John Kay: Global Financial System Is ‘Waiting for the Next Crisis’; Scott Minerd: Volatility Is Rising And Asset Prices Are Highly Vulnerable To All Incoming News; Albert Edwards: Worst Fears For The Stock Market And Economy Have Been Confirmed

Guggenheim Sums Up The Fed’s Dilemma

Via Scott Minerd of Guggenheim Securities,


Volatility is rising and asset prices are highly vulnerable to all incoming news. Recent sell-offs in stocks and bonds indicate that the current uptrend could uncoil before the end of quantitative easing (QE). The amount of attention paid to rumors about QE highlights how vulnerable the U.S. economy is to the prospect of a tapering in asset purchases or a rise in interest rates.

This is largely because the current economic expansion is dependent on further gains in housing, which would be adversely affected by a material rise in mortgage rates. Between one and two percent of GDP growth is coming from housing activity. The sluggishness in the rest of the economy is evident if you remove that number from the latest reading of 2.4 percent GDP growth for Q1. This dynamic underpins the Federal Reserve’s current dilemma over how to normalize monetary policy. I do not anticipate an easy ride for policymakers or investors over the coming months.”


Economist Kay: Global Financial System Is ‘Waiting for the Next Crisis’ 

The world is “waiting for the next crisis,” according to John Kay, an economist and author.

That’s because the global financial system is built on profits from trading, which is inherently unstable, argues the London School of Economics professor, the Financial Times reports.

The eurozone, he believes, is the likely site of the next crisis.

Kay plans to outline his reasoning in a speech at the Russell Investments’ annual pensions conference in London this week, according to the Times.

He points to the list of financial crisis that have taken place, such as the emerging market debt crisis in the mid- to late-1990s, the new economy bubble and the eurozone crisis.

“They’re trading crises, fundamentally, and the system is geared around trading profits, which are, in large part, money that is borrowed from the future. A crisis results from the moment at which this money has to be paid back,” Kay explains.


ALBERT EDWARDS: Everyone’s Worst Fears For The Stock Market And Economy Have Been Confirmed

In the last month, the economy gave us some particularly worrisome economic data.

Societe Generale’s Albert Edwards flags two data points: Q1 corporate profit growth, which unexpectedly turned negative, and the May ISM manufacturing report, which is now signaling a contraction in the sector.

“History tells us that this is a warning sign we ignore at our peril,” he wrote.

Edwards notes that the ISM numbers have been on the same path as they were going into the last recession.
Read more:


ANALYST: Everyone Is Now Paying Attention To The 50-Day Moving Average

Will it hold?
spx 50 day moving average

Business Insider/Matthew Boesler, data from Bloomberg


2013: Stock Market Crash!

They predicted it was going to happen long ago.

Are we talking about Nostradamus or even anything remotely as cheesy as him? We all know that was a load of baloney. Just hot air and wind! Right? The Mayans might have got it right after all. Remember, the end of the world for them didn’t necessarily mean the end of the world it just meant the end of a cycle. A new cycle might begin, just different, opening up a whole new world. So maybe that cycle did begin as the door closed on 2012. January came and went and we are still here.

But, there are people who are in-the-know and who are able to predict (or think they can) what’s going to happen even years ahead of when it actually does. Yet, we only look back and then it’s too late for the ‘if-only’ statements and weeping over the milk that got spilt. There’s no point looking back and regretting anything. Might as well listen to the people that have correlated the ups and downs in the financial markets. For once! What else have you got to lose?

If we are to believe what they said, then this is the year. 2013! It’s going to happen according to them. The stock-market is ready to crash yet again this year and this time it’s going to be a big one. Let’s take a look at what was said, when, why and by whom.

1.       Charles Nenner 

Claimed in December 2010 that the crash would occur sometime either in 2013 or just after. Although, we might ask if that is called hedging one’s bets. Nenner is a stock market analyst, right? But three years ago he developed a correlational theory that expressed the stock market moves as being influenced by sunspots.

Anyone that wants to predict the downturn in the market will be able to consult the predictions of the sunspot cycle via That means, in fact, that sunspot cycles are predictions that will enable us to make further predictions about the economic cycle of the world. Yeah!

2.       Peter Schiff

Predicted that the bang would occur this year too. This is the guy, you will surely recall, that was poo-pooed because he said in 2007 that the stock market crash of 2008 would occur. We were told that the economy back then had never looked so good. Now, he’s predicting the crash of 2013. Can we afford to turn a blind eye to this one? There will be a huge US Dollar drop and Treasury bond crisis. He says that the banks won’t hold up this time. They have been shored up once before, and they have passed Federal-Reserve tests regarding their ability to cope in the event of a crisis. But, he adds that they are not ready to pass any stress test for viability over a Treasury bond crisis like the one that is lurking behind the Fed’s door this year. Shiff is one of the few that believes it’s 2013 and that things are nowhere near the happy-go-lucky mark that people are spouting on about.

Japanese Stocks Hit Bear Market