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Image | Warning: Stocks Likely to Crater from Here
Warning: Stocks Likely to Crater from Here
by Chris Martenson

I don't relish the job of constantly pointing out the risks to the equity markets. But since few on Wall Street seem willing (or able) to do this, I'm "making the call" for a market correction, as enough variables have aligned to indicate a high likelihood of stocks heading downwards from here.

I've only given one other such warning about equities before, and that was in March of 2008, when I warned of the possibility of a 40% to 60% decline in stock prices by Fall. I am making a similar call today, with the understanding that I am usually a bit early to the game with my views.
Warning: Stocks Likely to Crater from Here
 by Chris Martenson

I don't relish the job of constantly pointing out the risks to the equity markets. But since few on Wall Street seem willing (or able) to do this, I'm "making the call" for a market correction, as enough variables have aligned to indicate a high likelihood of stocks heading downwards from here.

I've only given one other such warning about equities before, and that was in March of 2008, when I warned of the possibility of a 40% to 60% decline in stock prices by Fall. I am making a similar call today, with the understanding that I am usually a bit early to the game with my views.
Image | How the Market Failure Will Happen
How the Market Failure Will Happen
 PREVIEW
by Chris Martenson

Executive Summary The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices Persistently high gasoline prices are choking economic growth A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare,…
How the Market Failure Will Happen
 PREVIEW by Chris Martenson

Executive Summary The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices Persistently high gasoline prices are choking economic growth A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare,…
Image | The Forces That Will Reverse Housing’s Recent Gains
The Forces That Will Reverse Housing’s Recent Gains
 PREVIEW
by charleshughsmith

Executive Summary

  • Intervention in the housing market by central planners is experiencing diminishing returns
  • The four major trend reversals most likely to depress housing prices in the coming future
  • The power deflationary force of reversion to (or perhaps below?) the mean
  • Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals:

The Forces That Will Reverse Housing’s Recent Gains
 PREVIEW by charleshughsmith

Executive Summary

  • Intervention in the housing market by central planners is experiencing diminishing returns
  • The four major trend reversals most likely to depress housing prices in the coming future
  • The power deflationary force of reversion to (or perhaps below?) the mean
  • Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals:

Image | The Unsafe Foundation of Our Housing ‘Recovery’
The Unsafe Foundation of Our Housing ‘Recovery’
by charleshughsmith

What could go wrong with the housing 'recovery' in 2013?

To answer this question, we need to understand that housing is the key component in household wealth. And, that Central Planning policies are aimed at creating a resurgent “wealth effect,” as follows: When people perceive their wealth as rising, they tend to borrow and spend more freely. This is a major goal of U.S. Central Planning.

Another key goal of Central Planning is to strengthen the balance sheets of banks and households. And the broadest way to accomplish this is to boost the value of housing. This then adds collateral to banks holding mortgages and increases the equity of homeowners.

Some analysts have noted that housing construction and renovation has declined to a modest percentage of the gross domestic product (GDP). This perspective understates the importance of the family house as the largest asset for most households and housing’s critical role as collateral in the banking system.
The Unsafe Foundation of Our Housing ‘Recovery’
 by charleshughsmith

What could go wrong with the housing 'recovery' in 2013?

To answer this question, we need to understand that housing is the key component in household wealth. And, that Central Planning policies are aimed at creating a resurgent “wealth effect,” as follows: When people perceive their wealth as rising, they tend to borrow and spend more freely. This is a major goal of U.S. Central Planning.

Another key goal of Central Planning is to strengthen the balance sheets of banks and households. And the broadest way to accomplish this is to boost the value of housing. This then adds collateral to banks holding mortgages and increases the equity of homeowners.

Some analysts have noted that housing construction and renovation has declined to a modest percentage of the gross domestic product (GDP). This perspective understates the importance of the family house as the largest asset for most households and housing’s critical role as collateral in the banking system.
Image | Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?
Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?
by Chris Martenson

We are well into the financial crisis. Everyone’s trying to keep it together, even though it would appear from the reading of the economy things are not going well at all here. And everyone's ignoring things.

But I think, in their hearts, the Central Bankers must know what they’re doing is totally irresponsible. And the tell of that irresponsibility – which is the debasing of the currencies – is the fact that real things will go up in value. This should be reflected in the price of gold and silver.

So expresses Eric Sprott, CEO and founder of Sprott Asset Management, and one of the most experienced and vocal advocates for owning precious metals.

The past decade has validated Eric's thesis, as gold has risen considerably against all world fiat currencies. But what vexes him is that in recent years, when currency debasement has accelerated to extreme levels, precious metals prices have been clearly suppressed, particularly versus the U.S. dollar.

As the topic of price manipulation is nothing new, Eric finds his focus increasingly drawn to where the precious metals are going at these bargain prices – who is accumulating and who is dishoarding:
Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?
 by Chris Martenson

We are well into the financial crisis. Everyone’s trying to keep it together, even though it would appear from the reading of the economy things are not going well at all here. And everyone's ignoring things.

But I think, in their hearts, the Central Bankers must know what they’re doing is totally irresponsible. And the tell of that irresponsibility – which is the debasing of the currencies – is the fact that real things will go up in value. This should be reflected in the price of gold and silver.

So expresses Eric Sprott, CEO and founder of Sprott Asset Management, and one of the most experienced and vocal advocates for owning precious metals.

The past decade has validated Eric's thesis, as gold has risen considerably against all world fiat currencies. But what vexes him is that in recent years, when currency debasement has accelerated to extreme levels, precious metals prices have been clearly suppressed, particularly versus the U.S. dollar.

As the topic of price manipulation is nothing new, Eric finds his focus increasingly drawn to where the precious metals are going at these bargain prices – who is accumulating and who is dishoarding:
Image | Off the Cuff: Things are Getting Interesting
Off the Cuff: Things are Getting Interesting
 PREVIEW
by Chris Martenson

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The FOMC Freak-out
    • Why markets dove after the Fed minutes were released
  • Stocks Slip, PMs get Slaughtered
    • Why the markets look very treacherous from here
  • The Sinister Sequestration
    • What will likely result if it happens
Off the Cuff: Things are Getting Interesting
 PREVIEW by Chris Martenson

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The FOMC Freak-out
    • Why markets dove after the Fed minutes were released
  • Stocks Slip, PMs get Slaughtered
    • Why the markets look very treacherous from here
  • The Sinister Sequestration
    • What will likely result if it happens
Image | Gold’s Regular Morning Mugging
Gold’s Regular Morning Mugging
by Adam Taggart

Not everyone is a morning person. And few people like Mondays.

But if you're a precious metals investor, mornings – especially Mondays – are brutal.

The Evidence

The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.

Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.

Gold’s Regular Morning Mugging
 by Adam Taggart

Not everyone is a morning person. And few people like Mondays.

But if you're a precious metals investor, mornings – especially Mondays – are brutal.

The Evidence

The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.

Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.

Image | The 10 Next Predictable Steps to Japan’s Unfolding Disaster
The 10 Next Predictable Steps to Japan’s Unfolding Disaster
 PREVIEW
by Gregor Macdonald

Executive Summary

  • Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
  • Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
  • Rising bond rates are all but guaranteed.
  • Gold vs. the yen is surging and will pick up momentum from here
  • The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds

If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.

In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.

Further “abundance” harvesting from this point forward will be difficult if not impossible.

Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.

Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.

Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility.

The 10 Next Predictable Steps to Japan’s Unfolding Disaster
 PREVIEW by Gregor Macdonald

Executive Summary

  • Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
  • Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
  • Rising bond rates are all but guaranteed.
  • Gold vs. the yen is surging and will pick up momentum from here
  • The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds

If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.

In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.

Further “abundance” harvesting from this point forward will be difficult if not impossible.

Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.

Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.

Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility.

Image | The Arrival of Japan’s Sunset
The Arrival of Japan’s Sunset
by Gregor Macdonald

For a successful technology, reality must take precedence over public relations, for nature cannot be fooled. ~ Richard Feynman

Waiting for Japan's economy to make a strong recovery has been an ongoing game since 1990. Shall we play that game one more time?
The Arrival of Japan’s Sunset
 by Gregor Macdonald

For a successful technology, reality must take precedence over public relations, for nature cannot be fooled. ~ Richard Feynman

Waiting for Japan's economy to make a strong recovery has been an ongoing game since 1990. Shall we play that game one more time?
Image | James Howard Kunstler: The Dangers of the Age of Delusion
James Howard Kunstler: The Dangers of the Age of Delusion
by Chris Martenson

It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen. 

James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.

James Howard Kunstler: The Dangers of the Age of Delusion
 by Chris Martenson

It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen. 

James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.

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