Friday, February 28, 2020

Reality Returns to Wall Street

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by Jim Rickards, Daily Reckoning:

Barely a week after it set another record high, the Dow just suffered its worst one-day loss in its entire history.

While the latest turmoil hasn’t reached the crisis level by any means, I’ve been warning about a correction for months.

Warnings about an imminent collapse of developed economy stock markets, especially the U.S. markets, have been everywhere.

Whether you use Shiller’s CAPE ratio, Warren Buffett’s preferred market-cap-to-GDP ratio, or traditional P/E ratios, markets were overpriced and ready to fall. Of course, that did not mean they would fall anytime soon, or on anyone’s timetable.

As we saw in the dot.com bubble of 1996-2000, and the housing bubble of 2002-2007, so-called “irrational exuberance” can last longer than the skeptics believe. However, some warnings perhaps deserve more attention than others.

Anyone can sound warnings about doom and gloom or stock market crashes. But those Cassandras are not worth listening to unless they offer facts and analysis to support their views. Opinions without something solid to back them up are just that — opinions. The warnings I pay most attention to are those from establishment insiders.

These are the kinds of individuals who attend Davos and routinely discuss market conditions with central bank heads, finance ministers and people like Christine Lagarde, head of the IMF.

The credibility of such insiders is enhanced ever further when they come with serious academic credentials such as an economics Ph.D. from a top university in the field.

William White is such an individual. He was former head of the OECD review board and former chief-economist for the BIS, the “central bankers central bank” based in Basel, Switzerland.

In a recent interview, White flatly declared, “All the market indicators right now look very similar to what we saw before the Lehman crisis, but the lesson has somehow been forgotten.”

You can’t get much more of a blinking red light than that.

Heading into this year, I called 2018 “The Year of Living Dangerously.”

That description seemed odd to lot of observers. Major U.S. stock indexes kept hitting new all-time highs, which continued through the end of January.

Even in strong bull market years there are usually one or two down months as stocks take a breather on the way higher. Not last year. There was no rest for the bull; it was up, up and away.

The unemployment rate has been at a 17-year low. U.S. growth was over 3% in the second and third quarters of 2017. It underwhelmed in the fourth quarter at 2.6%, but it was still above the tepid 2% growth we’ve seen since the end of the last recession in June 2009.

The U.S. hasn’t been alone. For the first time since 2007, we were seeing strong synchronized growth in the U.S., Europe, China, Japan (the “big four”) as well as other developed and emerging markets.

In short, all has been right with the world.

Or not.

To understand why I said 2018 may unfold catastrophically, we can begin with a simple metaphor. Imagine a magnificent mansion built with the finest materials and craftsmanship and furnished with the most expensive couches and carpets and decorated with fine art.

Now imagine this mansion is built on quicksand. It will have a brief shining moment and then sink slowly before finally collapsing under its own weight.

That’s a metaphor. How about hard analysis? Here it is:

Start with debt. Much of the good news described above was achieved not with real productivity but with mountains of debt including central bank liabilities.

In a recent article, Yale scholar Stephen Roach points out that between 2008 and 2017 the combined balance sheets of the central banks of the U.S., Japan and the eurozone expanded by $8.3 trillion, while nominal GDP in those same economies expanded $2.1 trillion.

What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money?

The answer is that it went into assets. Stocks, bonds, emerging-market debt and real estate have all been pumped up by central bank money printing.

What makes 2018 different from the prior 10 years? The answer is that this is the year the central banks stop printing and take away the punch bowl.

The Fed is already destroying money (they do this by not rolling over maturing bonds). Last week, the Fed reduced its balance sheet by $22 billion. While that doesn’t seem like much when you’re talking about a $4 trillion balance sheet, it was the Fed’s largest cut to date.

Funny how the market hit the skids just after this happened. But you haven’t heard the mainstream media mention that.

By the end of 2018, the annual pace of money destruction will be $600 billion — if the Fed under new chairman Jerome Powell stays on course.

The European Central Bank and Bank of Japan are not yet at the point of reducing money supply, but they have stopped expanding it and plan to reduce money supply later this year.

In economics everything happens at the margin. When something is expanding and then stops expanding, the marginal impact is the same as shrinking.

Apart from money supply, all of the major central banks are planning rate hikes, and some, such as those in the U.S. and U.K., are actually implementing them.

Reducing money supply and raising interest rates might be the right policy if price inflation were out of control. But despite a recent uptick in some inflation measures, prices have mostly been falling.

The “inflation” hasn’t been in consumer prices; it’s in asset prices. The impact of money supply reduction and higher rates will be falling asset prices in stocks, bonds and real estate — the asset bubble in reverse.

And as the past few days show, the problem with asset prices is that they do not move in a smooth, linear way. Asset prices are prone to bubbles on the upside and panics on the downside. Small moves can cascade out of control (the technical name for this is “hypersynchronous”) and lead to a global liquidity crisis worse than 2008.

This will not be a soft landing. The central banks — especially the U.S. Fed, first under Ben Bernanke and later under Janet Yellen — repeated Alan Greenspan’s blunder from 2005–06. Greenspan left rates too low for too long and got a monstrous bubble in residential real estate that led the financial world to the brink of total collapse in 2008.

Bernanke and Yellen also left rates too low for too long. They should have started rate and balance sheet normalization in 2010 at the early stages of the current expansion when the economy could have borne it. They didn’t.

Bernanke and Yellen did not get a residential real estate bubble. Instead, they got an “everything bubble.” In the fullness of time, this will be viewed as the greatest blunder in the history of central banking.

Read More @ Dailyreckoning.com

Is the 9-Year Long Dead Cat Bounce Finally Ending?

by Charles Hugh Smith, Of Two Minds:

Ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo.

The term dead cat bounce is market lingo for a “recovery” after markets decline due to fundamental reversals. Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to “buy the dips” once again buy the decline, and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.

I submit that the past 9 years of market “recovery” is nothing but an oversized dead cat bounce that is finally ending. Here is a chart that depicts the final blow-off top phase of the over-extended dead cat bounce:

Why are the past 9 years nothing but an extended dead cat bounce? Nothing that’s fundamentally broken has been fixed, and none of the dynamics that are undermining the status quo have been addressed.

The past 9 years have been one long dead cat bounce of extend and pretend, i.e. do more of what’s failed because to even admit the status quo is being undermined by fundamental forces would panic those gorging at the trough of the status quo’s lopsided rewards.

This 9-year dead cat bounce was pure speculation driven by cheap central bank credit and liquidity. Demographics, environmental degradation, the decline of middle class security, the erosion of paid work, the bankruptcy of public and private pension plans, the global debt bubble, soaring wealth and income inequality, the corruption of democracy into a pay-to-play bidding war, the destruction of price discovery via market manipulation by those who have turned markets into signaling devices that all is well, the laughable distortion of statistics to mask the real world decline in our purchasing power (inflation is near-zero–really really really), the perverse incentives to leverage up bets in financial instruments that have no connection to the real-world economy–none of these have been addressed in the market melt-up.

Rather, ignoring or downplaying these fundamental forces has greatly increased the fragility of the status quo. Gordon T. Long and I discuss these fundamental forces in our latest half-hour video program, 2018 Themes (29:46 min):

Read More @ OfTwoMinds.com

Another Arrested Equity Correction?

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by Paul Craig Roberts, Paul Craig Roberts:

After the extraordinary sudden loss in equity values, today (2-6-18) brought gains back to the stock indices.

What happened? Did the market sneeze, cough, or was something misread and today perceived in a different light?

In my opinion this is what happened:

The Plunge Protection Team, as they have done on previous equity market drops, or the Federal Reserve operating for the Working Group on Financial Markets, sent a purchase order for S&P futures to the trading floor. The hedge funds, seeing the incoming bid, front-ran the bid by stepping in and buying S&P futures. This pushed the market back up, ended the correction, and prevented financial panic.

The Plunge Protection Team was created in 1987, approaching the end of the Reagan administration, in order to prevent a market correction from costing George H. W. Bush the presidential election as Reagan’s successor. The Republican Establishment was desperate to reestablish its control over the party. The Republican Establishment, convinced by Wall Street that the Reagan tax cut would result in high inflation, found themselves instead confronted with a long economic expansion. In those days that meant that the expansion could be nearing its end, and a stock market correction could deny the presidency to George H.W. Bush.

To prevent any such correction, the US Treasury and Federal Reserve created a “working group” to intervene in the stock market in order to support values. Whenever the market starts to drop, the team purchases S&P futures which halts the market decline.

We have witnessed this on several occasions. And, most likely, again today.

Pundits who speak about “market forces” are speaking about something that doesn’t exist. “Market forces” are the interventions that support existing values with money infusions.

Read More @ PaulCraigRoberts.com

EXECUTE ORDER 666: STOCK MARKET PLUNGE GLOBALIST SIGNAL TO TRUMP?

by Jamie White, Infowars:

Was recent 666 point drop in stock market warning to president?

Last Friday, the Dow Jones industrial average plunged 666 points amid interest rate fears and news of the FISA memo’s release.

Ominous? Yes. Coincidence? Maybe not.

On Monday, the Dow dropped 1,175 points (4.6%), the biggest single day selloff in history.

Conservative radio host Michael Savage surmised the globalists were behind the market shakeups because the FISA memo story is gaining steam and they need to hurt Trump where he’s strongest: the economy.

“The establishment, meaning the ‘Deep State,’ call it whatever you want, went into overdrive to destroy Trump, or try to destroy him, where he is strongest, because they couldn’t get him where they thought he was weakest,” Savage said Monday.

“So they are taking the market down. They are trying to hurt you. They are the enemies of the average American. Make no mistake about it, they are going for you! These people are so evil and so power-drunk that they’d burn the nation to the ground rather than let Donald Trump live another day in office.”

Economist Peter Schiff said the Federal Reserve may be attempting to destroy the “Trump effect” that’s been rallying the stock market for the last year.

“Maybe the Fed would be happy to see a bear market that could be blamed on Trump,” Shiff said in an interview with The Street.

“We’ve had a huge move up since the election of Trump even though prior to the election the expectation was if Trump won it [would be a disaster for markets].”

Are the globalists playing their last hand out of desperation?

Intelligence insider known as QAnon recently posted on 8chan suggesting the globalists’ next move was to rattle the stock market to send a signal to Trump they are still in control.

“[666]. Signal to POTUS they control the market? Signal? Threat? Welcome to the global war.”

Interestingly, QAnon also points out the Rothschild banking family has been selling off their properties and investment holdings like Apache Co. at about the same time as the recent market volatility.

“This type of transaction happens once in a century in a family like the Rothschilds,” Austrian real estate broker Klaus Bischof told Bloomberg last week.

Read More @ Infowars.com

Mark O’Byrne – Time For Hard Assets Nearly at Hand

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by Kerry Lutz, Financial Survival Network:

Mark O’Byrne believes that fundamentals do not justify the massive gains in US stocks in recent years (rise of over 300% in the S&P 500 since 2009). Does the U.S. have a perfect ‘Goldilocks economy’ or a vulnerable ‘Food stamp economy’? Are we in a ultra low interest rate, liquidity driven “everything bubble”? Is margin debt one of the factors driving speculation in stocks and a stock market bubble? Is there ‘irrational exuberance’ and overly bullish sentiment as seen in the recent headline ‘Stock market never goes down anymore’? Very important to keep up ongoing education in world of fake news bombardment. Also important to own hard assets including physical gold and cold hard cash outside our digital financial and banking system. Check out Mark’s podcast, here.

Click HERE to listen

Read More @ FinancialSurvivalNetwork.com

Who Could’ve Seen This Coming?

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by Dave Kranzler, Investment Research Dynamics:

Yesterday was amusing.  The meat with mouths on the so-called financial networks were crying, “how could this have happened.”  Funny thing, that.  They don’t raise the slightest doubt of conviction when the Dow soars 2,676 points in less than two months  – 23,940 on November 29th  to 26,616 on January 26th.  But when the market takes back that move in 6 trading days it’s a problem that Congress and the Fed need to “fix.”

The stock market’s small accident last Friday was a warning signal. But, in the context of the move made by the Dow since it bottomed on March 5, 2009, barely registers on the radar screen:

I saw this table on Twitter and thought it was a good summary of the extreme bullishness that I’ve been documenting for the past few issues (Short Seller’s Journal):

The old adage states that “they don’t ring a bell at the top.” But that table above seems to have nine different “bells ringing.” Note: “NAAIM” is the National Association of Active Investment Managers (Note, I know MMF is money market funds but I’m not sure what the rest of the metric represents other than its some measure of investor portfolio cash vs stock holdings). As you can see, every indicator that measures relative bull/bear sentiment is at a bullish extreme.

A record one-day inflow north of $500 million was tossed by retail investors into one of the inverse VIX ETNs.  Hard to imagine a louder “fire alarm” ringing than that one.  The Dow shed 1,095 points from last Friday’s close – 4.1%. The first big chunk down was Tuesday, when it lost 363 points. It also lost 177 points on Monday. After two small days of gains, ostensibly in support of Trump’s State of the Union speech, the Dow plunged 665 points on Friday.

Monday was obviously the type of market behavior about which many, including this blog, have been, have been warning.  Who could’ve seen that coming?

Even more interesting than the action in the stock market was the action in the bond market. Historically, other than in times of extreme market turmoil, when the stock market sells off with force, the funds flow into the Treasury bond market. Bond prices rise and yields fall. But this week the 10-year Treasury lost roughly 1.4 points, which translated into a 15 basis point jump in its yield to 2.84% The long bond closed over 3%. Even short term Treasury rates rose. It will be interesting to see if this trend continues. It is exceptionally bearish for the housing market.

Now, self-entitled “exceptionalist” Americans will be begging their Congressmen to “do something” while Congressmen will be grand-standing for the Fed to “do something.”  But the “something” that was done from 2008 to 2015 is wearing off.  If the Fed is going to do God’s work and save the universe from natural market forces, it will have to print  even more money than last time around. That type of “doing something” will annihilate the dollar.

The immediate problem will be retail and hedge fund margin calls. If we don’t hear about ETFs and hedge funds blowing up after what happened yesterday, it means the PPT (NY Fed + the Treasury’s Working Group on Financial Markets – the “PPT” – which both have offices in the same building in lower Manhattan) has monetized and covered up those financial road-side bombs.

Read More @ InvestmentResearchDynamics.com

Just A Coincidence?: The Dow Goes From Being 567 Points Down To 567 Points Up At The Closing Bell

by Michael Snyder, The Economic Collapse Blog:

Seriously?  We were expecting that Tuesday would be an unusual day on Wall Street, and that was definitely the case.  At the low point, the Dow Jones industrial average was down 567 points, but at the closing bell it was up 567 points.  That is a swing of more than 1000 points, but what is more surprising is the exact symmetry of those numbers.  Is this just some sort of bizarre coincidence?

At the opening bell, stock prices collapsed and many were concerned that we were heading for another really bad day for investors.  According to CNBC, the Dow was down 567 points at the lowest point…

The Dow Jones industrial average opened with a big whoosh lower, then rallied all the way back. As of 3:41 p.m. ET, the Dow is 600 points higher and trading at a new session high. At its session low it was down by 567 points.

But then momentum shifted and the Dow soared.  By the end of the Day, the Dow Jones industrial average was up 567 points.  The following comes from CNN

The Dow plunged 567 points at the open on Tuesday and briefly sank into correction territory — a drop of 10% from its record high. But those losses quickly vanished, and the index ended the day up 567.

It was the Dow’s biggest point gain since August 2015 and the fourth-largest in history. The percentage gain of 2.3% is the biggest since January 2016.

It is not unusual to see market swings of this magnitude during times of high volatility.  Even during times of panic, at some point the sellers get exhausted and investors looking for buying opportunities come surging in.  On Tuesday, this shift in momentum came almost immediately after the opening

“I thought we were going to see the bottom within five minutes of when we opened. I think that’s basically what we’re seeing,” said Ed Keon, portfolio manager at QMA, the quantitative and dynamic asset allocation business of PGIM. “At these levels, stocks represent pretty good value and we’re adding to equity exposure.” Keon said it’s too early to call a bottom but he expects that the worse is over.

But just because the Dow was up more than 500 points today does not mean that the crisis is over.

It is important to remember that there are wild swings both ways during any market crisis.  For example, 9 of the 20 best days in stock market history were right in the middle of the financial crisis of 2008.  So if a new financial crisis is indeed brewing, we would certainly expect to see days when the Dow rises dramatically.

Markets tend to do well when things are calm, and they tend to go down when things get choppy.  So the fact that there was such volatility on Wall Street today is not a good sign.

Hopefully things will settle down, because the markets will not be able to handle too much more shaking.  There is so much leverage on Wall Street today, and as Carl Icahn recently told CNBC, one of these days all of this leverage is “going to blow up the market”…

Billionaire Carl Icahn told CNBC on Tuesday there are too many exotic, leveraged products for investors to trade, and one day these securities are going to blow up the market.

The market is a “casino on steroids” with all these exchange-traded funds and exchange-traded notes, he said.

These funds, especially the leveraged ones, are the “fault lines” that will eventually lead to an earthquake on Wall Street, he said. “These are just the beginnings of a rumbling.”

Wednesday will be a key day.  If the markets are nice and calm, that will be a really good sign.

But if we see tremendous movement in one direction or the other, that could indicate that more shaking is on the way.

Read More @ TheEconomicCollapseBlog.com

We Did It To Ourselves! It’s Time for Change.

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by Gary Christianson, Miles Franklin:

Serious problems affect Americans. Problems first, solutions at the end!

We did what to ourselves? Our representatives, senators, and Presidents, supposedly acting on our behalf, voted for and created what history has shown are huge monetary and fiscal mistakes.

Some will disagree, but consider this partial list:

1 – Central banking and The Federal Reserve Act:  Enough money was spread around Washington D.C. to purchase the passage of this self-serving banking monstrosity. It was signed into law by President Wilson over a century ago.

David Stockman has a clear assessment and firm opinions regarding the danger and destructiveness of the Central Bank. His statement is:

“Folks, these people aren’t totally stupid. They have amassed extraordinary power and plenary dominance over the nation’s $19 trillion capitalist economy only by assiduously cultivating the mother of all Big Lies. Namely, the myth that private capitalism is dangerously unstable and possessed of an economic death wish for periodic cyclical collapses, which can be forestalled only by the deft interventions of the central bank.

“That’s self-serving malarkey, of course. Every recession of the modern Keynesian era has been caused by the Federal Reserve, and most especially the calamity of 2008-2009. And the “recovery” from that one, as well as those stretching back to the 1950s, was owing to the inherent regenerative powers of the free market, not the interest rate and credit supply machinations of the Fed.

“So what we really have is a case of the monetary Wizard of Oz. There is nothing behind the Eccles Building curtain except a posse of essentially incompetent economic kibitzers who spend 90% of the time slamming the same old “buy” key on the Fed’s digital printing press, while falsely claiming credit for the inherent growth propensity of private capitalism.”

2 – Fiat Currencies: When the currency is backed by nothing it will become worthless. Voltaire recognized this fact centuries ago when he said, Paper money eventually returns to its intrinsic value — zero.”

Dollar bills (paper and digital) are “Notes” – DEBTS of the Federal Reserve. They are not money, but are merely an “IOU” issued by the Fed. We are legally required to use these “IOUs” for taxes and commerce.

3 – Fractional Reserve Banking:  Allowing commercial banks to loan dollars into existence creates rising prices and much mischief. The Treasury will not condone individuals counterfeiting Federal Reserve Notes, but they allow commercial banks to do the equivalent.

4 – Too Big To Fail:  They have created the myth that certain banks are too large and must not be allowed to fail. The Fed and large banks promoted this self-serving nonsense.

5 – Regulatory Capture:  Create an agency to oversee banks (pharmaceutical companies, military contractors, securities sales etc.) and staff the agency with “tainted” members from the same industry.

Example: The SEC did not discover the Madoff scam even after receiving detailed analysis from Harry Markpolousshowing how to prove the Ponzi scheme. Madoff confessed and the SEC was late to the game.

6 – Derivatives:  They are profitable for banks at the expense of the economy. Failed derivatives nearly killed the economy in 2008. A larger disaster is coming.

7 – Banks Own and Strongly Influence Politicians and the Media:  No discussion needed.

8 – We Live In a Credit Based World:  Banks skim a piece off most transactions. Has “financializing” everything improved the lives of the citizens? What happens if credit dries up – again – as it did in 2008? Will existing bank loans be called, will ATM’s cease functioning, will world trade crash?

9 – War on Cash:  Banks demand maximum control, which means they want our assets, liabilities and transactions digitized inside their world. If all assets are “banked,” the only escape is cash – UNLESS CASH IS OUTLAWED. Once assets are “banked” then banks can confiscate assets via negative interest rates, transaction fees, and monthly charges.

10 – Central Banks Lowered Interest Rates to Near Zero:  Rates went negative in Europe. Your “high interest” checking account probably pays less than 0.05% interest. Savers, insurance companies, and pension plans have been damaged by low interest rates, but those low rates benefitted bank profits.

11 – U.S. Government Deficit Spending:  The Treasury borrows every month, spends more than its revenues, increases debt, and pretends all is well. The “debt ceiling” is a joke. Read 38,000 Tons of Poison.

George Carlin:  “It’s a big club and you ain’t in it.”

SOLUTIONS:

If you aren’t a member of the political and financial elite, you’re not in “The Club.”  All is not lost, but non-members must protect themselves. We should admit:

  • Fiat currencies are corrupt. The dollar has been devalued by about 98% in the century since the Fed was created.Because debt and spending will accelerate in the next decade, the rate of devaluation will increase.

Read More @ MilesFranklin.com

Stock Market Panics on Treasury Yields, Fed and Trump’s Domestic Wars

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by Pam Martens and Russ Martens, Wall St On Parade:

In little more than a week, $4 trillion in global stock market value has vanished as quickly as a snow cone in July. The heretofore uncanny calm of a U.S. stock market setting regular new highs was punctured Friday with a 665.7 point selloff in the Dow Jones Industrial Average. That was followed by yesterday’s bungee dive in late afternoon that took the Dow down 1597 points followed by a quick partial retracement that left the Dow down 1,175 points on the day. (That plunge and retracement brought back memories of the Flash Crash of 2010. See charts above and our coverage: Flash Crash Report Raises Flags on Quasi Stock Exchanges Inside Wall Street Firms.)

On a point loss basis, yesterday’s decline was the largest in Dow history. On a percentage basis, it paled in comparison to the 22.6 percent decline on October 19, 1987 when the Dow lost 507.99 points.

As we began reporting on January 22 (see Rising Treasury Yields Pose Risk for Those Over-Weighted in Stocks) the stock market had become overly complacent toward the fierce rise in U.S. Treasury yields. We warned that this could “turn out to be a dangerous, slippery slope for those heavily weighted in stocks.” We also cautioned that: “The stock market has been riding the euphoria of anticipating the tax cut benefit to corporate earnings. It seems to have forgotten about what the attendant budget deficits would mean for rising Treasury yields and those higher yields providing a competitive seduction to investors who increasingly see the stock market as asset bubble terrain.”

On January 30 we took a hard look at how Trump’s tax cut plan would drive the yields on Treasuries by impacting the supply and demand at a time when the Federal Reserve was cutting back on its own purchases of Treasuries in order to normalize its bloated balance sheet left over from its interventions following the 2008 financial crash. We wrote:

“The recent market action suggests that investors are about to get a serious investing lesson in the concept of supply and demand. According to research from the major Wall Street banks, there is going to be a stunning doubling of the net issuance of U.S. Treasury securities in the current Federal fiscal year versus last year. Net issuance of Treasuries in the last fiscal year was approximately $500 billion. For the coming year, Goldman Sachs projects the amount will be $1.03 trillion; Deutsche Bank thinks it will be about $1 trillion while JPMorgan Chase is floating the breathtaking figure of $1.42 trillion.

“The huge increase comes from two primary factors: a mushrooming budget deficit from the recently passed tax cuts and the wind down by the Federal Reserve of its Treasury purchases.” (Read the full article: Stocks Dive as Treasury Yields Set Off Alarm Bells.)

Yesterday’s plunge was accompanied by a new Federal Reserve Chair, Jerome Powell, taking his seat for his first day of work. Stock markets hate uncertainty and former Fed chief Janet Yellen’s dovish approach to rate hikes had a calming influence on the stock market. Powell’s approach to the size and timing of rate hikes this year is less predictable.

As the stock market repriced risk yesterday, President Donald Trump was in Ohio giving a speech on the booming economy while referring to Democrats as “treasonous” for not giving him a standing ovation during his State of the Union address. Trump is now waging four domestic wars at once: with the media; with Democrats; with his own Justice Department and FBI (which are headed by his own appointees) over his and his family’s potential involvement with Russia. Up until now, the chaos President has been bucked up by a calm stock market regularly scaling new heights. That all changed yesterday.

As Trump told his Ohio audience that “billions and billions of dollars are being poured back into the United States,” billions and billions of dollars were actually flowing out of U.S. stocks. As Trump remarked that his tax cut legislation had “set off a tidal wave of good news that continues to grow every single day,” the stock market was actually reassessing how much that tax cut was going to add to the U.S. deficit; how much it would mean in new issuance of Treasury bills, notes and bonds; and weighing how far interest rates would have to rise so that this massive doubling of debt issuance would find bids and buyers.

The Trump tax cut legislation reduced the corporate tax rate from 35 percent to 21 percent. The nonpartisan Congressional Budget Office has estimated that it will add $1.5 trillion to the deficit over the next decade.

The chaos President has now been joined by stock market chaos. The widely followed VIX, the CBOE’s Volatility Index which measures fear or raw nerves in the market, more than doubled yesterday and was up another 13 points this morning to 50.30, touching its highest level since 2009, which was in the midst of the fallout from the Wall Street collapse of 2008.

Heretofore, the stock market has shrugged off the President’s historically low approval ratings for his first year in office; his low approval on the global stage; and the sagging world view of U.S. leadership.

On January 19 of this year we wrote:

“Since the inauguration of Donald Trump on January 20, 2017, the stock market has performed as if it is operating in an alternative universe, regularly setting new record highs despite unprecedented chaos coming from the White House. Now, a new Gallup poll is calling into question how long the divergence between the market’s view of Trump and the world view of Trump can continue.

Read More @ WallStOnParade.com