Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Another Atrocious Stock Market Week Going Out With A Bang

Stock-Markets / Stock Markets 2016 Jan 15, 2016 - 05:33 PM GMT

By: John_Rubino

Stock-Markets

On days when lots of financial numbers are released, the normal pattern is for some to point one way and some another, giving everyone a little of what they want and overall presenting a reassuringly muddled picture of the economy.

Not today. A wave of economic stats flowed out of Washington, almost all of them terrible, while corporate news was, in some high-profile cases, shocking. Let's go to the highlight reel:


Retail sales fell again in December, bringing the 2015 increase to just 2.1% versus an average of 5.1% from 2010 through 2014. This kind of deceleration is out of character for year six of a gathering recovery, but completely consistent with a descent into recession.

The New York Fed's Empire State Manufacturing Survey index plunged to -19.37 in January from -6.21 in December. This is a recession -- deep recession -- level contraction. Not a single bright spot in the entire report.

U.S. industrial production fell for the third straight month in December, and the previous month was revised down sharply. Factories are already in a recession that appears to be deepening.

On the company-specific front:

UK resource giant BHP Billiton wrote down the value of its US shale assets by $7.2 billion -- two-thirds of its total investment -- in response to plunging oil prices. Now everyone is wondering who's next, and the list of likely candidates spans the entire commodities complex.

Chip maker Intel reported okay earnings but really disappointing margins and outlook. Its stock is down 9% as this is written mid-morning.

Walmart is closing nearly 300 stores and laying off most of the related 16,000 workers. It also cut its forward guidance aggressively.

There's more, much of it related to plunging oil prices and their impact on developing world economies. For countries that grew temporarily rich on China's infrastructure build-out, the end of that ill-fated program has produced something more like a depression than a garden-variety slowdown.

Now the panic is spreading. China stocks entered a bear market last night, oil is down huge, and as this is written (1 PM EST on Friday) the Dow is off 450 points. A tidal wave of terrified capital is pouring into Treasury bonds, and a smaller but still significant amount is moving to precious metals. Everything else is down varying shades of big.

Readers of a certain age will notice that this feels a lot like late 2007, when pervasive optimism hit a brick wall made up of subprime mortgages and credit default swaps. Everyone then headed for exits that were far too small to accommodate all the semi-worthless paper.

But this time around there are some big differences:

  1. In the 2000s the world's central banks weren't prepared for the scale of the carnage and had to improvise. Today they're already intervening in virtually every major market and so presumably have plans drawn up for the mother of all manipulations should 2008 come calling again. So we should expect some bold, experimental (let's just say crazy) monetary policies from major governments in the year ahead.

  2. The big banks are now seriously out of favor, so when their derivatives books blow up they might not be able to blackmail a sitting president with threats of martial law should Goldman and JP Morgan fail. Today that's an experiment that a lot of people would actually like to run, on the assumption that because the same number of factories, farms and hospitals would exist the day after such an event, real wealth would hardly change at all and mega-banks would be proven irrelevant.

  3. The world is vastly more indebted today, the carnage in commodities is global rather than sector-specific as with mortgages, and formerly rock-solid political systems like the eurozone and China are now unstable -- to put it mildly. A new financial crisis would energize fringe (i.e., anti-status quo) parties everywhere, vastly complicating the official response. In the US, another bust could easily result in a 2017 presidential race between Bernie Sanders and Donald Trump, neither of whom would favor bailing out the big banks.

And then of course there's the Middle East, which is now in end-to-end civil war.

Add it all up and, the picture is already grim, with lots more bad news in the pipeline. So it's not surprising that traders are nervous about going into the weekend with long positions in retail, tech, banks, commodities, or anything, really.

By John Rubino

dollarcollapse.com

Copyright 2016 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in