AuthorTopic: Big Slide v2.0 Begins  (Read 115837 times)

Offline RE

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Carnage: Worst Week For Stocks In 4 Years, VIX Soars Most Ever
« Reply #270 on: August 21, 2015, 07:06:18 PM »
Looks like the PPT ran out of rabbits to pull out of the hat today.

Great Weekend for the Big Vidcast!  :icon_sunny:

RE

http://www.zerohedge.com/news/2015-08-21/carnage-worst-week-stocks-4-years-vix-soars-most-ever

http://www.theguardian.com/business/2015/aug/21/us-markets-china-slump-global-sell-off
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Offline RE

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Making Sense Of The Sudden Market Plunge
« Reply #271 on: August 22, 2015, 03:24:59 AM »
Nothing new here for Diners, but Chris is catching up.

RE

http://www.peakprosperity.com/blog/94051/making-sense-sudden-market-plunge

Making Sense Of The Sudden Market Plunge

Are you prepared for further turmoil?
Friday, August 21, 2015, 10:13 PM

The global deflationary wave we have been tracking since last fall is picking up steam.  This is the natural and unavoidable aftereffect of a global liquidity bubble brought to you courtesy of the world’s main central banks.  What goes up must come down -- and that's especially true for the world's many poorly-constructed financial bubbles, built out of nothing more than gauzy narratives and inflated with hopium.

What this means is that the traditional summer lull in financial markets has turned August into an unusually active and interesting month. August, it appears, is the new October.

Markets are quite possibly in crash mode right now, although events are unfolding so quickly – currency spikes, equity sell offs, emerging market routs and dislocations, and commodity declines -  that it’s hard to tell for sure.  However, that’s usually the case right before and during big market declines.

Before you read any further, you probably should be made aware that, at Peak Prosperity, our market outlook has been one of extreme caution for several years.  We never bought into so-called "recovery" because much of it was purely statistical in nature, and had to rely on heavily distorted and tortured 'statistics' to be believed.  Okay, lies is probably a more accurate term in many cases.

Further, most of the gains in financial assets engineered by the central banks were false and destined to burst because they were based on bubble psychology, not actual returns.

Which bubbles you ask?  There are almost too many to track. But here are the main ones:

  • Corporate bond bubble
  • Corporate earnings bubble
  • Junk bond bubble
  • Sovereign debt bubble
  • Equity bubbles in various markets (US, China) and sectors (Tech, Biotech, Energy)
  • Real estate bubbles, especially in the commodity exporting countries
  • Central bank credibility bubble (perhaps the largest and most dangerous of them all)

What’s the one thing that binds all of these bubbles together?  Central bank money printing.

Passing The Baton

Operating in collusion, the world's major central banks passed the liquidity baton back and forth between them, first from the US to Japan, then from Japan to Europe, then back to the US, then over to Europe again where it now resides.  Seemingly endless rounds of QE that didn’t always do what they were supposed to do, and plenty of things they were not intended to do.

The purpose of printing up trillions and trillions of dollars (supposedly) was to create economic growth, drive down unemployment, and stoke moderate inflation.  On those fronts, the results have been dismal, horrible, and ineffective, respectively.

However, the results weren’t all dismal.  Big banks reaped windfall profits while heaping record bonuses on themselves for being at the front of the Fed’s feeding trough. The über-wealthy enjoyed the largest increase in wealth gains in recorded history, and governments were able to borrow more and more money at cheaper and cheaper rates allowing them to deficit spend at extreme levels.

But all of that partying at the top is going to have huge costs for ‘the little people’ when the bill comes due.  And it always comes due.  Money printing is fake wealth; it causes bubbles, and when bubbles burst there’s only one question that has to be answered: Who’s going to eat the losses?

The poor populace of Greece is just now discovering that it collectively is responsible for paying for the mistakes of a small number of French and German banks, aided by the collusion of Goldman Sachs, in hiding the true state of Greek debt-to-GDP using sophisticated off-balance sheet derivative shenanigans. As a direct result, the people of Greece are in the process of losing their airports, ports, and electrical distribution and phone networks to ‘private investors’ -- mainly foreigners harvesting the last cash-generating assets the Greeks have left to their names.

Broken Markets

As we’ve detailed repeatedly, our “markets” no longer resemble markets.  They are so distorted, both by central bank policy and technologically-driven cheating, that they no longer really qualify as legitimate markets.  Therefore we’ve taken to putting double quote marks around the word “”market”” often when we use it.  That’s how bad they’ve become.

Where normal markets are a place for legitimate price discovery, todays “”markets”” are a place where computers battle each other over scraps in the blink of an eye, ‘investors’ hinge their decisions based on what the Fed might or might not do next, and rationalizations are trotted out by the media for why inexplicable market price movements make sense.

Instead, we view the “”markets”” as increasingly the playgrounds of, by and for the gigantic market-controlling firms whose technology and market information have created one of the most lopsided playing fields in our lifetimes.

Signs of these distortions abound. One completely odd chart is this one, showing that the average trading range of the Dow (ytd) was the lowest in history as of last week (before this week’s market turmoil hit).  And that was despite Greece, China, QE, Japan, oil’s slump, Ukraine, Syria, Iran and all of the other ample market-disturbing news:

(Source)

Based on the above chart, you’d think that 2015 up through mid-August was the most serene year of the last 120 years.  Of course, it's been anything but serene.

The explanation for this locked-in trading range is a combination of ultra-low trading volume and the rise of the machines.  There have been times recently when practically 100% of market volume was just machines playing against each other…no actual investors (i.e, humans) were involved. 

As long as there was ample liquidity, then the machines were content to just play ping pong with the “”market””. Which they did, crossing the S&P 500 over the 2,100 line 13 times before the recent sell-off took hold.

But that’s not the most concerning part about having broken markets.  The most concerning thing centers on the fact that things that should never, ever happen in true markets are happening in todays “”markets”” all the time.

One measure of this is how many standard deviations (std dev) an event is away from the mean. For example, if the price of a financial asset moves an average of 1% per year, with a std dev of 0.25 %, then it would be slightly unusual for it to 2%, or 3%.  However it would be highly unusual if it moved as much as 6% or 7%.

Statistics tells us that something that 3 std dev movements are very unlikely, having only a 0.1% chance of happening.  By the time we get to 6 std devs, the chance is so small that what we’re measuring should only happen about once every 1.3 billion years. At 7 std dev, the chance jumps up to once every 3 billion years. 

Why take it to such a ridiculous level? Because those sorts of events are happening all the time in our “”markets”” now. And that should be deeply concerning to everyone, as it was to Jamie Dimon, CEO of JP Morgan:

'Once-in-3-Billion-Year' Jump in Bonds Was a Warning Shot, Dimon Says

Apr 8, 2015

JPMorgan Chase & Co. head Jamie Dimon said last year’s volatility in U.S. Treasuries is a “warning shot” to investors and that the next financial crisis could be exacerbated by a shortage of the securities.

The Oct. 15 gyration, when Treasury yields fluctuated by almost 0.4 percentage point, was an “unprecedented move” that would have serious consequences in a stressed environment, Dimon, the New York-based bank’s chairman and chief executive officer, said in a letter Wednesday to shareholders. Treasuries are supposed to be among the most stable securities.

Dimon, 59, cited the incident as he waded into a debate about whether bank regulations implemented after the 2008 financial crisis exacerbate price declines by limiting the ability of Wall Street banks to make markets. It’s just a matter of time until some political, economic or market event triggers another financial crisis, he said, without predicting one is imminent.

The Treasuries move was “an event that is supposed to happen only once in every 3 billion years or so,” Dimon wrote. A future crisis could be worsened because there “is a greatly reduced supply of Treasuries to go around.”

(Source)

While Mr. Dimon used the event to suggest that bank regulations were somehow to blame, that explanation is self-serving and disingenuous.  He'd use any excuse to try and blame bank regulations; that’s his job, I guess.

Instead what happened was that our “”market”” structure is so distorted by computer trading algorithms, with volume so heavily distorted by their lighting-fast reflexes, that one of those ‘once in 3-billion years events’ resulted.

This simply wouldn't have happened if humans were still the ones dong the trading, but they aren't. All the colored jackets have been hung up at the CME, and human market makers on the floor of the NYSE are rapidly slipping away into the sunset as algorithms now run the show.

The good news about computers is that they allow our trading to be faster and cheaper, presumably with better price discovery.  The bad news is that nobody really understands how the whole connected universe of them interact and that, from time to time, they go nuts.

As Mr. Dimon hinted, they have the chance of taking the next financial downturn and converting it into a certified financial meltdown

How common are these ‘billion year events’?

They happen all the time now. Here’s a short list:

(Source)

All of this leads us to conclude that the chance of a very serious, market-busting accident is not only possible, but that the probability approaches 100% over even relatively short time horizons. 

The deflation we’ve been warning about is now at the door. And one of our big concerns is that we’ve got “”markets”” instead of markets, which means that something could break our financial system as we know and love it.

From The Outside In

One of our main operating models at Peak Prosperity is that when trouble starts it always begins at the edges and moves from the outside in.

This is true whether you are looking at people in a society (food banks see a spike in demand well before expensive houses decline in price), stocks in a sector (the weakest companies decline first), bonds (junk debt yields spike first), or across the globe where weaker countries get in trouble first.

What we’re seeing today is an especially fast moving set of ‘outside in’ indicators that are cropping up so fast it’s difficult to keep track of them all.  Here are the biggest ones.

Currency Declines

The recent declines in emerging market (EM) currencies is a huge red flag.  This combined chart of EM foreign exchange shows the escalating declines of late.

(Source)

Since last Monday, here’s the ugly truth:

Many of these countries have been using precious foreign reserves to try and stem the rapid declines of their currencies, but I fear they will all run out of ammo before the carnage is over.

What’s happening here is the reverse part of the liquidity flood that the western central banks unleashed.  The virtuous part of this cycle sees investors borrow money cheaply in Europe, the US or Japan, and then park in in EM countries, usually by buying sovereign bonds, or investing in local companies (especially those making a bundle off of the commodity boom that was happening).

So on the virtuous side, a major currency was borrowed, and then used to buy whatever local EM currency was involved (which drove up the value of that currency), and then local assets were bought which either drove up the stock market or drove down bond yields (which move as in inverse to price).

The virtuous part of the cycle is loved by local businesses and politicians.  Everything works great.  The currency is stable to rising, bond yields are falling, stocks are rising, and everyone is generally happy.

However when the worm turns, and it always does, the back side of this cycle, the vicious part, really hurts and that’s what we’re now seeing.

The investors decide that enough is enough, and so they sell the local bonds and equities they bought, driving both down in price (so falling stock markets and rising yields), and then sell the local currency in exchange for dollars or yen or euros, whichever were borrowed in the first place.

And thus we see falling EM currencies.

To put this in context, many of the above listed currencies are now trading at levels either not seen since the Asian currency crisis of 1997, or at levels never before seen at all.  The poor Mexican peso is one of the involved currencies, which has fallen by 12% just this year, and almost made it to 17 to the dollar early this morning (16.9950).  Battering the peso is also the low price of oil which is absolutely on track to destroy the Mexican federal budget next year.

Stock Market Declines

In concert with the currency unwinds we are seeing deep distress in the peripheral stock markets.  There are now more than 20 that are in ‘bear country’ meaning they’ve suffered declines of 20% or more from their peaks.

Here are a few select ones, with Brazil being in the worst shape:

All of these signs reinforce the idea that the great central back liquidity tsunami has reversed course and is about to create a lot of damage and suck a lot of debris out to sea.

The Commodity Rout

A lot of EM countries are commodity exporters.  They sell their minerals trees and rocks to the rest of the world, by which we mean to China first and foremost.

Commodities are not just doing badly in terms of price, they are absolutely being crushed, now down some 50% over the past four years.

(Source)

Commodities tells a number of things besides the extent of EM economic happiness or pain – they tells us whether the world economy is growing or shrinking.  Right now they are saying “shrinking” which is confirmed by all of the recent Chinese import, export and manufacturing data, along with the dismal results coming out of Japan (in recession), Europe and the US.

Conclusion Part I

As we’ve been warning for a long time, you cannot print your way to prosperity, you can only delay the inevitable by trading time for elevation.   Now, instead of finding ourselves saddled with $155 trillion of global debt as we did in 2008, we’re entering this next crisis with $200 trillion on the books and interest rates already stuck at zero.  We are 30 feet up the ladder instead of 10 and it’s a long way down.

What tools do the central banks really have left to fight the forces of deflation which are now romping across the financial landscape from the outside in?

If the computers hiccup and give us some institution smashing or market busting 8 sigma move what will the authorities do?  Shut down the markets?  It’s a possibility, and one for which you should be prepared.

Where are we headed with all this?  Hopefully not the way of Venezuela which is now so embroiled in a hyperinflationary disaster that stores are stripped clean of basic supplies, social unrest grows, and creative street vendors are now selling empanadas wrapped in 2 bolivar notes because they are, literally, far cheaper than napkins.  Cleaner?  Maybe not so much.  I wouldn’t want to eat off of currency.

(Source)

But make no mistake, the eventual outcome to all this is captured brilliantly in this quote by Ludwig Von Mises, the Austrian economist:

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

The credit expansion happened between 1980 and 2008, there was a warning shot which was soundly ignored by ignorant central bankers, and now we have more, not less, debt with which to contend.

Venezuela has already entered the ‘total catastrophe’ stage for its currency, but Japan will follow along, as will everyone eventually who lives in a country that finds itself unable to voluntarily abandon the sweet relief of booms enabled by credit creation.

« Last Edit: August 22, 2015, 03:27:36 AM by RE »
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Offline agelbert

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Re: Big Slide v2.0 Begins
« Reply #272 on: August 22, 2015, 02:24:30 PM »
I believe prudent folks should take a gander at the year 2008 market stats. That year and this one track uncomfortably (depending on your point of view  ;D) well.

The Stock Market In 2015 Is Starting To Look Remarkably Similar To The Stock Market In 2008

http://theeconomiccollapseblog.com/archives/the-stock-market-in-2015-is-starting-to-look-remarkably-similar-to-the-stock-market-in-2008

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Offline MKing

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Re: Big Slide v2.0 Begins
« Reply #273 on: August 22, 2015, 03:43:49 PM »
I believe prudent folks should take a gander at the year 2008 market stats. That year and this one track uncomfortably (depending on your point of view  ;D) well.

The Stock Market In 2015 Is Starting To Look Remarkably Similar To The Stock Market In 2008


We shall see if we get to that wonderful of a buying opportunity. It will take some time to determine if we have reached the appropriate level of sheeple hysteria.


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Black Monday
« Reply #274 on: August 26, 2015, 02:04:05 AM »


gc2smOff the keyboard of Michael Snyder



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Published on The Economic Collapse on August 24, 2015






Discuss this article at the Market Flambe Table inside the Diner



The First Time EVER The Dow Has Dropped By More Than 500 Points On Two Consecutive Days



New York City Empire State Building - Public DomainOn Monday, the Dow Jones Industrial Average plummeted 588 points. It was the 8th worst single day stock market crash in U.S. history, and it was the first time that the Dow has ever fallen by more than 500 points on two consecutive days. But the amazing thing is that the Dow actually performed better than almost every other major global stock market on Monday.  In the U.S., the S&P 500 and the Nasdaq both did worse than the Dow. In Europe, almost every major index performed significantly worse than the Dow.  Over in Asia, Japanese stocks were down 895 points, and Chinese stocks experienced the biggest decline of all (a whopping 8.46 percent). On June 25th, I was not kidding around when I issued a “red alert” for the last six months of 2015. I had never issued a formal alert for any other period of time, and I specifically stated that “a major financial collapse is imminent“. But you know what? As the weeks and months roll along, things will eventually be even worse than what any of the experts (including myself) have been projecting. The global financial system is now unraveling, and you better pack a lunch because this is going to be one very long horror show.



Our world has not seen a day quite like Monday in a very, very long time. Let’s start our discussion where the carnage began…



Asian Markets



For weeks, the Chinese government has been taking unprecedented steps to try to stop Chinese stocks from crashing, but nothing has worked. As most Americans slept on Sunday night, the markets in China absolutely imploded




As Europe and North America slept on Sunday night, Chinese markets went through the floor — the Shanghai Composite index of stocks fell by 8.49%, the biggest single-day collapse since 2007.



It wasn’t alone. Hong Kong’s Hang Seng fell 5.17%, and Japan’s Nikkei fell 4.61%. Stocks in Taiwan, the Philippines, Singapore, and Thailand also tumbled.




Things would have been even worse in China if trading had not been stopped in most stocks. Trading was suspended for an astounding 2,200 stocks once they hit their 10 percent decline limits.



Overall, the Shanghai Composite Index is now down close to 40 percent from the peak of the market, and the truth is that Chinese stocks are still massively overvalued when compared to the rest of the world.



That means that they could very easily fall a lot farther.



European Markets



The selling momentum in Asia carried over into Europe once the European markets opened. On a percentage basis, all of the major indexes on the continent declined even more than the Dow did




In Europe, the bloodbath from Friday continued unabated. The German Dax plunged 4.7%, the French CAC 40 5.4%, UK’s FTSE 100 dropped 4.7%. Euro Stoxx 600, which covers the largest European companies, was down 5.3%.



But wait… Europe is where the omnipotent ECB and other central banks have imposed negative deposit rates. The ECB is engaged in a massive ‘whatever it takes” QE program to inflate stock markets. But it’s not working. Omnipotence stops functioning once people stop believing in it.




U.S. Markets



Even before U.S. markets opened on Monday morning, the New York Stock Exchange was already warning that trading would be halted if things got too far out hand, and it almost happened




The thousands of companies listed by the New York Stock Exchange and Nasdaq Stock Market will pause for 15 minutes if the Standard & Poor’s 500 Index plunges 7 percent before 3:25 p.m. New York time. The benchmark got close earlier, falling as much as 5.3 percent.




There were other circuit breakers in place for later in the day if too much panic selling ensued, but fortunately none of those were triggered either. Here is more from Bloomberg




Another circuit breaker kicks in if the S&P 500 extends its losses to 13 percent before 3:25 p.m. If the plunge reaches 20 percent at any point during today’s session, the entire stock market will shut for the rest of the day.




When the U.S. markets did open, the Dow plunged 1,089 points during the opening minutes of trading. If the Dow would have stayed at that level, it would have been the worst single day stock market crash in U.S. history by a wide margin.



Instead, by the end of the day it only turned out to be the 8th worst day ever.



And in case you are wondering, yes, investors are losing a staggering amount of money. According to MarketWatch, the total amount of money lost is now starting to approach 2 trillion dollars




As of March 31, households and nonprofits held $24.1 trillion in stocks. That’s both directly, and through mutual funds, pension funds and the like. That also includes the holdings of U.S.-based hedge funds, though you’d have to think that most hedge funds are held by households.



Using the Dow Jones Total Stock Market index DWCF, -4.21% through midmorning trade, that number had dropped to $22.32 trillion.



In other words, a cool $1.8 trillion has been lost between now and the first quarter — and overwhelmingly, those losses occurred in the last few days.




Unfortunately, U.S. stock prices are still nowhere near where they should be. If they were to actually reflect economic reality, they would have to fall a lot, lot lower.



For example, there is usually a very strong correlation between commodity prices and the S&P 500, but in recent times we have seen a very large divergence take place. Just check out the chart in this article. At this point the S&P 500 would have to fall another 30 to 40 percent or commodities would have to rise 30 or 40 percent in order to close the gap. I think that the following bit of commentary sums up where we are quite nicely




“Markets are afraid of further economic weakness in China, further pain in global commodity markets and uncertain about Fed and PBoC policy — what they will do and what the impact will be,” Societe Generale’s Kit Juckes wrote on Monday. “The divergence between global commodity prices and equities is not a new theme but the danger now is that they begin to re-correlate – as they did when the dotcom bubble burst in 2000 and what had previously been an emerging market crisis became a US recession.”




And commodities were absolutely hammered once again on Monday.



For instance, the price of U.S. oil actually fell below 38 dollars a barrel at one point.



What we are watching unfold is incredible.



Of course the mainstream media is bringing on lots of clueless experts that are talking about what a wonderful “buying opportunity” this is. Even though those of us that saw this coming have been giving a detailed play by play account of the unfolding crisis for months, the talking heads on television still seem as oblivious as ever.



What is happening right now just doesn’t seem to make any sense to the “experts” that most people listen to. I love this headline from an article that Business Insider posted on Monday: “None of the theories for the Black Monday market crash add up“. Yes, if you are willingly blind to the long-term economic and financial trends which are destroying us, I guess these market crashes wouldn’t make sense.



And if stocks go up tomorrow (which they probably should), all of those same “experts” will be proclaiming that the “correction” is over and that everything is now fine.



But don’t be fooled by that. Just because stocks go up on any particular day does not mean that everything is fine. We are in the midst of a financial meltdown that is truly global in scope. This is going to take time to fully play out, and there will be good days and there will be bad days.  The three largest single day increases for the Dow were right in the middle of the financial crisis of 2008. So one very good day for stocks is not going to change the long-term analysis one bit.



It isn’t complicated. Those that follow my writing regularly know that I have repeatedly explained how things were setting up in textbook fashion for another global financial crisis, and now one is unfolding right in front of our eyes.



At this point, everyone should be able to very clearly see what is happening, and yet most are still blind.



Why is that?



Offline RE

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Morgan Stanley issues 'full house' buy alert for stocks
« Reply #275 on: September 04, 2015, 06:34:51 AM »
hahahahahahahahahahaha!  :icon_mrgreen:

RE

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

Morgan Stanley issues 'full house' buy alert for stocks

All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities
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Offline jdwheeler42

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Re: Morgan Stanley issues 'full house' buy alert for stocks
« Reply #276 on: September 04, 2015, 07:32:02 AM »
hahahahahahahahahahaha!  :icon_mrgreen:

RE

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

Morgan Stanley issues 'full house' buy alert for stocks

All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities
Hey, the timing seems perfect for a sucker's rally...
Making pigs fly is easy... that is, of course, after you have built the catapult....

Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #277 on: September 04, 2015, 08:14:07 AM »
Back up the truck. After the Fed raises the discount rate a quarter point, I'm sure the markets will soar.
What makes the desert beautiful is that somewhere it hides a well.

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Re: Morgan Stanley issues 'full house' buy alert for stocks
« Reply #278 on: September 04, 2015, 11:30:57 AM »
hahahahahahahahahahaha!  :icon_mrgreen:

RE

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

Morgan Stanley issues 'full house' buy alert for stocks

All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities



Will all the central banksters PAAAALEEEEESE put down the crack pipe !  :icon_scratch:
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline azozeo

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Re: Big Slide v2.0 Begins
« Reply #279 on: September 04, 2015, 11:35:35 AM »
<a href="http://www.youtube.com/v/pPGz6aDi8dc&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/pPGz6aDi8dc&fs=1</a>
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline Surly1

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Re: Morgan Stanley issues 'full house' buy alert for stocks
« Reply #280 on: September 04, 2015, 02:17:32 PM »
hahahahahahahahahahaha!  :icon_mrgreen:

RE

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

Morgan Stanley issues 'full house' buy alert for stocks

All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities



Will all the central banksters PAAAALEEEEESE put down the crack pipe !  :icon_scratch:

Glass pipes for everyone today. Check this out:
http://www.telegraph.co.uk/finance/economics/11845194/Nouriel-Roubini-dismisses-China-scare-as-false-alarm-stuns-with-optimism.html
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline RE

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« Reply #281 on: September 04, 2015, 02:40:06 PM »
hahahahahahahahahahaha!  :icon_mrgreen:

RE

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

Morgan Stanley issues 'full house' buy alert for stocks

All five of the bank's key timing indicators are flashing a green light for the first time since early 2009, suggesting the worst may be over for global equities



Will all the central banksters PAAAALEEEEESE put down the crack pipe !  :icon_scratch:

Glass pipes for everyone today. Check this out:
http://www.telegraph.co.uk/finance/economics/11845194/Nouriel-Roubini-dismisses-China-scare-as-false-alarm-stuns-with-optimism.html


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Glencore Starts Process to Sell Some Assets in Chile and Australia
« Reply #282 on: October 12, 2015, 01:29:23 AM »
http://www.bloomberg.com/news/articles/2015-10-12/glencore-to-sell-copper-mines-in-chile-australia-to-curb-debt

Glencore Starts Process to Sell Some Assets in Chile and Australia

    Swiss company offers Cobar and Lomas Bayas mines for disposal
    Divestments would add to $10 billion debt-reduction program

Glencore Plc is in talks to sell two mid-sized copper mines in Australia and Chile after approaches from buyers, adding to a $10 billion debt-cutting plan announced last month.

The trading-cum-mining group may divest the Cobar mine in Australia’s New South Wales together with a metallurgical plant that produces about 50,000 metric tons of copper-in-concentrate a year, Glencore said Monday in a statement. It’s also offering the Lomas Bayas open-pit operation in Chile’s Atacama desert, which produces about 75,000 tons of refined copper a year.

“The sale process is in response to Glencore receiving a number of unsolicited expressions of interest for these mines,” the Baar, Switzerland-based company said. “This will allow potential buyers to bid to purchase either one or both of the mines and may or may not result in a sale.”

The disposals would add to a debt-cutting program announced by Chief Executive Officer Ivan Glasenberg in early September. That plan includes selling $2.5 billion of new stock, asset sales, spending cuts and suspending the dividend -- in total reducing debt from $30 billion nearer to $20 billion. The company has said it intends to raise at least $2 billion from the sale of a minority stake in its agricultural assets and precious-metals streaming transactions.
Stock swings

The uncertainty that’s roiled metal markets has seen Glencore’s shares in London swing wildly in the past few weeks. Its stock plunged 29 percent on Sept. 28 to a record low on concern weak prices threatened its ability to repay debt. In the two weeks since, the shares have almost doubled. Glencore halted trading in Hong Kong Monday pending the announcement.

The potential copper-mine sales come as the price of the red metal hovers near its lowest since the global financial crisis. Copper for delivery in three months on the London Metal Exchange is trading just above $5,000 a ton, about half the $10,190 record set in 2011.

“Copper isn’t performing well, yet in fact that’s actually adding to its appeal as it’s probably now at the bottom of its price cycle,” Gavin Wendt, senior resource analyst at Mine Life Pty in Sydney, said by phone. ”It’s understandable that people are out there and looking to acquire copper assets at this moment.”

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
Read this next

    It's Glencore Versus Goldman in Metals as Miners Cut Production
    Why Glencore's Longtime Lenders Haven't Walked Away
    Glencore Shares Halted Pending Detail on Asset Sales Plan

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Offline RE

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More Glencore
« Reply #283 on: October 12, 2015, 07:51:29 AM »
http://www.zerohedge.com/news/2015-10-12/glencore-production-cuts-backfire-after-worlds-second-largest-miner-vows-fill-glenco

Glencore Production Cuts Backfire After World's Second Largest Miner Vows To Fill The Glencore Void

Submitted by Tyler Durden on 10/12/2015 09:45 -0400

    Australia Bond China Copper Crude Deutsche Bank Fail Glencore Market Share Monetary Policy Saudi Arabia
 

First Glencore cut its coal production. Then a month ago as part of its "doomsday" deleveraging plan, the troubled Swiss miner-cum-trader announced drastic production cuts and major layoffs in its copper mining business, which would be reduced by 400,000 tons as a result of mine closures in Zambia and DR Congo. Then late last week the company surprised many when it once again slashed its zinc production by a third (while laying off 1,600 workers in Australia), in the process reducing global zinc output by 500,000 metric tons.

The logic, in theory, behind the move was simple enough. As DB summarized it, "$1650 for zinc is fundamentally too low and some of the capacity makes no cash at these levels - Solution: Shut it down until the price normalizes. While most market observers see the zinc market already in deficit, the dwindling price says otherwise and Glencore's move should bring forward the crunch point with a resulting positive impact on the metal price."

Additionally, DB provided a beautiful model of how said zinc production cut for Glencore - expected to be completed over the next 6 months - would look like, as well as the ensuing production ramp-up in 2017, "as the zinc price recovers."

 

On Friday the market, too, was delighted by this announcement, and led not only to a rally in price of Glencore stock but also unleashed the biggest surge in the price of zinc, which soared by over 10%, the biggest intraday move in history.

 

There was just one problem, and we laid it out in our response to the market reaction to Glencore's latest production cut - all it would take is for just one company to defect from this attempt to reestablish the "game theory" equilibrium, for the whole plan to fail.

    "with sales a function of price and volume, and with Glencore aggressively cutting volumes, it is hoping the price increase will (more than) offset the drop in volumes. Which is a big gamble as other cash-strapped miners step up their own production, in the process boosting supply and once again slamming the price of zinc (and copper) lower."

     

    It remains to be seen where the equilibrium price levels off after all these production cutbacks, although if the copper and zinc markets are anything like oil, it is certain that any volume reductions by Glencore will be promptly taken advantage of by Glencore's competitors, because in a global deleveraging and commodity supercycle repricing, he who cooperates while others defect, always loses the game theory.

This was once again spot on, because while Glencore's theory is admirable, it is what happens in practice that matters.

And what happened is that just as expected, overnight the world's second biggest mining company, Rio Tinto, warned that it will not cut copper production, saying it would be illogical to hold back output and leave space in the market for higher-cost rivals.

And just like that Glencore's assumption that others in the space will act rationally, and "cooperate" with the attempt by Glencore to impose a new game theoretical equilibrium by reducing supply, and thus boosting prices, has crashed and burned.

According to the FT, Jean-Sebastien Jacques, head of copper and coal at Rio, said the Anglo-Australian mining group would not reduce output even though current prices of the industrial metal did not reflect “fundamentals”.

    His comments come just days after rival commodities group Glencore said it would slash its zinc output by a third after the price of the industrial metal fell to a five-year low on concerns about slowing economic growth in China.

     

    Rio and its peer BHP Billiton have been ramping up production of their main commodities during the current price rout, betting that their low-cost assets will enable them to survive and maintain market share while higher-cost producers go bust.

     

    While copper prices have been slumping, Rio has been spending billions of dollars expanding output at its giant copper project in Mongolia, and is preparing a second underground phase of the mine.

Furthermore, just as we said that the crude paradigm of the past year is now dominant, so it has spread to all other commodities: a world where diversified miners are hoping they can take out the high-cost marginal producers by keeping the price painfully low through production below cost. The CEO confirmed this:

    “Why should I make cuts?” Mr Jacques said, in an interview ahead of LME Week, the biggest annual gathering of the metals and mining industry.

     

    “If you have marginal assets and marginal projects and you have a pretty weak balance sheet I think you may be in trouble pretty soon,” he said.

Which in turn brings up monetary policy, because just like Saudi Arabia has been hoping high cost US shale producers would have long since burned out by now, they keep finding gullible junk bond investors who fund them at below-cost prices, if only to clip at least one hefty double digit coupon before the company defaults (because at the end of the day, the year-end bonus paid out from other people's money, is all that matters in the ZIRP world).

So about that pretty Deutsche Bank zinc production chart shown above... well, scrap it because while it will be absolutely correct about the drop (unless Glencore renegs on its production cut plan just days after announcing it) there will be no rebound, unless Glencore wants to suffer even greater costs and negative cash flows associated with unmothballing stalled operations at prices that remain vastly uneconomical and loss-making.

Jacques also spoke to Bloomberg, reiterating his philosophy on boosting production at below-cost prices:

    The metal is “not trading on fundamentals,” Rio Copper & Coal Chief Executive Officer Jean-Sébastien Jacques said in an interview in London. “There is lots of short-selling in copper and we’ve seen the pick up in terms of short-selling in copper on the back of what happened in China a few months ago.”

     

    “It can be a very dangerous game in the medium and long term,” he said. “You don’t want to have a short position when the market moves into a deficit. From an industry standpoint, the sooner we move back into a deficit situation the better it is because currently there is a lot of noise in the system.”

Of course, with Rio Tinto set to boost production to take up the production generously given up by Glencore, the moment when the system shifts to equlibrium has been indefinitely delayed.

Worse, once Glencore realizes that its olive branch has been rejected, the miner will have no choice but to turn those machine back on, and proceed to regain all the market share it has lost because it, like the gullible longs, believes theory and practice are the same.

As for Glencore, the market is starting to realize the big picture, and the stock was down 4% as of this moment, its biggest drop in two weeks, and back to the level of the September equity follow on offering.
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Re: Big Slide v2.0 Begins
« Reply #284 on: October 12, 2015, 11:01:40 AM »
Glad to see the basics of supply and demand are working just as the economists figure it will. And just as surprising that folks apparently keep forgetting it, to their detriment.
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