Optimism?

He portends doom: “Those trend-following knuckleheads on Wall Street don’t realize it (yet), but the stock market will fall without the Fed’s help, because corporate America is starting to really struggle,” predicts Sagami.

Sagami’s evidence? Just 37% of companies have increased their revenue forecasts over the last six months, the smallest number since the 2001 dot-com bust. And just 49% of stocks have seen their earnings-per-share estimates revised up, the least amount since 2012.

What this all means is that Wall Street and its “cheering-pit traders” understand the stock market is going to drop like a stone unless more central-bank stimulus is coming, he says. “Wall Street continues to tell you and me to keep buying stocks, while behind the scenes they are becoming more bearish by the week,” he says.

It all makes sense to me.  Brokers make money when people buy and sell.  They might as well keep bringing in buyers until its scary.  Selling is inevitable when the big drop comes.  The average joe is not scared of a market down turn yet even though in other countries lives are becoming ruined.

Gloomy

Now the healthcare sector is taking blame for the market dropping.

Billionaire investor Carl Icahn said the Fed's low interest rates are creating bubbles in markets for art, property and "junk" bonds.

Sp500 index could break through its -10% support level any hour now.

More Italian tax evasion

Pope Francis inherited a Roman Catholic Church in a unique type of crisis, an institution that was widely perceived as out of touch with modernity and unable to live up to its own eternal values. But he was also burdened with a very different kind of problem: managing a financial institution immersed in money laundering and tax evasion charges and reluctant to change. 
Francis has been widely recognized for his efforts to move the church into the modern era, but his work on financial reforms at the Vatican bank, once called the "most secret bank in the world," hasn't gotten as much attention.
The Vatican bank's shadowy dealings have been well documented over the years, particularly the 1982 death of Roberto Calvi. Calvi, known as "God's Banker," was found hanging from Blackfriars Bridge in London, his pockets stuffed full of bricks and more than 10,000 British pounds in cash. Two weeks later, the bank where Calvi served as chairman and in which the Catholic Church was the largest shareholder, Banco Ambrosiano, collapsed. The bank was suspected of laundering money from Mafia drug trafficking. The Vatican, the Italian government said at the time, was the bank's "effective partner." The Church admitted "moral involvement" in the collapse and paid creditors $241 million.
The Vatican's financial troubles became very public again in September 2010, when Italian authorities seized a 23 million euro transfer out of the Vatican bank. An Italian bank rejected the Vatican bank's request to move the money because the Vatican bank would not provide basic information -- the reason for the transaction, and the identity of the sender and recipient -- that are required by financial regulators in order to detect money laundering and other illicit activities. The lack of transparency ended up triggering a minor banking crisis, prompting other European and international banks to refuse to do business with the Vatican bank. 

Someone should make a movie about this.

Pope francis = the news, china's prez = a blip

Mention the Chinese Dream to anyone in China now, however, and you’ll likely receive a round of salty insults exploding like lead shot.

Ask the ant tribe. They’re educated, young professionals who live in near-poverty conditions, grinding away at soul-crushing jobs—not careers—that yield no personal satisfaction and zero financial growth. Typically from rural areas, most have settled in northwest Beijing, where their living quarters are cramped and they have no personal space. They’re smart, they work hard, yet receive no recognition and can’t shake off anonymity. So, people call them ants.

“I borrowed money from my parents and invested in the stock market, then I lost most of it in the past few months,” said Xiao Xian Zheng, an office worker originally from Hebei province who graduated from university four years ago with a degree in accounting.. “My parents have never asked me about the money, but I’m sure they know and I feel extremely guilty.”

China’s stock market has seen much better days. Despite billions of yuan thrown into the market as stimulus, investors were hit with plummeting share prices. When state-backed interventions failed, the Chinese government blamed foreign powers for manipulating the financial system, then tried to arrest its way out of embarrassment. A well-respected financial journalist, Wang Xiaolu, was placed on air to “confess” to triggering stock market chaos through his reporting. The scapegoating provided little consolation to investors whose money had vaporized.

The news is covering every detail of  the pope's visit to the us while Xi Ping is also here trying to promote business in china.

Most people would rather watch someone who is promoting reasonable leniency to immigrants, not bullying gay/transgendered people but respecting heterosexual marriage which is preferred, being mature christians in life overall.

This crash is hesitating so long the government has had time to prepare

SEC moves to head off runs on mutual funds
The Securities and Exchange Commission has unanimously called for rules to prevent investors' demands for redemptions in a market crisis from putting mutual funds out of business. The proposal responds to warnings from the International Monetary Fund and the Federal Reserve that some funds would struggle to meet commitments to redeem shares if a sharp market downturn were to trigger a run.

The s&p500 is 9% off its all time high, sitting on a month old resistance level from the aug 25 mini crash.

My dad is still right

My dad told me europeans are unable to successfully sell affordable cars in the us. 

Vw had lousy profit for a long time, then for the past 5 years they supposedly changed things up and sales jumped. Not only has their sales slowed back down, but I personally experienced various quality issues in my wife's and her family's VW's.  VW also got caught cheating on emissions testing with a defeat device to make their diesel models do amazing when the car knows its being tested.

Stock is down 20%.

1950's = Leadership

The economy overall grew by 37% during the 1950s. At the end of the decade, the median American family had 30% more purchasing power than at the beginning. Inflation, which had wreaked havoc on the economy immediately after World War II, was minimal, in part because of Eisenhower's persistent efforts to balance the federal budget. Except for a mild recession in 1954 and a more serious one in 1958, unemployment remained low, bottoming at less than 4.5% in the middle of the decade.

The main economic goal that Eisenhower pursued through both his terms in office was to achieve a balanced federal budget. The government ran a small deficit in 1954 and 1955, then registered a surplus for each of the next two years. As the nation went into a recession in 1958 and 1959, Eisenhower allowed the federal deficit to grow in order to stimulate the economy. By 1960, he managed to return to a surplus.

 

What I see is a very prosperous time for the US because someone focus on being responsible with the government’s money.  Really?  Is that the secret?  You mean only paying for what you can afford is good for a government just like for an individual?    Even with the typical bad things like recessions/war and good things like cheap oil/GI Bill benefits that happen every decade, their was strong, healthy growth in the 1950’s.

Lehman bros still around

Since Lehman filed for bankruptcy on Sept. 15, 2008—crashing the market and helping to trigger the financial crisis and Great Recession—it has mostly been selling off what was once a staggering $639 billion in assets and trying to liquidate its massive web of investments. Yet at the offices of Lehman Brothers Holdings, on the 40th floor of the Time & Life building (just 16 floors above Fortune’s offices), someone was still buying stocks as recently as last winter. The remnants of the portfolio are a reminder of just how complex—and financially vast—an entity Lehman was, and the time and effort it has taken to wind down its assets. Seven years later, that unwinding process has no end in sight.

Lehman Brothers Holdings continues to quietly manage a stock-only portfolio—albeit a relatively puny one. According to Lehman’s latest SEC filing, as of June 30 the portfolio had just under $1.2 million in assets, the only individual equity positions that Lehman currently discloses. That portfolio now holds two stocks: Texas-based marketing firm Bazaarvoice BV (its top holding at $934,000) and insulation maker Aspen Aerogels ASPN,

But in March, Lehman owned a good deal more: It reported that the value of the stock portfolio had soared to $38 million in the first quarter of 2015, up from the $1.6 million reported at the end of 2014. Lehman had apparently received a windfall early this year, with which it bought $33 million of AlcoaAA shares and $3.6 million worth of Norwegian Cruise Line Holdings NCLH, exchanging the $2000 worth of UBS UBS shares that it held in December.

Still, Lehman’s current two-stock portfolio is a sliver of what it was a year ago, when it had $48.4 million invested in seven stocks: Besides Aspen Aerogels, Bazaarvoice and UBS, it also owned Warren Buffett’s Berkshire Hathaway brk.a, General Electric GE, publisher Houghton Mifflin Harcourt HMHC, and Synovus Financial Corp. SNV. The surprise? None of those positions appear to be leftovers from a pre-financial crisis fund: Lehman bought all of those stocks in 2013 and 2014, according to Bloomberg data.

Lehman Brothers Holdings would not comment on the trades or its ongoing restructuring efforts. But a source familiar with the liquidation process confirmed that Lehman still manages an equity portfolio “primarily to maximize value to pay back creditors”—as the bank’s ultimate mission (and reason for continued existence) is to repay its debts.

They are trading to pay debt but it sounds like its being managed pretty well.  Interesting situation.

Scared of the fed

The best jewish bank ever, the fed reserve, scares the public no matter what they say.

People are scared if the interest rate goes up or down. 

Beer

AB inbev announced an aquisition of SAB Miller when SAB Miller was over 20% off their stock's high.  That must be why Miller was already planning on shutting down their first Genuine Draft brewery.  Everything makes sense in hindsight after an aquisition is finally announced.  When a company's stock price is down 20-50% and they are consolidating/terminating jobs....that hints at an upcoming aquisition which is followed by a surge in the stock of the aquired company to a certain price level.

Stock option motivation

CEOs with abundant stock options get a huge payoff when the company performs well but endure minute consequences when it doesn’t. As a result, those executives tend to be much riskier and more aggressive in their decision-making. They become less thorough, increasing the probability that there will be mistakes in the design, production, and/or distribution of products.

Adam Wowak, one of the researchers, clarifies the findings:

This isn’t to say that CEO options are always the culprit when product recalls occur, but our findings suggest that recalls can potentially be an unintended consequence of using options to motivate risk-taking in CEOs.

The correlation between stock options and product recalls was strongest among CEOs who were newer to their positions. Those with more experience in the role weren’t as “susceptible” to the potential effects of stock options, and founding CEOs were “more or less immune” likely because they would rather protect their company than attempt to get a larger payout.

Genetics

Our ability to trade against fear is in large part genetic.

Several traits influence how we take investment risk including personal background, life experiences, age, and gender.  Gene-environment interactions are also important.  But primary among these influences is our personal genetic endowment.

Consider a polymorphism of the serotonin transporter gene:  5-HTTLPR.  Individuals carrying the short polymorphism of this gene are more likely to develop depression in response to negative events and are more likely to experience a long-term emotional impact from financial losses. In some studies, people carrying this polymorphism experience more financial anxiety than others.

Kuhnen and Chiao (2009) had previously reported that this polymorphism biased investment preferences among a sample of university students.  Students who are homozygous for the short form of the transporter - the s/s allele - took 28% less investment risk in their study.

Building on this work, Gregory Samanez-Larkin, Camelia Kuhnen, and Brian Knutson examined the investing habits, genetics, and beliefs of a group of 60 retail investors in this excellent study. They showed that all factors have some explanatory power over investment risk-taking, but that genes appear to be the strongest contributor.  Our genes - an element out of control - determine the majority of our financial risk taking (the contribution of the personality trait neuroticism to risk taking is accounted for by the 5-HTTLPR variant).  

This is a dramatic conclusion, and it's important to qualify that it hasn't been replicated on other genes.  It's disturbing to discount the valuable notion of free will. But it's only when we recognize that much of what we THINK is in our control actually is not, that we can we then accurately forecast and plan for our errant investing behaviors.

Meanwhile, the vast herd of investors is reading news and reacting in a knee-jerk biological manner.  And the saavy (and self-controlled) investor can take advantage of the surges of market fear and relief.

I have had to condition myself a lot for several years, so I guess I dont have the trading genes.

Krispy kreme

Kkd posted 'bad' earnings numbers and people went ape shit.  It lost 12% overnight.  People only want krispy kreme doughnuts from their actual stores.  So they will probably focus on opening stores instead of retail.  I dont like them so I dont care either way.  Be careful, people will sell like crazy out of nowhere and they are not taking big profits.  Its nervousness.  If you are buying at business cycle lows like I prefer, there is nothing to worry about.

Disney = succubus

The more you learn about Disney, the more you lose respect for them.

Their stock dropped over 30% during august.  Just some panic selling after slightly negative news.  Disney bought $2.5 billion of their own shares.  They got their shares at 20% off the high.  Im thinking either they want to prevent a hostile takeover or they think they can prevent their stock from really crashing.

Margin debt vs GDP

I read an article posted by trader Louise Yamada which showed a nice chart of margin debt as a % of GDP.  it would peak really high before each market crash, especially in 2000, 2007 and right now in 2015.

Overall it was a decent article.  The margin debt chart was beautiful from an objective perspective.  Like watching a thousand venemous baby spiders hatching from their egg sack.  Even if it scares you, it is to be respected.  I have found many other reasons for a big pending drop in equities but this adds to it.  If you are planning on buying heavy in about 6 months, you are in a good position.  Thanks Louise.

Corp profits down

Profits of companies in the S&P 500 are expected to drop 4.3% this quarter from a year ago, according to market data company FactSet. That would be the biggest drop since the third quarter of 2009, when the economy was still clawing its way out of a recession. It would be the first time earnings have fallen more than 1% in a quarter since the end of the recession. And it would also be the first time since the end of the recession that profits dropped for two quarters in a row. Earnings are expected to have fallen 0.7% in the second quarter.

So its another 'first time since last recession...' and I think lower profit combined with no liquidity in the corp bond market means the song is ending. 'Its time...to sayyyy....goodbyeeeee' - andrea bocelli

Oil is still a good buy but market indices could be 40% below highs within 6 months. 

Around the world

Brazil has had a very sharp rally in equities.  A short sellers dream.

Sri lanka will stop trying to control their currency.  Then their rupee plunged. Does anyone care?

Us labor numbers show a small negative change and people sell because of it.  One small change doesnt say much, it changes constantly, shows how nervous people are.

An indian guy in England, I think, has been indicted for contributing to the flash crash.  He had a spoofing plan, whatever that is.  Executing Fagazi.

German DAX had a death cross.

Australian dollar is at a 6 year low.

Chinese military is laying off 300k soldiers. Damn.

Italians have acquired a high number of options to hedge against a big selloff.

Math genius

Why you should listen
As a mathematician who cracked codes for the National Security Agency on the side, Jim Simons had already revolutionized geometry -- and incidentally laid the foundation for string theory -- when he began to get restless. Along with a few hand-picked colleagues he started the investment firm that went on to become Renaissance, a hedge fund working with hitherto untapped algorithms, and became a billionaire in the process.

Now retired as Renaissance’s CEO, Simons devotes his time to mathematics and philanthropy. The Simons Foundation has committed more than a billion dollars to math and science education and to autism research.

I sympathize with your needs

“What we're seeing today is not a recovery. It's market volatility, it's nervousness, it's an inability to call the direction of the market," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Damn, didnt I just say the same thing a couple days ago?

Possible theme to this market crash

US corporate-bond issuance stagnates 
No companies have issued investment-grade bonds in the US in the past 10 days, the longest dry spell, not including Christmases, since 1995, according to Dealogic.

 

This is interesting to me because I have a little feeling corporate bonds might take the blame for this recession some how.  Its not all over the news but its basically been in its own bubble with much more than normal volatility when compared to noncorporate/government bonds.  I dunno.  If people start throwing it around on tv maybe they could make a shit storm out of it and blame greedy executive boards or whoever.  And it has two parts.  Corporate bonds are about 3.5x larger in issuance than sovereign bonds.   In 2000 corp was 5 billion, sov was 4 bilion, 2007 corp was 10 billion, sov got up to 5 billion the prior year, 2015 corp is about 35 billion, sov about 8.  So governments are going by normal growth while companies are probably way too high.  Gotta love all that debt money coming in though.  The second part is how about 85% is in foreign currencies other than USD.  the world in general is contributing and probably more vulnerable than the US.  To top it off, all the bonds could easily be peaking since its in a 10 day dry spell, which hints at an upcoming stock crash.

 

Who to blame, who to blame…

 

Amerrica

Auto sales in the US last month soared to their highest level since July 2005, fueled by consumer demand for SUVs and pickups.

 

An economy at a peak and oil in a trough creates a perfect storm.
Git r dun
 

Ostraya

Australia’s dollar plummets to 6 year low.  The value of the Australian dollar on foreign exchange markets dropped below 70 US cents for the first time since 2009.

 thats one continent on its way down...

Canadia

By Leah Schnurr

OTTAWA (Reuters) - The Canadian economy shrank again in the second quarter, putting the country in recession for the first time since the financial crisis, with a plunge in oil prices taking a toll as business investment fell and inventory accumulation slowed.