Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Stock Market and Pessimistic Press Headlines

Stock-Markets / Stock Markets 2014 Mar 20, 2014 - 08:52 AM GMT

By: Doug_Wakefield

Stock-Markets

Do you remember the following headline from the fall of 2011?

"In the Absence of a Credible Plan We Will Have A Global Financial Meltdown in Two or Three Weeks" [states] Dr. Robert Shapiro, Advisor to the IMF, Zero Hedge, October 6, 2011

How about these headlines, from June 2012?

[Spanish] Bankia Customers Pull Out Over 1 Billion Euros, Reuters, May 17 '12


Or some of these from December 2012 through December 2013?

Ben Bernanke: If We Go Over The Fiscal Cliff, The Fed Can't Help, Huffington Post, Dec 12, 2012

Wall Street Drops After Bernanke Hints At Slowing Stimulus, Reuters, June 19, 2013

'War-Weary' Obama Says Syria Chemical Attack Requires Response, CNN, August 30, 2013

Standoff In the Mediterranean: The US vs Russian Navies, Zero Hedge, Sept 5, 2014

Jack Lew [US Treasury Secretary] Warns That A Default Could Cause 'Irrevocable Damage', Huffington Post, Oct 10, 2013

Markets Rally As Traders Take Taper in Stride, The Guardian, Dec 19, 2013

And the most recent drama centered on Ukraine, and involving Russia, the EU, and the US?

Stocks Hit By Global Worries; Dow's Worst Session Since Feb 3, CNBC, Mar 13, 2014

Did Russia Just Move Its Treasuries Offshore?, WSJ, March 14, 2014

US, G-7 Allies Won't Recognize Crimea Election Results, The Hill, March 12, 2014

Crimea Will Formally Apply To Join Russia Tomorrow After 95.5% Support Referendum; US, UK, EU Reject Results, Zero Hedge, March 16, 2014

US, EU Levy Sanctions on Russia, Ukraine Officials After Crimea Vote, LA Times, March 17, 2014

So what do these “pessimistic” headlines have in common? US stocks bottomed at or shortly after these headlines. That’s right. None of them lead to a crisis or hard sell off. All were “signals” to buy stocks.

What in the old days could be explained as negative news that sent traders and investors to the sidelines, in the brave new world, for 2 ½ years, has been seen as a “positive” for buying stocks.

See for yourself. This is not forecasting the future, but merely examining the past.

$SPX S&P 500 Large Cap Index INDX

$SPX S&P 500 Large Cap Index INDX

$SPX S&P 500 Large Cap Index INDX

$SPX S&P 500 Large Cap Index INDX

At this point, the inevitable, “well this could continue much longer” continues to be the most widely acclaimed investment mantra.  Yet I ask you, why do life insurance companies charge higher premiums to an 80 year old than they do a 50 year old? Is it not because risk is rising, as we get older?
Eventually, whether consciously or unconsciously, the norm becomes “Buy the dip and EXPECT there to be another all time high very soon”, or “Why would anyone ever want to sell?” The longer the money manager or investor bets on black and wins, the greater the confidence to continue down the exact same path.

Even the most recent all time high on March 7, 2014 saw only a 2.3% decline in the S&P 500 during the 5 trading days leading up to last weekend’s vote in Crimea, which we now know lead to their independence from Ukraine. As one could find out easily with a little reading, the global impact caused by economic militant actions that could be taken by Russia, Europe, the US, and possibly even China, make the stakes higher this week than last. So as markets turn right back up, so also do risk levels. 

Yet sadly, millions of investors and advisors are receiving a message from watching US stock prices that is 180 degrees opposite from what anyone considering global economic and financial risk would attain from looking at factors OUTSIDE of stock prices. Consider these factors:

"Russia is Europe's largest natural gas supplier, supplying one-third of the continent's natural gas." [To Understand What's Really Happening in the Ukraine, Follow the Gas Lines on This Map, PolicyMic, March 10, 2014]

"In 2014, EU-Russia overall trade stands at around 360 billion Euros [currently app $500 billion US dollars] per year. ...The EU is also the largest investor in the Russian economy and accounts for 75 percent of all foreign investments in Russia." [Ukraine's Crisis: Economic Sanctions Could Trigger a Global Depression: News Junkie Post, March 15, 2014]

"Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia's giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers." [Russian Companies withdraw billions from the West, Say Moscow Bankers, Financial Times, March 14, 2014]

"China's top envoy to Germany has warned the West against punishing Russia with sanctions for its intervention in Ukraine, saying such measures could lead to a dangerous chain reaction that would be difficult to control....

"We don't see any point in sanctions," [Chinese Ambassador to Germany] Shi said. "Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don't want this." [China Warns of Dangerous Russia Sanctions 'Spiral', Reuters, March 13, 2014]

"Somebody just yanked $105 billion dollars worth of US government bonds out of the Federal Reserve, according to the latest data from the US central bank."[And now, it looks like Russia may be messing with the Fed, Quartz, March 15, 2014]

"...as of January, the US has a brand new third largest holder of US Treasuries, one which in the past two months has added over $100 billion in US Treasury paper, bringing its total from $201 billion in November, to $257 billion in December, to a whopping $310 billion at January 31.

The country? Belgium" [Meet The Brand New, and Shocking, Third Largest Foreign Holder of US Treasuries, Zero Hedge, March 18, 2014]

Belgium US Treasury Hodlings ($BN)

If you are familiar with European politics, you recognize Brussels, Belgium as the de facto capital of the European Union, home of the European Commission, the Council of the European Union, and one of two homes (the other being Strasbourg, France) of the European Parliament. 

So who decided to move $100 billion in the week ending March 12 away from the Fed’s custody accounts for Foreign Official and International Accounts? Did the European Central Bank, home in Brussels, Belgium, have anything to do with the massive increase in US Treasury holdings over a 2 month time period ending as of January? If so, why the sudden enormous movement of US Treasury holdings?

Based on everything we have briefly covered in this short article, can you think of why all of this information should be dismissed, and we should place all of our faith on US stock prices going nowhere but up, solely because that is what they have been doing?

$SPX S&P 500 Large Cap Index INDX

Leveraged Loan Issuanced Soars

Source - Is It A Bubble Yet?, Zero Hedge, March 12, 2014

If the casino let you win over and over and over again by betting on black, would you really keep pushing all the chips back on black? Worse yet, if you had won all those times by doing nothing but leaving your chips on the table, would you really be surprised to wake up some day to find that the last roll landed on red, and your chips had been taken by the dealer?

"If we were going to conduct a financial war, we needed people who knew how to us financial weapons - such as front running, inside information, rumors, 'painting the tape' with misleading price quotes, short squeezes and the rest of the tricks on which Wall Street thrives." [Currency Wars: The Making of the Next Global Crisis (Aug 2012) James Rickards, pg 9 of 254, Kindle Edition. * - Rickards was one of about 60 experts to take part in the first ever financial war game, sponsored by the Pentagon, and conducted at the Applied Physics Laboratory in 2009.]

  • Starting Friday, March 21st, The Investor's Mind will be issuing a second newsletter for the retail investor and advisor who have little or no experience trading, yet have come to understand that bubbles always end and time is running out to prepare for the next major chapter in financial history. This publication will be available along with the current publication, The Investor's Mind (began in Jan '06), at no extra cost. A subscription to The Investor's Mind will bring to you the current newsletter and trading publication, as well as the new newsletter for retail investors and advisors. As we all saw from 2008, the "buy and never sell" strategy has extreme consequences. We cannot continue to trust central banks to merely reflate brokerage statements when global bubbles burst.

  • I am available for public speaking, radio interviews, and consulting. Presentations are for all, both non- investors and investors, big as well as small. Please contact my office for more details.

  • In the meantime, for those of you seeking a wide range of opinions based on a study of history, science, and a study of human behavior as we live through this incredible period of change, subscribe to my most comprehensive research and market commentary with a 6-month subscription to The Investor's Mind: Anticipating Trends through the Lens of History, and download my rare research paper on short selling, Riders on the Storm: Short Selling in Contrary Winds (Jan '06), which spells out major areas of systemic risk that advisors are not taught as part of their own conventional education, as well as solutions for periods when assets deflate in value.

Doug Wakefield
President
Best Minds Inc., a Registered Investment Advisor
2548 Lillian Miller Parkway
Suite 110
Denton, Texas 76210
www.bestmindsinc.com
doug@bestmindsinc.com
Phone - (940) 591 - 3000
Alt - (800) 488 - 2084
Fax - (940) 591 –3006

Copyright © 2005-2012 Best Minds Inc.

Best Minds, Inc is a registered investment advisor that looks to the best minds in the world of finance and economics to seek a direction for our clients. To be a true advocate to our clients, we have found it necessary to go well beyond the norms in financial planning today. We are avid readers. In our study of the markets, we research general history, financial and economic history, fundamental and technical analysis, and mass and individual psychology.

Disclaimer:  Nothing in this communiqué should be construed as advice to buy, sell, hold, or sell short. The safest action is to constantly increase one's knowledge of the money game. To accept the conventional wisdom about the world of money, without a thorough examination of how that "wisdom" has stood over time, is to take unnecessary risk. Best Minds, Inc. seeks advice from a wide variety of individuals, and at any time may or may not agree with those individual's advice. Challenging one's thinking is the only way to come to firm conclusions.

Doug Wakefield Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

TraderJoe
20 Mar 14, 11:58
Pot Calling Kettle


Your last article of early Feb - http://www.marketoracle.co.uk/Article44338.html

If the Dow and S&P 500 stall below their respective December and January highs in the near future, it will only solidify the patterns shown in this article, providing further warnings to all investors and traders.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules