But of that day and that hour knoweth no man, no, not the angels which are in heaven, neither the Son, but the Father.

– Mark 13:32

 

La MortLa Mort, photograph of her good side.

Image credit: Thinkstock

 

Bigger Than a Bear Market

BALTIMORE – Again, not much movement in the U.S. stock market. All eyes were on U.S. politics. The Ides of March came… and yea, went… with poor Marco Rubio out of the race. Yes, it was “Goodbye, Rubio Tuesday”… leaving Donald Trump and Hillary Clinton way ahead of the pack in the race to win their parties’ nominations.

 

Good-bye Rubio Tuesday!

 

Meanwhile, a dear reader wrote in to complain that the Dow was up some 1,500 points since he acted on our gloomy view… and sold out of the market. But we hold to our opinion: This ship is sinking.

As an investor, you face two kinds of risk: the risk of missing out on gains and the risk of taking losses. It’s up to you whether you continue to bet on rising U.S. stocks. But our view is you will be glad you got out when you did.

 

DJIADow Jones Industrial Average, daily. Looks actually just about ripe again… – click to enlarge.

 

We all live under a death sentence. Markets… societies… and our very lives must follow an unstoppable pattern. We breathe in… and then we breathe out. We are born… and every mother’s son ever born from the beginning of time until today is programmed for death. Every ship ever built is destined for the bottom of the sea… or the scrap yard.

Up, down… in, out… expansion, contraction. Hey, don’t blame us! We didn’t invent it. That’s just the way it is. And since that is the way it is: Vive la mort! We don’t necessarily want it. But since it is inevitable, we will look forward to it, like a pair of new boots yearning for mud. There are times to go forward… and times to back up. There are times to buy. And there are times to refrain from embracing stocks. This is one of those times.

The Fed has stood pat on rates since December. But the Japanese, the Chinese, and the Europeans have continued to try to goose up their economies with increasingly crackpot monetary policies. Much of the money thus created has found its way into U.S. markets… which probably explains the refusal of the Dow to go down.

 

Day of Reckoning

It could be, of course, that we are totally wrong… and that some trend is in place we don’t recognize. Stock markets are said to “discount the future.” Maybe they see something we don’t. Or maybe they are simply preparing for a more spectacular day of reckoning by drawing more mom-and-pop investors into deeper water; as always, we wait to find out.

Still, it looks as though the bull market that began in the U.S. in March 2009 is over. And the contraction is not limited to the stock market. Our economy, our society, and our body politic are all closing up… looking inward… turning their backs on the wider world. Yes, we are connecting the dots. It is not just the world of money that contracts and expands. The economy breathes, too… and so does our political world.

 

Social MoodThe changing perceptions of society, via the Socionomics Institute. Bear Markets and increasing social and political polarization are going hand in hand – click to enlarge.

 

Why is Donald J. Trump running so strongly in the Republican primaries? Why is National Front leader Marine Le Pen doing so well in France? How did Jeremy Corbyn – otherwise a nobody – become the leader of the second-largest party in Britain?

Why is world trade plunging? Why are inflation expectations running at about 1% for the next decade… despite the biggest increase in central bank balance sheets – the monetary footings of the entire system – in history? Why are growth rates in Europe, Japan, and the U.S. at their lowest levels since World War II? And why is $7 trillion of government debt now trading at sub-zero yields?

 

Warning Shot

“Economists fire warning shot on risks of negative interest rates,” reported the Financial Times in a front-page story last week.  “Japan’s negative interest backfire…” it added, again on the front page, two days later. Why?

Because we are breathing out. Borders are tightening up. Barriers are erected. The “globalism” heralded by New York Times columnist Thomas Friedman and others as a solution to all the world’s problems is giving way to “nationalism.”

The expansive EZ money world of the last 30 years is losing air. Yesterday brought news that consumer savings from the lower price of oil is NOT leading to greater consumer spending… not even in autos. Bloomberg:

 

“U.S. retail sales dropped in February and the prior month’s gain was revised to a decline, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016.

The decrease in purchases, which included auto dealers, department stores, and furniture outlets, showed Americans were salting away money saved at the gas pump amid volatile financial markets. The disappointing reading on the biggest part of the economy comes as Fed officials meet to gauge whether growth is strong enough to eventually warrant another increase in interest rates.

“We’re seeing higher rents, higher healthcare expenses, so that may be offsetting a lot of the benefit of lower gasoline prices,” said Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida.”

 

The New Sub-Prime

While current spending slacks off, past spending continues to rattle its chains. Newsmax:

 

“Delinquencies on subprime auto debt packaged into securities reached a high not seen since October 1996, as late payments continued to worsen in February, according to Fitch Ratings.

The number of car borrowers who were more than 60 days late on their bills in February rose 11.6% from the same period a year ago, bringing the delinquency rate to 5.16%, Fitch wrote Monday in a report. During the financial crisis delinquencies peaked at 5.04%, Fitch wrote.”

 

Auto-loan-paymentsLate car loan payments are soaring – and the situation is worst in the oil producing states.

 

You’ll recall that when we left you yesterday, we promised a look at a deeper malaise. This is it. It is not just the threat of a  bear market on Wall Street. Not just a grumpy mood of the voters threatening the Establishment.

It is something bigger… deeper… something unstoppable…

More dots tomorrow…

 

Charts by: StockCharts, Socionomics Institute, CNN Money

 

Chart and image captions by PT

 

The above article originally appeared as Bigger Than a Bear Market at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

One Response to “Death Sentence”

  • No6:

    Good read.

    I think the Bank bailouts were the obvious wake-up call for the unwashed masses. Now they feel uncomfortable, and won’t go back to sleep.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • How to Survive the Winter
      A Flawless Flock of Scoundrels One of the fringe benefits of living in a country that’s in dire need of a political, financial, and cultural reset, is the twisted amusement that comes with bearing witness to its unraveling.  Day by day we’re greeted with escalating madness.  Indeed, the great fiasco must be taken lightly, so as not to be demoralized by its enormity.   Symphony grotesque in Washington [PT]   Of particular note is the present cast of characters. ...
  • Credit Spreads: The Coming Resurrection of Polly
      Suspicion isn't Merely Asleep – It is in a Coma (or Dead) There is an old Monty Python skit about a parrot whose lack of movement and refusal to respond to prodding leads to an intense debate over what state it is in. Is it just sleeping, as the proprietor of the shop that sold it insists? A very tired parrot taking a really deep rest? Or is it actually dead, as the customer who bought it asserts, offering the fact that it was nailed to its perch as prima facie evidence that what...
  • The Strange Behavior of Gold Investors from Monday to Thursday
      Known and Unknown Anomalies Readers are undoubtedly aware of one or another stock market anomaly, such as e.g. the frequently observed weakness in stock markets in the summer months, which the well-known saying “sell in May and go away” refers to. Apart from such widely known anomalies, there are many others though, which most investors have never heard of. These anomalies can be particularly interesting and profitable for investors – and there are several in the precious metals...
  • A Falling Rate of Discount and the Consumption of Capital
      Net Present Value Warren Buffet famously proposed the analogy of a machine that produces one dollar per year in perpetuity. He asks how much would you pay for this machine? Clearly it is worth something more than $1.00. And it’s equally clear that it’s not worth $1,000. The value is somewhere in between. But where?   We are not sure why Warren Buffett invoked a money printing machine of all things – another interesting way of looking at the concept is by e.g....
  • Business Cycles and Inflation – Part I
      Incrementum Advisory Board Meeting Q4 2017 -  Special Guest Ben Hunt, Author and Editor of Epsilon Theory The quarterly meeting of the Incrementum Fund's Advisory Board took place on October 10 and we had the great pleasure to be joined by special guest Ben Hunt this time, who is probably known to many of our readers as the main author and editor of Epsilon Theory. He is also chief risk officer at investment management firm Salient Partners. As always, a transcript of the discussion is...
  • What President Trump and the West Can Learn from China
      Expensive Politics Instead of a demonstration of its overwhelming military might intended to intimidate tiny North Korea and pressure China to lean on its defiant communist neighbor, President Trump and the West should try to learn a few things from China.   President Trump meets President Xi. The POTUS reportedly had a very good time in China. [PT] Photo credit: AP   The President’s trip to the Far East came on the heels of the completion of China’s...
  • Is Fed Chair Nominee Jay Powell, Count Dracula?
      A Date with Dracula The gray hue of dawn quickly slipped to a bright clear sky as we set out last Saturday morning.  The season’s autumn tinge abounded around us as the distant mountain peaks, and their mighty rifts, grew closer.  The nighttime chill stubbornly lingered in the crisp air.   “Who lives in yonder castle?” Harker asked. “Pardon, Sire?” Up front in the driver's seat it was evidently hard to understand what was said over the racket made by the team of...
  • Business Cycles and Inflation, Part II
      Early Warning Signals in a Fragile System [ed note: here is Part 1; if you have missed it, best go there and start reading from the beginning] We recently received the following charts via email with a query whether they should worry stock market investors. They show two short term interest rates, namely the 2-year t-note yield and 3 month t-bill discount rate. Evidently the moves in short term rates over the past ~18 - 24 months were quite large, even if their absolute levels remain...
  • A Different Powelling - Precious Metals Supply and Demand Report
      New Chief Monetary Bureaucrat Goes from Good to Bad for Silver The prices of the metals ended all but unchanged last week, though they hit spike highs on Thursday. Particularly silver his $17.24 before falling back 43 cents, to close at $16.82.   Never drop silver carelessly, since it might land on your toes. If you are at loggerheads with gravity for some reason, only try to handle smaller-sized bars than the ones depicted above. The snapshot to the right shows the governor...
  • Heat Death of the Economic Universe
      Big Crunch or Big Chill Physicists say that the universe is expanding. However, they hotly debate (OK, pun intended as a foreshadowing device) if the rate of expansion is sufficient to overcome gravity—called escape velocity. It may seem like an arcane topic, but the consequences are dire either way.   OT – a little cosmology excursion from your editor: Observations so far suggest that the expansion of the universe is indeed accelerating – the “big crunch”, in...
  • Claudio Grass Interviews Mark Thornton
      Introduction Mark Thornton of the Mises Institute and our good friend Claudio Grass recently discussed a number of key issues, sharing their perspectives on important economic and geopolitical developments that are currently on the minds of many US and European citizens. A video of the interview can be found at the end of this post. Claudio provided us with a written summary of the interview which we present below – we have added a few remarks in brackets (we strongly recommend...
  • Precious Metals Supply and Demand
      A Different Vantage Point The prices of the metals were up slightly this week. But in between, there was some exciting price action. Monday morning (as reckoned in Arizona), the prices of the metals spiked up, taking silver from under $16.90 to over $17.25. Then, in a series of waves, the price came back down to within pennies of last Friday’s close. The biggest occurred on Friday.   Silver ended slightly up on the week after a somewhat bigger rally was rudely interrupted...

Support Acting Man

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com