GDP reaches a point historically disconnected from the underlying size of the economy. We are in such a period again, having recently reached a ratio of stock values to GDP of 145%.
The biggest bubbles in most of our lifetimes were the 2000 tech bubble, the 2007 real estate bubble and the monstrosity we are witnessing now: the cheap money bubble. This new bubble has been induced by central banks' artificially low interest rates which are creating the TINA effect, which stands for "there is no alternative." This effect is found in markets where hungry investors are forced to buy high risk assets like stocks because other assets offer worse returns.
Bubbles occur when excess optimism about the future pushes the value of asset prices beyond what the underlying economy actually produces. They are a result of unrealistic future growth and valuation expectations.
All three bubbles have done something unique. They have vastly accelerated asset prices above their historical mean. In 2000 and 2007, these bubbles reached extreme ratio peaks of 146% and 137% in the US, respectively, before they burst, correcting into bear markets.
Today's cheap money bubble has arrived with full vengeance on the heels of $20 trillion in global central bank intervention through quantitative easing and a historic collapse in bond yields, which has forced money into equities. .....

....... look closely at what has happened over the past 18 months. We have kept hitting that 140% to 150% ceiling. In January 2018, US markets reached nearly 150% market cap to GDP and stocks got punished with a 10% correction. From last September to October, US markets hit 147% market cap to GDP and stocks got hit with a 20% correction. And last month, we hit 145% market cap to GDP and stocks have since begun selling off again.
How far and for how long can stock markets stay this far disconnected from the underlying size of the economy? History says not for very long. .....

https://www.cnn.com/2019/08/12/perspect ... index.html


Throw in some massive sovereign debt, trade wars, a dash of elevated consumer debt, and a lunatic American executive branch, what are you likely to get? A ten trillion dollar "correction"? Twenty? Wars of 'convenience'?
Blessed are the Meek, for they shall inherit nothing but their Souls. - Anonymous Ghung Person
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby EdwinSm » Wed 14 Aug 2019, 09:29:31

Are the markets signalling that a recession is due?

Financial markets have flashed a warning sign about the economic outlook for the UK and the US.

It is known in the jargon as an "inverted yield curve".

It means that it is cheaper for those countries' governments to borrow for 10 years than for two.

It is an unusual development and it often comes before a recession or at least a significant slowdown in economic growth.

Wall Street shares plunged in early trading on Wednesday, as investors' concerns about a potential recession were stoked by the news.

All the main stock market indexes were down about 1.5%.

https://www.bbc.com/news/business-49346972

Should we be worried?

Well the Federal Reserve Bank of San Francisco says

The term spread—the difference between long-term and short-term interest rates—is a strikingly accurate predictor of future economic activity. Every U.S. recession in the past 60 years was preceded by a negative term spread, that is, an inverted yield curve. Furthermore, a negative term spread was always followed by an economic slowdown and, except for one time, by a recession. While the current environment is somewhat special—with low interest rates and risk premiums—the power of the term spread to predict economic slowdowns appears intact.

https://www.frbsf.org/economic-research/publications/economic-letter/2018/march/economic-forecasts-with-yield-curve/
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Wed 14 Aug 2019, 09:44:56

Meanwhile, record American household debt, near $14 trillion including mortgages and student loans, is some $1 trillion higher than during the Great Recession of 2008. Credit card debt of $1 trillion also exceeds the 2008 peak.
Americans are spending heavily, again — and often recklessly, say analysts.

Bankruptcy petitions for consumers and businesses are on the rise. There was a 5% increase in total bankruptcy filings in July 2019 from the previous month, the American Bankruptcy Institute said this week. There were 64,283 bankruptcy filings, up from 62,241 for the same period last year.


And as we plunge into this new economic downturn, things are only going to get worse. The middle class is absolutely drowning in debt, and even a mild recession would be enough to financially wipe out millions of American families.


If you think that things are getting worse, you are right; they are! By 2025 the equity holdings of the average resident on planet earth will be zero.

Business is going to get a little slow!
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Wed 14 Aug 2019, 15:11:19

Americans Say They Can’t Afford a Vacation “More than 2/3 of US adults opted out of recreational activity due to cost at some point in past year” THIS is what happens when weekly earnings slow from 4% in January to 2.6% in July. Discretionary spending dies


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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Wed 14 Aug 2019, 15:13:45

China Adds 10 More Tons of Gold to Its Hoard


They know what’s coming
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Wed 14 Aug 2019, 15:40:00

"As I wrote in yesterday's newsletter (to which you should subscribe!), amateurs talk about stocks, but professionals study bond markets. As of this morning the bond market is basically begging governments to borrow: the US 10-year real rate just 0.02 percent."

Paul Krugman

Every nation in Europe is offering a negative yield.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Wed 14 Aug 2019, 15:45:26

P.S. Yes I know that I was twisting things for a joke with the Noble Laurentian.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby waterpowerman1 » Wed 14 Aug 2019, 16:32:53

While not a crash. Where do you put your money?
DJI for today and 18 months ago:
Date Open High Low Close* Adj Close** Volume
Jan 12, 2018 25,638.39 25,810.43 25,633.08 25,803.19 25,803.19 376,390,00
Aug 14, 2019 26,035.10 26,035.10 25,471.59 25,479.42 25,479.42 357,003,312
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Wed 14 Aug 2019, 16:54:52

waterpowerman1 wrote:While not a crash. Where do you put your money?
DJI for today and 18 months ago:
Date Open High Low Close* Adj Close** Volume
Jan 12, 2018 25,638.39 25,810.43 25,633.08 25,803.19 25,803.19 376,390,00
Aug 14, 2019 26,035.10 26,035.10 25,471.59 25,479.42 25,479.42 357,003,312



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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Outcast_Searcher » Thu 15 Aug 2019, 02:44:06

Armageddon wrote:The German economic engine is contracting. Europe is in deep trouble

You really need to take first grade math. Growth is not contraction. Slowing growth isn't contraction, it's slowing growth.

A child who can do simple arithmetic could understand this, why, repeatedly can't you?

Because you have a story to sell, true or not, perhaps?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby EdwinSm » Thu 15 Aug 2019, 05:27:06

Normally I find that you have a good response to some of the more doom laden news, but here you seem to have fallen for the positive spin. :oops: :oops:

Outcast_Searcher wrote:
Armageddon wrote:The German economic engine is contracting. Europe is in deep trouble

You really need to take first grade math. Growth is not contraction. Slowing growth isn't contraction, it's slowing growth.

A child who can do simple arithmetic could understand this, why, repeatedly can't you?

Because you have a story to sell, true or not, perhaps?


The article I linked to about Germany (from a good news source, ie the BBC), and the news that Armageddon referred to talked about negative growth. You must have read in too much of a hurry and missed the negative qualifier so falling into the spin trap that the headlines writers had left! :P :P :P

There was a small contraction in the German economy of 0.1%. Small but a contraction nevertheless although nowhere near crash levels (at this stage). It was one of the main items on this morning's radio news because Germany is the biggest export market for the country where I am living and people are getting nervous.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Thu 15 Aug 2019, 10:11:50

"ECB's Rehn makes big promises. Says stimulus package in Sep may beat expectations. “When you’re working w/ financial markets, it’s often better to overshoot than undershoot,” Mr. Rehn said."
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Outcast_Searcher » Thu 15 Aug 2019, 15:24:20

EdwinSm wrote:Normally I find that you have a good response to some of the more doom laden news, but here you seem to have fallen for the positive spin. :oops: :oops:

Outcast_Searcher wrote:
Armageddon wrote:The German economic engine is contracting. Europe is in deep trouble

You really need to take first grade math. Growth is not contraction. Slowing growth isn't contraction, it's slowing growth.

A child who can do simple arithmetic could understand this, why, repeatedly can't you?

Because you have a story to sell, true or not, perhaps?


The article I linked to about Germany (from a good news source, ie the BBC), and the news that Armageddon referred to talked about negative growth. You must have read in too much of a hurry and missed the negative qualifier so falling into the spin trap that the headlines writers had left! :P :P :P

There was a small contraction in the German economy of 0.1%. Small but a contraction nevertheless although nowhere near crash levels (at this stage). It was one of the main items on this morning's radio news because Germany is the biggest export market for the country where I am living and people are getting nervous.

Is Germany suddenly the world?

Clearly people are getting nervous. There is volatility in markets all the time.

I was looking at quarterly GDP here:

https://data.oecd.org/gdp/quarterly-gdp ... ator-chart

And the real GDP forecast here:

https://data.oecd.org/gdp/real-gdp-fore ... ator-chart

As I've been saying to Armageddon for months, we may well have a US and/or a global recession in 2020 or 2021. SO WHAT? Recessions are a normal part of long term economic cycles.

It's the doom mongering and constant spinning toward everything negative that I am reacting to, trying to (in a balanced way) point out that there is good and bad news in a lot of places, re global economics.

Now, if I missed that the latest (first estimate) re Germany is a tiny negative, OK: One small mistake re me missing something. Thousands of mistakes re a decade of bad calls and misinformation by Armageddon.

You and I disagree about who should be embarrassed by that.

Oh, and unlike the bulk of the fast crash doomers, when I make a mistake, I readily ADMIT it. I'm not embarrassed by that either.

With respect, just because person X doesn't like the concept of reporting both good and bad data points does NOT imply "positive spin".
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Thu 15 Aug 2019, 15:26:25

From today's Cass Report: With the -5.9% drop in July, following the -5.3% drop in June, and the -6.0%
drop in May, we repeat our message from last two months: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”


Very telling
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Thu 15 Aug 2019, 15:29:22

US Manufacturing Slumps Back Into Contraction
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Thu 15 Aug 2019, 16:34:49

Dealers Dangle Deals to Move Outgoing Models “Some dealers say they are even saddled with 2018 model-year vehicles at a time when 2020 models are showing up for traditional fall changeover”

https://www.wsj.com/articles/dealers-da ... 1565874003
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Fri 16 Aug 2019, 07:30:50

Hey, if you don't like the yield curve as a recession gauge, how about the -5.9% YoY trend in the Cass Freight Index, the -9.7% plunge in Port of Long Beach cargo traffic and the 3.9% slide in US railway carloadings?
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