We Have Reached the Terminus, The Stock Market Is Breaking Down, With The Small-Caps and Transports Severely Underperforming… James Turk – Unspeakable Financial Destruction Is Headed Our Way
Doug Kass says the same thing today, pointing to “subsurface weakness” in the market.
Here are a few points Kass highlights in his note:
The Russell 2000 underperformed on Monday (-1.3%) and was down (-0.5%) on an up day on Tuesday.
The advance/decline line is eroding as the market’s rise narrows.
Breadth disappointed – yesterday, NYSE decliners eclipsed advancing issues by over 200, excluding ETFs and fixed-income closed-end funds.
The number of new 52-week highs is narrowing.
The bank stocks/brokerages are lagging.
Transports trailed, down 1.5% and 1.2% on the first two days of the week, respectively — check out the chart of FedEx (FDX).
Semis got schmeissed (-2.0% on Monday and -0.8% on Tuesday).
The cyclical index dropped by -0.7% on Tuesday, following a 1.2% decline on Monday — check out the chart of Caterpillar (CAT).
The yield on the 10-year U.S. note remains low (1.86%) and is signaling slowing domestic economic growth — speaking of the bond market, this week brought a continued disconnect between Treasury note and bond yields (lower by 3 to 4 basis points) compared to the market averages (slightly higher in price).
The screeching coming from CNBS and elsewhere this morning is amusing.
There’s only one chart that matters, and it will, when recognized, blow up the stock market — sending it down 50% or more.
It’s this one:
That’s it. And the ADP report this morning is showing the pathway to recognition, as construction has stalled and the destruction of job creation in small and mid-sized businesses exposed to Obamacare will finish it off.
I continue to maintain that we’re in a time very similar to 2007, when the facts were on the table. Banks paying dividends with money they didn’t have. Hedge funds that blow. Bubbles in crazy places, then housing, this time in subprime car lending, student loans and even Bitcon.
The transports are telling you that all is not well. CAT is confirming it. Copper is warning that we’re in deep trouble internationally, and irrespective of the claim that “America benefits from everyone else’s pain” that’s only partially true – in the end earnings are what drive stock prices, and the red flags are waving at warp speed on earnings.
To go along with this are rail car loadings. The trouble here is that baseline is in a serious downtrend — and after halting its decline from 2008 to 2009 over the last year it has slid severely once more. There will be those who argue that this is “no big deal”; I disagree.
The reason for this is because they are getting ready for bigger bank failures. The Dutch EU minister said taking depositor money is going to be the template throughout the EU, which should send shivers up the spine of everyone, whether or not they have money on deposit in a bank.
As if that were not enough, this Friday, Argentina is probably going to default on billions of dollars it owes banks. When this year began, I was saying that we will a see another Lehman-type collapse in 2013. Cyprus is the tremor, but the real earthquake isn’t far away.
from Russia Today:
Enough is enough for the Cypriot finance minister – Michalis Sarris has handed in his notice, after securing the 10-billion-euro bailout that will see savers in two major banks pay the bill. The finger-pointing’s far from over though – as the island tries to establish who’s to blame for the country’s economic meltdown.
Eric King: “If you are in the shoes of the central planners here, Jim, what are you executing today and why are you executing this? For what purpose?”
Sinclair: “I want the general financial public to accept ‘bail-ins’ as a valid method of approaching further banking problems, which I want to the public to believe will not occur. In order to accomplish that, those items which trigger an alarm must be muted.
We live in an alarm-less society. Since Bretton Woods we’ve removed every single economic crisis alarm in currency, bond, and in fact all of our key markets….
by Greg Hunter, USAWatchdog:
Economist John Williams says don’t be fooled by the new highs on the Dow. Williams contends, “The economy is still in serious trouble. The banking system is still in serious trouble. The budget deficit is exploding out of control.” Williams thinks the ongoing banking crisis in Cyprus has global implications.
Williams says, “You have a precedence set in Cyprus that they can seize the funds. They will not guarantee all deposits. If that’s the case, you may have a much worse crisis than you had back in 2008.” Williams adds, “The big problem is the government is insolvent in the long term.” Williams says the U.S. dollar could start selling off in May because of a deadlock in Congress on the budget. Williams predicts, “The global markets are looking for the U.S. to address its long term sovereign solvency issues. That’s not going to happen. . . . In response, it’s going to be off to the races with a dollar sell-off. That could be the trigger for the early stages of hyperinflation.”
“It’s likely that they will next take the pension plans and the 401k’s…” – Jim Rogers
All Markets at the Cusp (McAlvany audio)
With colleges producing more graduates, and youth unemployment at a sky-high 11.5 percent, even landing a job selling Big Macs is getting competitive.
Consider: A job opening at a Massachusetts McDonald’s restaurant for a full-time cashier requires one to two years experience and a bachelor’s degree.
“Get a weekly paycheck with a side order of food, folks and fun,” offered McDonalds.