The grim reality that the wealth creation built since the GFC in 2007/2008 is an illusion that can only survive on record low interest rates and insane Quantitate Easing is starting to sink in with the Dow Jones following up the 666 point loss on Friday with a horror 1175 point plunge today.
The trading was so extreme that at one point, as the Dow Jones slumped 1600 points, it was 1% away from the entire stock exchange being shut down.
Once it breached 1000 points, the computers took over and started a mass sell off.
The moment when the market realised that Trumps grand clothes were an illusion will spin the global economy.
The meltdown will hit NZ with higher interest rates on house properties people won’t be able to afford while they watch their Kiwisaver accounts get mashed.
The black swans are all coming home to roost and are being driven in armoured cars.
Market Value (Market Cap) as if its a real number. Currencies dont have Market Caps. The Market of the US dollar is a totally fictional metric. Pure Ponzi narrative. Financial Media should report the news not the nonsense.
You can trade Options in stocks. If the old money is down its a little bit but not by much because there’s a lot of active last 4 weeks trading Options. Institutional investors know this prior to going into positions. In Stocks you can make $ out of positions that go against you. GPRO is still a turnaround. If this hurts any one it will be felt internally as most Fortune500 CEOs are payed in stocks.
I cri (insert my saddest sad face and of so swollen hart here)…
The meltdown will hit NZ with higher interest rates on house properties people won’t be able to afford while they watch their Kiwisaver accounts get mashed.
Pretty sure the exact opposite happens(?). The central banks (including NZ’s) will lower interest rates to “stimulate” borrowing and “save” the economy with cheap debt. At least that’s what’s always happened previously. And unlike the US, NZ at least has wiggle room to lower rates, but the US is basically already at zero which might mean more QE (i.e. inflation) on the way and/or negative interest rates.
Incidentally the liquidity in the US S&P futures market right now looks like something from a banana republic right now. I suspect there are a lot of margin calls coming in. Tomorrow could be interesting.
2018 GFC;
Caravans will cost three hundred rent cost from next year as homes are sold as ‘bank repo’s’ the party is over for the speculators.
Reality is nigh as “what goes up must come down”
Our ‘essential services (power/water) will climb as most of these former civic services have largely been “privatised” by the former national Government.
Solar panels and home wind turbines along with (roof collection self storage water tanks) alongside homes will dot the entire landscape as homeowners switch to providing their own power and water services.
This is already happening in USA.
This is the market reaction to the fed promising to raise interest rates and start reversing QE ,i.e. selling back to the market the bonds bought with QE money.
This is effectively withdrawing the fiat money put into the system to keep it afloat; the resultant effect on the market was completely predictable and invertible .
I agree with Nitrium entirely. They will soon resume QE though they might just enter the market surreptitiously with QE money and not announce it.The recovery from 1600 down was probably due to fed action.
But thats the end of reversing QE or raising interest rates.
D J S
Bitcoin is starting to look better with only losing two thirds of its value. If it keeps dropping I might be able to afford one soon.
Not quite sure that’s right. Bitcoin fell 18 per cent, Ethereum 19 per cent and Ripple 17 per cent, while Bitcoin Cash lost on fifth of its value. Bitcoin has now lost almost two thirds of it value since its peak last month. I’ll be sticking with reality money.
There are no black swans here. This has been signaled since 2008. It was always a matter of when not if, and this is just a taster.
The black swan is going to be mob rule and street justice, when violence replaces currency as the de facto form of power. It is coming, and it will not be pretty
It may be the start of something or it may not. Stock markets are incredibly fickle and when there is a big drop, bargain hunters come in and before you know it, everything is back to normal.
What is of concern is the unbelievable amount of money the US needs to borrow in just one year to make up for the federal shortfall in revenue, somewhere in the vicinity of a Trillion US dollars, worsened by those tax cuts.
Honestly, while the US continues to rack up debt like it is, where will it end?
Yep. The tax are disastrous; an additional US$400 billion in borrowing, which will mean a US$1 trillion deficit going forward.
Remarkably, almost all of that eye-watering deficit could be zeroed if the federal government fixes healthcare, which never, to date, has addressed its ever growing cost which has increased by ~8% per annum for the last 40 years (everyone only talks about “funding”). Healthcare used consume just 4% of US GDP, it now consumes ~20% (yes 1 in 5 dollars spent in the US entire economy goes to healthcare!!!). In less than a decade it will be 40%. Needless to say, that won’t happen, because it can’t, since it would consume the entirety of federal taxation.
This is something NZ (and the rest of world) should also seriously look into ASAP. If cost isn’t even considered (i.e. that the government de facto simply funds whatever the providers say they “need” to provide their service) we’re going to be in equally big trouble over the next decade or so as far as balancing the budget is concerned.
I know ! Lets burn down the Banksters, write off mortgage debt, renege on foreign ‘loans’ and grow foods for the world ! ?
Yes?
No?
I was going to have sausages and potatoes for dinner but fuck it. I’m splashing out and will eat a Bitcoin. No calories in bitcoin’s.
We Kiwis will be alright.
4.7 mil people on fertile lands, with a temperate climate and the size of the UK . Can’t go wrong.
Just don’t get fucked up on debt. Don’t freak out.
Unless U$A aircraft carriers sail into each of our main harbours. Then freak out. I mean, really freak out.
its not as if it wasn’t predicted iam old enough to remember 1987 people lost millions but then it was only stock market investors this time losses are going to be much more wide spread but the warnings have been out there get your house in order eliminate debt time to get the popcorn out as this unravels how far down the rabbit hole will it go.
Oh, someone watched the MSM news, and thought, hey, the new crash is here.
This is an overdue ‘correction’ of sorts, there will not be a repeat of the GFC, not at this stage.
The hype of share value growth into the sky is over for now, business as usual. Portfolios will be re-arranged, the bosses and owners will keep their power and control.
Australian economist steve keen give this interview in may on rnz he lays it out bare what nz position is
but sunday morning when nobody was listening
https://www.radionz.co.nz/national/programmes/sunday/audio/201845436/steve-keen-the-coming-crash
I was listening and paid off my debts then switched my KiwiSaver into a conservative fund.
The real reason for the coming crash is that the free market was not allowed to act as it should have done in 2007-8. Banks were bailed out, rather than allowed to fail (with the crooks imprisoned) and the printing presses ramped up to the max. In other words, government meddling has delayed a crash, but the coming one will be far, far worse than the previous one should have been.The real reason for the coming crash is that the free market was not allowed to act as it should have done in 2007-8. Banks were bailed out, rather than allowed to fail (with the crooks imprisoned) and the printing presses ramped up to the max. In other words, government meddling has delayed a crash, but the coming one will be far, far worse than the previous one should have been.
…and probably saved millions of workers losing their jobs; growth in hardship, poverty, and homelessness; massive social upheaval; and the rise of more extremist political forces.
The 1920s/30s are a clear indication what consequences lie in store for us when “market forces” run rampant over peoples’ needs and well-being. This is why the so-called “free” market is ultimately a failure; it fails to make human well-being a priority.
Keep some powder dry! I suspect this is going to get very messy. Having said that I’ve seen some bargains on the FTSE small cap and some Asian Stocks are at prices I never thought would hit that you would want to buy. Truly Amazing! The next 48 hours is going to be an absolute dog fight in Financial Markets. Only the Dog with the strongest bite, loudest bark, cunning and guile will survive. The Puppy’s and the Poodles will be skinned and eaten alive.
I still think the main markets are disgustingly over priced and could easily drop 20% by the end of the quarter. Some ridiculous price to earnings ratios.
Primed for a bear market. Bitcoin wealth evaporating, US rates to rise, rents disconnected from wages both in New Zealand and abroad, and Trump has domestic enemies galore…
Some one asked what was on the menu and I replied your pension fund.
It’s the money system that destabilises everything I think Frank. When the money supply was controlled it worked alright. Unlimited debt creation by the organisations that profit from leasing it, and decide who can have any, and for what purpose have control of everything and everyone. And they have their own “interest” at heart , not societies’ interest.
Cheers D J S
Dead cats can be made to bounce over and over again if it suits those who rig the system.
For some reason all the big financial meltdowns in recent history have come in or around October. So we may well have another 8 months of rigging, extending and pretending.
Must say I am surprised with your analysis Martyn, I agree with you. The paper wealth is an illusion for the most part. QE has really distorted reality. Most asset classes, including Auckland real estate, are waiting for a fall. Your diagnosis is correct, central bankers and their QE are the problem.
Stock markets will always be a drain on society by their very nature.
Our base economy and financing of community need supply should never be in private hands for gamblers and profit takers to rule over others.
We have a Govt for that.
The power of money is power to corrupt and steal from others.
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