AuthorTopic: Big Slide v2.0 Begins  (Read 97559 times)

Offline RE

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📉 USTs Pass the Magic 3% Mark...
« Reply #540 on: April 25, 2018, 01:45:41 AM »
...and the Stock Market isn't too happy.  :(

RE

Business News
April 24, 2018 / 4:09 AM / Updated 7 hours ago
Wall Street slides as high bond yields fan cost worries
Stephen Culp

6 Min Read

NEW YORK (Reuters) - Wall Street dropped sharply on Tuesday as warnings by bellwether companies of higher costs reverberated as the benchmark U.S. 10-year Treasury yield pierced the 3 percent level for the first time in four years.

Caterpillar, an industrial heavyweight, tumbled 6.20 percent after management said first-quarter earnings would be the “high water mark” for the year and warned of increasing steel prices, although the company beat earnings estimates due to strong global demand.

The S&P 500 and the Dow fell the most in two-and-a-half weeks, and the Dow Jones Industrial Average was down for a fifth day in a row. The S&P 500 is down 1.5 percent year-to-date.

Other companies, including Lockheed and 3M, also gave disappointing updates, adding to the sting of rising Treasury yields. The 10-year yield, a benchmark for global borrowing costs, has been driven steadily higher by a combination of concerns over inflation, growing debt supply and rising Federal Reserve borrowing costs.

“It makes borrowing costs more expensive for corporations. This market rally for the last nine years has been driven by low interest rates, accommodating monetary policy and excess liquidity,” said Oliver Pursche, chief market strategist for Bruderman Asset Management in New York.

Higher bond yields could also prompt portfolio managers to weigh moving money into more attractive fixed-income securities at the expense of equities. The stock market had already been spooked by a climb in bond yields earlier in the year, sliding sharply in February..

Diversified industrial manufacturer 3M Co (MMM.N) was the biggest drag on the Dow Jones Industrial Average .DJI. Shares fell 6.83 percent after the company posted in-line profits as lower taxes offset a miss in operating profits and the company lowered its 2018 earnings forecast.

“We’re seeing some of the earnings numbers have come out, and after further review, (investors) realized where all this revenue was coming from,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “They didn’t see it as recurring or indicative of the core business.

“I think what investors had hoped the benefit from taxes would get redeployed back into the company. That’s not happening,” Nolte said.

The Dow Jones Industrial Average .DJI fell 424.56 points, or 1.74 percent, to 24,024.13, the S&P 500 .SPX lost 35.73 points, or 1.34 percent, to 2,634.56 and the Nasdaq Composite .IXIC dropped 121.25 points, or 1.7 percent, to 7,007.35.

Technology .SPLRCT stocks also weighed on the major indexes. Facebook Inc (FB.O) fell 3.7 percent.

Alphabet shares fell 4.77 percent, erasing the stock’s year-to-date gains as rising expenses and shrinking margins overshadowed the company’s better-than-expected quarterly profit.

Apple Inc (AAPL.O) shares lost 1.39 percent as worries over softening demand for high-end smartphones were underscored as Corning Inc (GLW.N) reported a drop in screen glass sales for the first time in at least four quarters.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., April 19, 2018. REUTERS/Brendan McDermid

Fellow technology stocks Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O) also weighed on the Nasdaq.

“They’re kind of pulling each other down,” said Nolte. “Investors are saying, ‘You know, the group has had a tremendous run over the last two to three years, maybe we should take some money off the table here.’”

Shares of Lockheed Martin Corp (LMT.N), the Pentagon’s largest weapons supplier, dropped 6.17 percent. The company reported better-than-expected first-quarter earnings and boosted its full-year sales and profit forecast but did not raise its 2018 cash-flow projections.

So far, 24 percent of S&P 500 companies have reported first-quarter results, with 77.1 percent coming in above the Street consensus, versus the 64 percent average since 1994. Analysts estimate 21.1 percent growth in earnings for the quarter, according to Thomson Reuters data.

On the economic front, U.S. consumer confidence rebounded in April, according to the Conference Board, as short-term optimism improved and the share of consumers expecting their incomes to decline in the coming months hit its lowest level since December 2000.
3M Co215.88
MMM.NNew York Stock Exchange
-1.87(-0.86%)
MMM.N

    MMM.N.DJI.SPX.IXICFB.O

Oil rose above $75 a barrel to its highest level since November 2014, but then reversed course as U.S. President Donald Trump and French President Emmanuel Macron pledged to try to resolve U.S.-European differences on Iran, easing concerns that the United States might reinstate sanctions against Iran.

Declining issues outnumbered advancing ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favored decliners.

The S&P 500 posted 13 new 52-week highs and 21 new lows; the Nasdaq Composite recorded 61 new highs and 90 new lows.

Volume on U.S. exchanges was 7.22 billion shares, compared to the 6.80 billion average for the full session over the last 20 trading days.

Reporting by Stephen Culp; editing by Leslie Adler
« Last Edit: April 25, 2018, 02:00:24 AM by RE »
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Offline Eddie

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Re: 📉 USTs Pass the Magic 3% Mark...
« Reply #541 on: April 25, 2018, 05:16:09 AM »
...and the Stock Market isn't too happy.  :(

RE

Business News
April 24, 2018 / 4:09 AM / Updated 7 hours ago
Wall Street slides as high bond yields fan cost worries
Stephen Culp

6 Min Read

NEW YORK (Reuters) - Wall Street dropped sharply on Tuesday as warnings by bellwether companies of higher costs reverberated as the benchmark U.S. 10-year Treasury yield pierced the 3 percent level for the first time in four years.

Caterpillar, an industrial heavyweight, tumbled 6.20 percent after management said first-quarter earnings would be the “high water mark” for the year and warned of increasing steel prices, although the company beat earnings estimates due to strong global demand.

The S&P 500 and the Dow fell the most in two-and-a-half weeks, and the Dow Jones Industrial Average was down for a fifth day in a row. The S&P 500 is down 1.5 percent year-to-date.

Other companies, including Lockheed and 3M, also gave disappointing updates, adding to the sting of rising Treasury yields. The 10-year yield, a benchmark for global borrowing costs, has been driven steadily higher by a combination of concerns over inflation, growing debt supply and rising Federal Reserve borrowing costs.

“It makes borrowing costs more expensive for corporations. This market rally for the last nine years has been driven by low interest rates, accommodating monetary policy and excess liquidity,” said Oliver Pursche, chief market strategist for Bruderman Asset Management in New York.

Higher bond yields could also prompt portfolio managers to weigh moving money into more attractive fixed-income securities at the expense of equities. The stock market had already been spooked by a climb in bond yields earlier in the year, sliding sharply in February..

Diversified industrial manufacturer 3M Co (MMM.N) was the biggest drag on the Dow Jones Industrial Average .DJI. Shares fell 6.83 percent after the company posted in-line profits as lower taxes offset a miss in operating profits and the company lowered its 2018 earnings forecast.

“We’re seeing some of the earnings numbers have come out, and after further review, (investors) realized where all this revenue was coming from,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “They didn’t see it as recurring or indicative of the core business.

“I think what investors had hoped the benefit from taxes would get redeployed back into the company. That’s not happening,” Nolte said.

The Dow Jones Industrial Average .DJI fell 424.56 points, or 1.74 percent, to 24,024.13, the S&P 500 .SPX lost 35.73 points, or 1.34 percent, to 2,634.56 and the Nasdaq Composite .IXIC dropped 121.25 points, or 1.7 percent, to 7,007.35.

Technology .SPLRCT stocks also weighed on the major indexes. Facebook Inc (FB.O) fell 3.7 percent.

Alphabet shares fell 4.77 percent, erasing the stock’s year-to-date gains as rising expenses and shrinking margins overshadowed the company’s better-than-expected quarterly profit.

Apple Inc (AAPL.O) shares lost 1.39 percent as worries over softening demand for high-end smartphones were underscored as Corning Inc (GLW.N) reported a drop in screen glass sales for the first time in at least four quarters.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., April 19, 2018. REUTERS/Brendan McDermid

Fellow technology stocks Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O) also weighed on the Nasdaq.

“They’re kind of pulling each other down,” said Nolte. “Investors are saying, ‘You know, the group has had a tremendous run over the last two to three years, maybe we should take some money off the table here.’”

Shares of Lockheed Martin Corp (LMT.N), the Pentagon’s largest weapons supplier, dropped 6.17 percent. The company reported better-than-expected first-quarter earnings and boosted its full-year sales and profit forecast but did not raise its 2018 cash-flow projections.

So far, 24 percent of S&P 500 companies have reported first-quarter results, with 77.1 percent coming in above the Street consensus, versus the 64 percent average since 1994. Analysts estimate 21.1 percent growth in earnings for the quarter, according to Thomson Reuters data.

On the economic front, U.S. consumer confidence rebounded in April, according to the Conference Board, as short-term optimism improved and the share of consumers expecting their incomes to decline in the coming months hit its lowest level since December 2000.
3M Co215.88
MMM.NNew York Stock Exchange
-1.87(-0.86%)
MMM.N

    MMM.N.DJI.SPX.IXICFB.O

Oil rose above $75 a barrel to its highest level since November 2014, but then reversed course as U.S. President Donald Trump and French President Emmanuel Macron pledged to try to resolve U.S.-European differences on Iran, easing concerns that the United States might reinstate sanctions against Iran.

Declining issues outnumbered advancing ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 1.71-to-1 ratio favored decliners.

The S&P 500 posted 13 new 52-week highs and 21 new lows; the Nasdaq Composite recorded 61 new highs and 90 new lows.

Volume on U.S. exchanges was 7.22 billion shares, compared to the 6.80 billion average for the full session over the last 20 trading days.

Reporting by Stephen Culp; editing by Leslie Adler

It's just barely tagged the trend line. It might yet hold here. If I had to bet, I'd bet we're close to a top on 10Yr Bond yields, and that a reversal should be expected, after perhaps one more surge to shake out the weak hands. But at this point I'm completely out of markets, and planning to stay out for a while.
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Offline RE

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Re: 📉 USTs Pass the Magic 3% Mark...
« Reply #542 on: April 25, 2018, 08:42:09 AM »

It's just barely tagged the trend line. It might yet hold here. If I had to bet, I'd bet we're close to a top on 10Yr Bond yields, and that a reversal should be expected, after perhaps one more surge to shake out the weak hands. But at this point I'm completely out of markets, and planning to stay out for a while.

...and the rates keep on climibing...

What's the tipping point?

RE

https://www.cnbc.com/2018/04/25/us-stock-futures-dow-earnings-tech-and-politics-on-the-agenda.html

Stocks slide, add to Tuesday's losses, as rates keep climbing
Fred Imbert   | Alexandra Gibbs   
Published 6 Hours Ago Updated 58 Mins Ago CNBC.com
      
Traders work on the floor of the New York Stock Exchange (NYSE) on March 23, 2018 in New York City.
Wall Street slide set to extend into Wednesday session 
4 Hours Ago | 01:02

Stocks fell on Wednesday, adding to losses from the previous session, as investors fretted over interest rates reaching multiyear highs. Investors also worried that corporations may not be able to maintain their pace of earnings growth.

The Dow Jones industrial average dropped 40 points after a higher open. The S&P 500 slipped 0.3 percent and Nasdaq composite declined 0.4 percent.

The benchmark 10-year Treasury yield traded at 3.02 percent after breaking above 3 percent for the first time since 2014 on Tuesday. The move higher in rates helped push stocks lower on Tuesday, with the Dow dropping more than 400 points.

Investors are worried rising borrowing costs may slow the economy and hurt companies' ability to buy back their own stock.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, April 20, 2018.
Michael Nagle | Bloomberg | Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, April 20, 2018.

"For 10 years, rates were kept artificially low to encourage risk taking," said Jack Ablin, founding partner of Cresset Wealth. "Once we get to more normal levels, that's going to become a challenge for equities as an asset class."

With the 10-year yield hitting the 3 percent mark, financial markets around the globe have fallen, with European and Asian indexes trading in the red Wednesday.

U.S. equities fell sharply in the previous session. On Tuesday, the Dow fell more than 400 points, while the S&P 500 and Nasdaq dropped more than 1 percent each.

The recent move lower in equities is taking place despite a string of strong corporate earnings. Dow member Boeing reported earnings and revenue that easily beat expectations. Twitter posted a better-than-expected profit and revenue for the first quarter. NBCUniversal-parent Comcast also posted stronger-than-forecast earnings and revenue.

On Tuesday, bellwether Caterpillar posted earnings and revenue that beat expectations, but the shares fell after the company's CFO said their first-quarter results may have been the "high watermark" for the year. Those remarks helped push the market lower in the previous session.

Jeremy Klein, chief market strategist at FBN Securities, said he is not worried about corporate earnings, however.

"Fears of 'peak earnings' are laughable considering that the average constituent in the S&P 500 has enjoyed year-over-year bottom line growth in excess of 20%," Klein wrote in a note. "Revenues have increased by nearly 10%. Solid economic data, which includes strong consumer and business confidence, makes an imminent recession a remote possibility."
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Offline RE

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📉 Why I Think the Stock Market Cannot Crash in 2018
« Reply #543 on: May 14, 2018, 01:48:47 AM »
https://wolfstreet.com/2018/05/13/why-i-think-the-stock-market-cannot-crash-in-2018/

Why I Think the Stock Market Cannot Crash in 2018
by Wolf Richter • May 13, 2018 • 35 Comments   
But the crash-insurance policy is a one-time deal. And then what?


The 85% of S&P 500 companies that have reported earnings so far disclosed they’d bought back $158 billion of their own shares in Q1, according to the Wall Street Journal. The quarterly record of $164 billion was set in Q1 2016. If the current rate applies to all S&P 500 companies, they repurchased over $180 billion of their own shares in Q1, thus setting a new record:

At this trend, including a couple of slower quarters, S&P 500 companies are likely to buy back between $650 billion and $700 billion of their owns shares in 2018. This would handily beat the prior annual record of $572 billion in 2007. Here are the top buyback spenders in Q1:

    Apple: $22.8 billion
    Amgen: $10.7 billion
    Bank of America: $4.9 billion
    JPMorgan Chase: $4.7 billion
    Oracle: $4 billion
    Microsoft: $3.8 billion
    Phillips 66: $3.5 billion
    Wells Fargo: $3.34 billion
    Boeing: $3 billion
    Citigroup: $2.9 billion

Buybacks pump up share prices in several ways. One is the pandemic hype and media razzmatazz around the announcements which cause investors and algos to pile into those shares and create buying pressure. Since May 1, when Apple announced mega-buybacks of $100 billion in the future, its shares have surged 11%. The magic words.
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Other companies with big share buyback programs have also fared well: Microsoft shares are up 14% year-to-date. And if buybacks don’t push up shares, at least they keep them from falling: Amgen shares are flat year-to-date.

Shares of the 20 biggest buyback spenders in Q1 are up over 5% on average year-to-date, according to the Wall Street Journal, though the S&P 500 has edged up only 2%.

Share buybacks also prop up prices because they create buying pressure by the company itself when it finally does buy the shares. This is the only entity in the market that doesn’t want to buy low. It wants to buy high since it’s trying to manipulate up its own shares. By design, it provides the relentless bid in a market that might want to sell off. The amounts are huge.

In addition, share buybacks change the math of earnings per share by reducing the number of shares outstanding. The same earnings will get spread over fewer shares, thus, increasing earnings per share even if net earnings remained flat or declined. Share buybacks also counteract the dilution effects of stock-based compensation.

Share buybacks have been a godsend in this environment of rising interest rates, sky-high valuations, the QE Unwind with which the Fed is bleeding liquidity out of the market, and antsy investors.

In the first quarter, investors pulled $29.4 billion out of US stock mutual funds and exchanged-traded funds, the most since the sell-off in early 2016, according to a BofAML report, cited by the Wall Street Journal. Retail investors, after the phenomenal Trump spike, have lost their enthusiasm.

A large portion of these buybacks are now funded by corporations’ “overseas” cash. This cash accumulated in overseas entities as a result of profits that thus dodged the old US tax law. This “cash,” while registered overseas, has actually been invested in US Treasuries, US corporate bonds, and other investments in the US and elsewhere. Share repurchases were among the things companies could not do with this “overseas” cash without triggering 39% income tax. Now they can, under the reduced rates of the new tax regime.

Alas, the tax regime was changed under the pretext of encouraging US companies to invest this money in their operations in the US to grow in the US, hire people in the US, and crank up the US economy. Everyone knew this was a pretext for a corporate tax cut that would free companies to do what they’d done during the last “repatriation holiday” in 2004: Buy back their own shares, increase dividends, and jack up executive compensation packages. Ironically, companies that had “brought back” the most cash, ended up laying off the most employees.

With this kind of corporate buying pressure in the market, it’s very hard for shares to crash no matter what else is going on – such as during the record buyback-year 2007 the housing bust, a budding mortgage crisis, and big visible cracks in the banks. In 2018 too, companies will pile into the market at every dip and buy as high as possible. And they’ll be able to prevent their shares from crashing.

This has already played out during the sell-offs this year, when corporate buybacks surged on days when everyone was selling. And it stopped the sell-offs.

Other companies won’t be able to do that and their shares might get thrown under the bus. But the mega-caps such as Apple and Microsoft, solidly lined up behind the buyback binge, will help prop up the broader market. Overall, the S&P 500 may zig-zag lower in 2018, and even share buybacks may not be able to stop it, but it’s unlikely the overall market can crash this year no matter what happens.

But this “overseas” cash is a one-time trove of money. Once it’s used up, it’s gone. Then what?

Then share buybacks will have to be funded by cash flows and borrowing. Cash flows aren’t nearly enough to maintain this buyback pace, and borrowing is getting increasingly expensive, and corporations are already burdened by a record amount of debt. The Fed’s QE Unwind, which is currently ramping up, will drain up to $600 billion a year in liquidity out of the market in 2019 and later years, when share buybacks funded by “overseas” cash, which were able to counteract the early effects of the Fed’s liquidity drain, will begin to fade out. This gradual transition is one of several reasons why I think that in the near future this market cannot crash — say, a 50% decline over a relatively short period of time — but that it will instead zig-zag lower, and that this process could last many years before the excesses have been wrung out of the market.

And these are getting to be serious amounts. Read… Fed’s QE Unwind Accelerates Sharply
 
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Offline Eddie

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Re: 📉 Why I Think the Stock Market Cannot Crash in 2018
« Reply #544 on: May 14, 2018, 06:26:33 AM »
https://wolfstreet.com/2018/05/13/why-i-think-the-stock-market-cannot-crash-in-2018/

Why I Think the Stock Market Cannot Crash in 2018
by Wolf Richter • May 13, 2018 • 35 Comments   
But the crash-insurance policy is a one-time deal. And then what?


The 85% of S&P 500 companies that have reported earnings so far disclosed they’d bought back $158 billion of their own shares in Q1, according to the Wall Street Journal. The quarterly record of $164 billion was set in Q1 2016. If the current rate applies to all S&P 500 companies, they repurchased over $180 billion of their own shares in Q1, thus setting a new record:

At this trend, including a couple of slower quarters, S&P 500 companies are likely to buy back between $650 billion and $700 billion of their owns shares in 2018. This would handily beat the prior annual record of $572 billion in 2007. Here are the top buyback spenders in Q1:

    Apple: $22.8 billion
    Amgen: $10.7 billion
    Bank of America: $4.9 billion
    JPMorgan Chase: $4.7 billion
    Oracle: $4 billion
    Microsoft: $3.8 billion
    Phillips 66: $3.5 billion
    Wells Fargo: $3.34 billion
    Boeing: $3 billion
    Citigroup: $2.9 billion

Buybacks pump up share prices in several ways. One is the pandemic hype and media razzmatazz around the announcements which cause investors and algos to pile into those shares and create buying pressure. Since May 1, when Apple announced mega-buybacks of $100 billion in the future, its shares have surged 11%. The magic words.
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2 changes to Social Security you need to know about
2 changes to Social Security you need to know about
by Palm Beach Letter

Other companies with big share buyback programs have also fared well: Microsoft shares are up 14% year-to-date. And if buybacks don’t push up shares, at least they keep them from falling: Amgen shares are flat year-to-date.

Shares of the 20 biggest buyback spenders in Q1 are up over 5% on average year-to-date, according to the Wall Street Journal, though the S&P 500 has edged up only 2%.

Share buybacks also prop up prices because they create buying pressure by the company itself when it finally does buy the shares. This is the only entity in the market that doesn’t want to buy low. It wants to buy high since it’s trying to manipulate up its own shares. By design, it provides the relentless bid in a market that might want to sell off. The amounts are huge.

In addition, share buybacks change the math of earnings per share by reducing the number of shares outstanding. The same earnings will get spread over fewer shares, thus, increasing earnings per share even if net earnings remained flat or declined. Share buybacks also counteract the dilution effects of stock-based compensation.

Share buybacks have been a godsend in this environment of rising interest rates, sky-high valuations, the QE Unwind with which the Fed is bleeding liquidity out of the market, and antsy investors.

In the first quarter, investors pulled $29.4 billion out of US stock mutual funds and exchanged-traded funds, the most since the sell-off in early 2016, according to a BofAML report, cited by the Wall Street Journal. Retail investors, after the phenomenal Trump spike, have lost their enthusiasm.

A large portion of these buybacks are now funded by corporations’ “overseas” cash. This cash accumulated in overseas entities as a result of profits that thus dodged the old US tax law. This “cash,” while registered overseas, has actually been invested in US Treasuries, US corporate bonds, and other investments in the US and elsewhere. Share repurchases were among the things companies could not do with this “overseas” cash without triggering 39% income tax. Now they can, under the reduced rates of the new tax regime.

Alas, the tax regime was changed under the pretext of encouraging US companies to invest this money in their operations in the US to grow in the US, hire people in the US, and crank up the US economy. Everyone knew this was a pretext for a corporate tax cut that would free companies to do what they’d done during the last “repatriation holiday” in 2004: Buy back their own shares, increase dividends, and jack up executive compensation packages. Ironically, companies that had “brought back” the most cash, ended up laying off the most employees.

With this kind of corporate buying pressure in the market, it’s very hard for shares to crash no matter what else is going on – such as during the record buyback-year 2007 the housing bust, a budding mortgage crisis, and big visible cracks in the banks. In 2018 too, companies will pile into the market at every dip and buy as high as possible. And they’ll be able to prevent their shares from crashing.

This has already played out during the sell-offs this year, when corporate buybacks surged on days when everyone was selling. And it stopped the sell-offs.

Other companies won’t be able to do that and their shares might get thrown under the bus. But the mega-caps such as Apple and Microsoft, solidly lined up behind the buyback binge, will help prop up the broader market. Overall, the S&P 500 may zig-zag lower in 2018, and even share buybacks may not be able to stop it, but it’s unlikely the overall market can crash this year no matter what happens.

But this “overseas” cash is a one-time trove of money. Once it’s used up, it’s gone. Then what?

Then share buybacks will have to be funded by cash flows and borrowing. Cash flows aren’t nearly enough to maintain this buyback pace, and borrowing is getting increasingly expensive, and corporations are already burdened by a record amount of debt. The Fed’s QE Unwind, which is currently ramping up, will drain up to $600 billion a year in liquidity out of the market in 2019 and later years, when share buybacks funded by “overseas” cash, which were able to counteract the early effects of the Fed’s liquidity drain, will begin to fade out. This gradual transition is one of several reasons why I think that in the near future this market cannot crash — say, a 50% decline over a relatively short period of time — but that it will instead zig-zag lower, and that this process could last many years before the excesses have been wrung out of the market.

And these are getting to be serious amounts. Read… Fed’s QE Unwind Accelerates Sharply

I said this the day Trump announced the "tax cut". The stock market would be headed into the stratosphere already if it weren't for Trump's silly posturing on trade, and the Fed's aggressive deleveraging. I agree with Wolf that stock buy-backs will keep the market inflated a bit longer. At some point the rising interest rates and the eventual tapering on the buy-backs will result in a Wiley Coyote moment. the bull market is very long in the tooth. I expect the bubble to pop in a couple of years. That's why I'm deleveraging and trying to raise some more cash.
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Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #545 on: May 14, 2018, 05:41:51 PM »
This is a chart of UST 10-year yield from 14 April to 15 Mat 2018.



On 25 April it reached 3.00% and the next day it peaked at 3.02%, then falling all the way down to 2.95% before again reaching 3.00% today.  Clearly there is potential to break 3.03% tomorrow, which you nominated as the critical level (for a break-out, causing widespread bankruptcies for the over-extended).

I watched a TV report on HSBC last night.  This has to be the most criminal bank in the world, way beyond Deutsche Bank and GS.  They control all the FX trading of Yuan, and are backed by Chinese Government.  When the UK offered to bail them out in 2008, they refused and China had to do it itself.  They handle big Chinese (tax-free) money looking to go offshore, so USTs are the first parking point.  UST yields affect the entire off-shoring investment structure.
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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #546 on: May 14, 2018, 06:35:24 PM »
I did not say that widespread bankruptcies would occur if the 10 Yr UST broke 3.03.

I said that it would be a break in a very long term trend line, and that THAT would be a real influence on how bond traders got positioned going forward.  But it has to be a confirmed break, not just a quick run up that touches the line and fails to follow through. So far we haven't had that, but I will concede that we very well might.

I got out of equities a few months ago now myself, because I thought it was a possibility. I paid off another small mortgage, and used up my cash so I wouldn't even be tempted for a while. But I remain unconvinced of any real threat of a market breakdown. It is the stock buy-backs driving the gains, not any kind of fundamentals. that much is certain.

The rising rates and strong dollar are killing emerging market countries with dollar denominated debt. Look at Argentina. EM's are feeling the stress now, and the IMF is going to have to do more bailouts.





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Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #547 on: May 14, 2018, 07:08:35 PM »
It seems to me that a market breakdown could occur when ever a big player makes a big mistake. If Argentina collapses, again, someone's credit default swap will be suddenly called upon, threatening their own default swaps, cascading across the sytem.  HSBC is the world's biggest bank with branches in over 100 countries, and involved in every type of transaction, including government loans and drug money laundering.  The potential for big mistakes at any time (including tomorrow) is obvious. 

I just don't get how you could say "But I remain unconvinced of any real threat of a market breakdown."
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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #548 on: May 14, 2018, 07:20:05 PM »
Well, look at Italy. Their banks are eaten up with bad loans. But the government bails them out. Their national debt is 132% of GDP, but somehow, they manage to keep on keeping on. I know the chickens must come home to roost at some point yes, but when?

I say I'm not convinced that any kind of crash is imminent because I see nothing going on that's new and different that I haven't seen for the last decade....... except that we now have people running the US government who are willing to just flat give the big corporations carte blanche to rape and pillage at will with no repercussions. I expect that to have some very short term positive effects on equity markets.  That's the Trump Effect, if there is such a thing. Tax cuts for the rich help the stock market.
« Last Edit: May 14, 2018, 07:21:57 PM by Eddie »
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Offline David B.

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Re: Big Slide v2.0 Begins
« Reply #549 on: May 14, 2018, 07:23:57 PM »
I did not say that widespread bankruptcies would occur if the 10 Yr UST broke 3.03.

I said that it would be a break in a very long term trend line, and that THAT would be a real influence on how bond traders got positioned going forward.  But it has to be a confirmed break, not just a quick run up that touches the line and fails to follow through. So far we haven't had that, but I will concede that we very well might.

I got out of equities a few months ago now myself, because I thought it was a possibility. I paid off another small mortgage, and used up my cash so I wouldn't even be tempted for a while. But I remain unconvinced of any real threat of a market breakdown. It is the stock buy-backs driving the gains, not any kind of fundamentals. that much is certain.

The rising rates and strong dollar are killing emerging market countries with dollar denominated debt. Look at Argentina. EM's are feeling the stress now, and the IMF is going to have to do more bailouts.
I have a question Eddie. As a mere mortal with some insight do you think the rise is being "controlled" for some purpose or was it always inevitable? Rates had to go up but the somewhat quick rise will tank emerging markets and destabilize large chunks of the global economy. Is that a plan or a dumb side effect? I see all the banker suits behind spray tan man and I wonder. He seems dumb enough to blunder into it but the boys in the background must know the shit storm it will bring no? I'm not prone to conspiracy theories myself I usually assign simple greed and shortsightedness as prime motives not great plots. I keep saying to myself " there is no way he can be this blind" and "surely he can't think that" and lo and behold yes he can be and yes he does. For the life of me I cannot figure out whether there is a great american bunker building exercise going on with a strong plan or its just old fashion isolationism coming back to please the base...
A confused canuck...
If its important then try something, fail, disect, learn from it, try again, and again and again until it kills you or you succeed.

Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #550 on: May 14, 2018, 07:45:30 PM »
I've wondered the same thing for years and the truth is that I'm not completely sure.

Brandon Smith (Alt-Market Blog) has written for years that the banksters crash the economy at will to suit the purposes of their globalist agenda. That the ultimate goal is a single planetary currency with no cash, so that all our financial transactions will be transparent (and therefore taxable). He sees Trump as a patsy being set up to take the blame for the "Big One" that's coming.

Other people, like Jim Rickards, believe that when the crash does come that the IMF will unveil a new reserve currency basket based on something called SDR's (special drawing rights). These SDR's are an international reserve asset that already exists.

I think some people on the Fed actually just want to see bank interest go back to what they consider "normal", i.e. roughly a 5% prime rate. Banks, after all, make more money on money they loan when rates are higher. When I went into business 30 years ago, prime was over 10%, and I borrowed business loans for over 12% that had the interest only locked for 180 days.

Yes, it will be technically impossible for the government to pay the national debt off  at high interest rates, but it remains to be seen exactly when and how that shit will hit the fan. Financial repression is how governments deal with onerous debt. They raise taxes and break promises.

I don't know the answer to your question for sure.

Dinner beckons....talk more later.
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Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #551 on: May 15, 2018, 04:08:47 PM »
UST-10 yield at 3.07% at close.
Safe Haven Index collapses to 109.99 - the lowest it has been since 20 May 2010.
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Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #552 on: May 16, 2018, 05:51:37 PM »
UST-10 yield: 3.09% at close.
Safe Haven Index: 109.16
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Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #553 on: May 17, 2018, 05:01:09 PM »
UST-10 yield: 3.11%
Safe Haven Index: 108.27

I think we can say that we have "broken through 3%" and the US markets are hyper-unstable from here on.
As always check FDIC for bank suspensions at close today.
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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #554 on: May 17, 2018, 05:35:13 PM »
Nice. I heard 3.24 mentioned for the next leg up. It is happening. We'll see how bad it gets.
What makes the desert beautiful is that somewhere it hides a well.