“Markets don’t have a purpose any more – they just reflect whatever central planners want them to.” – Mark Spitznagle
Well there you have it. Not from Crazy Bob, not from some whacked out you tube character proclaiming that reptilians are shape-shifting into Presidents. No, just a guy who made over a billion dollars in ONE Day last year.
To further quote him, “This is the greatest monetary experiment in history. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable”
Well that sounds amazingly like what I’ve been spewing for the past 5 years, doesn’t it? It sure does. My mantra for the past several years is that the Central planners do any and everything they can to keep the markets up, and for two distinct reasons. One is Illusion.
To this day, I’m constantly amazed at the amount of everyday folks that will point to the stock market and think that things must be good because the market still flirts with all time highs. No matter how many times I show them the disconnect between what’s happening in the real world of economics, versus where the market is, they just can’t “get it”.
To some extent, that’s part of a frustration that I’ve experienced for over 25 years. What do you do, when you know something that goes directly AGAINST the typical beliefs being pushed by media, and social media? When you try and dispel the myth that’s prevalent as truth, you’re looked at as a nut. Then there’s those folks that figure “hey, I have a life, I’m busy, and if it isn’t affecting my daily routine, who gives a crap?”
What they don’t realize is that it IS affecting their daily lives and will be even more so in the future. People like me, the late Bob Chapman, James Corbitt, Alfred, etc, are simply trying to educate folks. But isn’t that the way? No one pays attention until the SHTF, and then they mad scramble to find out what to do about it. Too late.
True Story here… ( and Joey if you’re reading this, you know whom I’m talking about!)… Back in about 2005 into 2006, I was talking to a neighbor of mine. The housing market was in full time bubble mode, and it was so over the top ridiculous that only the blind couldn’t see that it was going to end in horror. We lived in a bayfront house in Coastal NJ, and houses up and down the street ( and the interior lagoon homes) were appreciating at a pace never seen before. I said, “Ya know, one day I’ll be able to buy all these homes for under 150 grand”. Well that seemed ludicrous as they were going up daily. 300K, 400K, 500K… it was insane. These were shore-side bungalow’s folks. Not mansions.
Another neighbor whom I told that same statement to sort of laughed me off. His Daughter had just bought a home a few blocks over for 350 grand. Now mind you this was a home that just 5 years earlier was about 95K. He was convinced her purchase was okay, and this would never end.
Well guess what? By 2009 there were dozens of foreclosed homes, and homes for sale. Price tags? 129K. 149K. Yes those very homes that fetched 400 grand were on the block for 140.
Very few listened. And that’s always the way it is. People tend to focus on what’s going on at the moment and what things look like. In 2005 it looked like Real Estate ONLY went up, and it could never stop. The pattern always repeats. People get caught up in the moment, and don’t look at the big picture. Remember the tech run up of the late 90’s? When I told an investment club in Philadelphia that the tech market would completely blow up and crash, first I was booed. Then one attendee actually got up and yelled “you don’t understand technology, this can never stop!”
It stopped. 200 companies that had stock prices over 100 per share were UNDER a dollar a share when it was over. Sure, technology wasn’t going to stop, it always marches on. But economic reality has to enter at some point, whether you want it or not.
We are in the greatest monetary bubble of all time. Lord knows we’ve preached to you about it for years. Because of the credit binge the world went on, we overproduced everything. They took the “free money” and made plants to make widgets, knowing there was no one to buy them. They took more free money and created derivatives; some 700 TRILLION of them to trade back and forth and skim even more profits on. No matter where you looked, they “drew forward” from future demand.
Now the world is circling the depression toilet. No one wants a depression on their watch, namely the Central banks. Figure it like this…if you can have a second major depression despite having a Central bank which is supposed to be able to ward off such things…why have one? Exactly. You shouldn’t. And they know it.
Job one at the Central banks is to REMAIN in power. Job two then, is to do anything and everything possible to keep the wheels from flying off this beaten senseless train. All the gimmicks like Negative interest rates, all the “rigging” such as the gold fix, and LIBOR, etc, are all just part of keeping the illusion alive.
We play in the stock market. Nowhere else is it as “in your face” concerning manipulation than there. ( oops, sorry…actually the manipulation in the gold and silver markets is even worse) Consider this fact. In the past month, retail funds saw the biggest outflow since August of 2011. We’re working on 17 straight weeks of institutional selling. Now consider the volumes. Our recent low average volumes on the SPY have floated around the 100 million. That’s about 50% lower than last years.
Now, one might ask this simple question. How can you have a market just a few percent away from all time highs, and have a day like Monday where we gain 200 points on even LOWER volume than our already pathetic volume, while at the same time the “smart money” has bailed out for 17 weeks in a row? How can that be?
There’s ONLY TWO ways. One is the Central banks of the world are in collusion with outfits like Citadel to buy stocks. Some of them don’t even hide it! Did you know that in 2015 the Swiss National Bank doubled their ownership of Apple (AAPL) stock to 10.5 MILLION shares? Yes indeed they did. In a 13F filing they break down some of the individual stocks they own. So, as AAPL was weakening the SNB was buying it up. Supporting it. Oh by the way, they also own about 100 BILLION in global equities. Stocks folks. Central banks buying stocks. They own 14 million shares of Microsoft. 12 million of Pfizer.
When you wonder why the stock market is still ‘up” just remember this ONE item. The SNB alone, bought 14 BILLION worth of US stocks in just the first quarter of the year.
Well if the SNB is holding 100 billion, what’s Japan been buying? How about our little munchkin Yellen? Just because the Fed’s don’t tell us what they have you’d be juvenile to believe they too don’t have a stock portfolio.
Second on the list is the all too familiar stock buy back. After setting a record for buy backs in 2015, we’re on track for another record. But here’s the rub. They BORROW the money to do the buy back, increasing corporate debt, yet jamming the stocks higher. If not for the record amount of buy backs, S&P earnings would be down a whopping 8% THIS PAST QUARTER.
So, what do I catch Tuesday morning? Oh just this….
Dell $16 billion in secured bonds at 6.5% coupon coming.
There ya go folks. DELL isn’t doing terribly well right now. So like a hundred other companies that can’t sell anything, they’re luring in suckers to lend them money by paying 6.5%, 4 times over a 10 year bond return. If they were still public, they’d use those bond sales to buy back their own stock like everyone else has.
So here’s the big question of the day that we’re all going to have to reckon with. The tech bubble crashed. The housing bubble crashed. The credit bubble is bigger than both combined. Is it immune from crashing?? I think not.
Don’t the elites know this? Are they stupid? Of course they know this. ( they’re not stupid, just evil) So it is my guess that they’re going to do any and everything to keep things going, UNTIL they have a back up plan in place to replace the current system. That plan in my estimation will be SDR’s and global devaluations of currencies and debt.
The fly in the ointment is the black swan. Maybe it just isn’t possible to keep the plates spinning in the air, as some event triggers the big crash before they’re ready for it? Or maybe they actually create the crash when they’re ready, and then present their “new plan” because everyone will take anything they can get at that point? Time will tell.
The bottom line to this rant is this… George Soros’s biggest holding is Gold right now. He’s doubled down on his S&P put options. Puts increase if the underlying asset goes down. Carl Icahn is short the market. Spitznagle made a billion dollars in 4 hours last year, he’s a smart guy....he says an epic crash is coming. I’ve been calling for a “reset” for over 4 years now. The timing is tough, but each day we’re closer.
Be very very careful folks.