Death Knell for the Bull Market?


When will the bull market end? With money velocity collapsing and ominous divergences developing in both the NYSE Advance/Decline line and the New Highs/New Lows summation, U.S. stocks closed at an all-time high last week. If this were not disconcerting enough, the Hindenburg Omen, which signals an increased probability of a stock market crash, flashed red on Friday. There was also this unequivocal pronouncement from the Elliott Wave Theorist after the Dow Industrials came within a single point last week of fulfilling their long-term rally target at 17280: “Next week, the U.S. stock averages should begin their biggest decline ever.”  As for your editor,  Rick’s Picks has been drum-rolling a key “Hidden Pivot” target at 2028 in the S&P 500 Index that has been 27 years in coming. On Friday, the index hit a record 2019.

Is a major top at hand?  It is often said that bells do not ring to signal the end of a bull market. But if the broad averages were in fact to plummet in the weeks ahead, never forget that bells did indeed ring. Of course, permabulls and Wall Street managers charged with throwing Other People’s Money at stocks will not likely have noticed, so intent have they been on headlines proclaiming the soundness of America’s alleged economic recovery. Over the weekend, one such story that would have goosed their confidence to giddy new heights concerned the recovery of home prices in the exurbs.  To the OPM bozos, nothing says “recovery” like renewed growth in subprime mortgage debt.

Flashing Red

For those trying to decide the bullish/bearish case for themselves, let me add the opinions of three heavyweights in the guru world with whom I’ve corresponded over the years: Peter Eliades, Alan Newman and Bob Hoye. Hoye’s latest Pivotal Events insightfully answers the question of how the stock market could be going bonkers while the U.S. economy continues to languish:  “At the moment, cash hoarding is being used to explain another failure of interventionist theories that easy money forces GDP growth. Not when the public wants to speculate in financial assets such as now.”  Eliades — like Hoye, an analyst whose perspective on the markets stretches back not just decades, but centuries – notes in the latest issue of Stockmarket Cycles that the NYSE Advance-Decline line has failed since June to follow the broad averages higher – has in fact been falling since the beginning of August. This, he says, is “one of the fingerprints that accompanies important market highs that has been missing over the past year and longer.”

As for Newman, market watchers may recall that for years his Crosscurrents newsletter diligently tracked the dollar volume of all NYSE transactions versus the total dollar value of U.S. GDP. Over decades, the former has grown to several times the size of the latter, supporting Newman’s contention that the main business of America is no longer selling goods and services, but trading stocks. Now he sees a looming train wreck in the chart above, which shows 10-Day New Highs – New Lows for the combined NYSE, Nasdaq and S&P indices. “This could be the worst chart we’ve ever seen,” notes Newman in a bulletin sent out to subscribers over the weekend.  “All the major indexes made new highs on Friday.  For the S&P 500 and Dow Industrials,  all-time records.  For Nasdaq, the same level reached only two weeks before the final tech mania peak.  Yet, when you measure new highs minus new lows for the last ten day period, the sum is barely positive.  Fewer stocks are participating in this madness. Frankly, we do not understand how anyone in their right mind could be bullish on the prospects for stocks.  As far as we are concerned, this is a dreadful technical condition and we believe stocks are extremely vulnerable at this juncture.”

Odds of calling the exact top of a bull market that has been snaking its way higher for five-and-a-half years will never be great or even good no matter how savvy the forecaster.  Even so, investors who ignore the observations above do so at their great peril.

**The Bull Market’s End 2014**

  • mario September 28, 2014, 2:20 am

    Here’s another big “bingo” as I’d brought up in many past forums on the long term, expected shift in American society: The shift back to families living together or with roommates to save money and survive as is far more predominant in China/Asia…

    It is not hard at all to understand how Chinese households have so much cash. The spent the last twenty years living a lifestyle which created their ability to accumulate cash. It was simply a matter of priority, practical reality and mindset. And now we see the result. No surprise. We can see this shift as further confirmation that the American middle class dream society is long gone for a massive group in that society, now shifting their behavior accordingly.

    While we are the shift from the era of American hegemony to a global economic model with China’s increasing influence I won’t be so negative as to say “Rome is burning” , I’d rather say it’s morphing into a different creature altogether, very much integrated into the global economic system. I mean to say that the evolution of the global could be considered as both the problem and the saving grace of America’s economy and society. I don’t say this as a massive attempt to downplay America’s woes.

    Cheers, Mario

  • redwilldanaher September 26, 2014, 8:32 pm

    El Garo dodges another silver bullet…


    El Garo sent me a private e-mail with the subject header “Annoying, isn’t it” (I read no further than that), earning a suspension until 2015 rather than the original 30 days. RA

    • redwilldanaher September 27, 2014, 3:16 am
      • Redwilldanaher September 27, 2014, 9:09 pm

        Poor Garo, he doesn’t seem to know the first rule of hole recognition.

    • mario September 28, 2014, 2:01 am

      Great story Red, thx for posting… Actually reminds me of the exact pattern of behavior found in too many corporate cultures….people not speaking up for fear of pissing off the higherups, kowotowing to customers, etc, even though the situation is obviously out of whack. I was hired once as a consultant to work with the regional sales team of a large German multinational here, all the problems, most of which turned out to involved the very people who hired me and asked me to fix the other guys. Did my work, got paid, submitted my report and “never heard from them again” on the obviously needed followup I was paid to clarify… Typical and too common.

      Cheers, Mario

      • Redwilldanaher September 28, 2014, 2:48 pm

        Thanks Mario. This is obviously much worse since any reasonable person now must conclude that the fraud er uh Fed, and Gubmint colluding with the bankstsers is fact not conspiracy theory. Another broadside for Garo. He is having some rough times.

  • John Jay September 24, 2014, 4:09 pm

    “The poor sheep’s we all are stuck on their pasture…”

    Just add “dumb” after “poor” above and you ave nailed it!

    I am still laughing at the survey that discovered that 25% of Americans think the sun revolves around the earth.
    And another 25% just made a lucky guess.

    So not only are things not going to get better, as the Dark Ages take hold, and 7 billion people turns into 8 billion people………….
    Things can only get worse.

    Take away the technology that the enlightened few have enabled and the average human will be living right back in the 6th or 7th century AD.

    Disconcerting to say the least!

    • mava September 26, 2014, 7:18 am

      Here is a star for you! Almost nobody knows the true reason for the dark ages, but you have chosen your history books very well.

      • Oregon September 26, 2014, 4:09 pm

        The dark age happened because Al Gore hadn’t invented electricity yet.

        Can I get a star also?

      • John Jay September 27, 2014, 1:44 pm


        Very long story made very short:
        Imperial Rome declined from the Baths of Caracalla to cattle grazing in the ruins of the Roman Forum.
        We are well on our way there!

  • mava September 24, 2014, 5:44 am

    The more they ‘bail, the more paper they steal. The more they steal, the more they want to buy gold for themselves, and stash it away, because they know it is all just hot air.

    If this was not true, then it would totally be possible to live in a dream. The thing is, the reason that all fake things go up quickly, is because they contain just air, no hardship involved. And the other side of the same coin, the other side of the same stick is, the curse of their blessing, is that it is all built on air! Air doesn’t take a while to get out of the way, like, say, concrete (except on 9/11). So, when you rise on air, you also fall fast and hard.

  • Chas Caldwell September 24, 2014, 4:30 am

    ‘Ya Getting Nervous?’ – By Karl Denninger

    The ugly part of said empirical evidence is that there was never any reason to believe this “grand experiment” that began around 1980 would work because the desired outcome over the intermediate and longer term was and is mathematically impossible.

    The 1987 stock market crash followed the “boomlet” of credit expansion about two years earlier; when it folded back you got the market collapse. The 2000 Nasdaq crash followed the “boomlet” of the 1998-1999 credit expansion relative to GDP. And the 2008 collapse came, as was utterly predictable, from the 2003-2007 credit explosion — an explosion that reached seven times that of GDP expansion.

    We’re back at it again, by the way — since 2011. And, as has been the case previously, we are once again whistling along ignoring arithmetic, believing it will all be ok.

    It’s rather amusing to read what Bill has to say in this letter, because it is a raw admission that for the last 30 years, on the data, that the so-called “policy” has failed. Not that it might fail in the future, or that the future is uncertain, but that his entire thesis is bankrupt not only as I have asserted must be the case on the math, but it has also been demonstrated to be bankrupt through the last 30 years of actual experience.

    Buckle up folks.

  • Chas Caldwell September 24, 2014, 4:29 am

    The return of the stock market bubble – My Budget 360

  • Chas Caldwell September 24, 2014, 4:28 am

    Central Bankers from the World Over Warn of Impending ‘Perfect Storm’

    The language in the 2014 edition of the annual report is unusually direct with warnings that the world could be hurtling itself toward a new crisis. With a note of déjà vu, it claims the climate is now more fragile and volatile than the buildup to the Lehman Brothers crisis in 2007.

    The same old signs are there. Not much has changed. Debt levels remain high everywhere, encouraged by low interest rates. Dangerous new asset bubbles are forming.

    What makes this storm different is that it is not only the developed countries that are out of balance but emerging nations have joined the party. Debt ratios in the developed countries have now risen to as much as 275 percent of gross national product, while the emerging economies of China, Brazil, Turkey and others are gorging themselves on private credit booms of their own, increasing their debt ratio significantly.

  • Chas Caldwell September 24, 2014, 4:22 am

    This stock bubble is ‘beyond 1929 and 2007,’ says John Hussman

    And here’s where the Fed comes in. Investors are willing to abandon what some simple math might otherwise make obvious due to the role of the central bank in the markets. He writes:

    “The simple fact is that the primary driver of the market here is not valuation, or even fundamentals, but perception. The perception is that somehow the Federal Reserve has the power to keep the stock market in suspended and even diagonally advancing animation, and that zero interest rates offer “no choice” but to hold equities. Be careful here. What’s actually true is that the Fed has now created $4 trillion of idle currency and bank reserves that must be held by someone, and because investors perceive risky assets as having no risk, they have been willing to hold them in search of any near-term return greater than zero. What is actually true is that even an additional year of zero interest rates beyond present expectations would only be worth a roughly 4% bump to market valuations. Given the current perceptions of investors, the Federal Reserve can certainly postpone the collapse of this bubble, but only by making the eventual outcome that much worse.”

  • Baseball Bill September 24, 2014, 1:12 am

    Silver/gold, like the Oakland A’s, may just turn it around here. Then again, the A’s may miss the playoffs or win the World Series. I suppose that means anything can happen, right?

    The way I see it, if bank bailin’s are a real deal plan and some big insiders know what’s possible, then there is a floor under gold. The same gang crushing the price for their institutions and the US Dollar, may be accumulating in private and likely are. That should put a floor under gold if this scenario exists.

    Said another way.Right now gold is priced by Western Bankers, but these same bankers may see the end of their world control coming. I would say holding 30% of your net worth in physical metals is a no brainer, no matter what the “sentimate” is.

    • Chas Caldwell September 24, 2014, 4:24 am

      Metals will continue to plunge just as they have been doing for the past 3+ years across the board for both base and precious metals. Gold is on its way towards its mean of $456 per ounce and silver is on its way towards its mean of $8 per ounce.

      • mario September 24, 2014, 6:30 am

        Please refrain from duplicating your points in multiple posts in the same thread. It’s a simple protocol.

  • Buster September 23, 2014, 10:33 pm

    It looks like it’s time to watch & learn what a real sh%&storm looks like, Gary. I’m sure it’ll all manage to defy logic.
    Don’t say nobody warned you!

    Sincerely, best of luck to you & everyone else here whichever side of the fence one is sitting.

  • Andy Gutterman September 23, 2014, 1:49 am

    When silver was topping out it formed a picture perfect descending triangle. Measurement called for a drop to $2/oz. I read about the forecasts for $100 silver and wonder on what planet? What is supposed to drive the price higher?

    Today I cashed out of my USAA gold IRA. Wasn’t much in it, I got it for insurance purposes a few years back, just in case. But watching the price action in gold has me convinced it is going down, down, down. $750 or lower. Not much point in hanging on to a falling price.


  • Chas Caldwell September 23, 2014, 12:06 am


    Arends: Is the stock market at a greater risk than in 2000?

    Stocks may be more overpriced now than before the tech bubble burst

    You know how I reported that this is now the third biggest stock market bubble in U.S. history?

    I was wrong.

    By one way of looking at it, it isn’t the third biggest bubble at all.

    It may be the biggest.

    Yes, really. Bigger even than 1999-2000 – the daddy bear of all stock-market bubbles.


    That’s because the average overvaluation today may actually be higher than it was back then. There are fewer whacko bubble stocks – but there are also far fewer good-value stocks.

  • Jackson September 22, 2014, 8:21 pm

    All joking set aside. If a 27 year old pivot is in play for the stock market to top off going into long a term era of deflation then is it possible the same has happened with gold? Why can’t gold go down to a couple hundred dollars per ounce? 43 years in the making from $35 to $1900. Rick I’m just wondering, fundamentals set aside, isn’t it possible gold has finished the mother of all hail-marys?


    I must admit, Jackson, that I am conflicted about gold. Although I am confident that no matter what happens to the U.S. economy and the global financial system, gold will hold its purchasing power relative to all other classes of assets, the deflationist in me cannot see bullion prices going to the moon.

    • David Luck September 23, 2014, 2:55 pm

      when the dollar can longer be backed by lead, gold and silver will go asymptotic. That day is fast approaching

      • Craig September 23, 2014, 8:42 pm

        Ironically the all mighty US Dollar is backed by silver……as in the silver wiring in all the missile systems and missiles.

      • Chas Caldwell September 24, 2014, 4:21 am

        As to the value of the US dollar, it is now well above its 3 year high of 84.14 and will rapidly be soaring to above 90 and then above 100 on the DXY as the value of the euro (which is 57% of the weight of the DXY) continues to plunge back towards 1:1 parity with the US dollar which is essentially where it started out publicly when it made its debut in January 2012.

    • Chas Caldwell September 24, 2014, 4:19 am

      Gold will soon be well below its 3 year low of $1178 and rapidly headed towards and to its mean of $456 per ounce and then lower.

      • steve September 24, 2014, 5:49 am

        Gold will soon be well below its 3 year low of $1178 and rapidly headed towards and to its mean of $456 per ounce and then lower. 🙂 🙂 🙂

        Thanks for your tip.. When will Fruitcakes be on sale?

  • C.C. September 22, 2014, 7:46 pm

    Personally, I’m not in the least bit concerned about what goes on ~inside~ the confines of U.S. economics. The domestic front is covered and has been since 2008. Whatever needs to be done, will be done to maintain the system – or the appearance thereof. What cannot be ‘covered’ is our foreign policy abroad and what those actions may or will precipitate. In fact, those actions over the past 13 years have already precipitated the move. All that is left is military posturing, nuclear weaponry and the near-psychotic will of those in officialdom to maintain $hegemony. When one stops to think this over carefully, one can almost feel the desperation afoot.

    • John Jay September 22, 2014, 8:34 pm


      I agree.

      “Maintain the System”
      Another reason the Oligarchs have mandated Open Borders since 1965.
      1. Cheap votes
      2. Cheap labor
      3. Upward pressure on rents/Real Estate prices

      We can’t have the proles pay off a house in five or ten years!
      So simply maintain a constant flood of poor people into the US for decades.
      Keeps wages down, keeps house prices up.
      And the politicians get cheap votes.
      Everybody wins!
      Everybody that matters, that is.
      Maintain the System!

      • mario September 24, 2014, 6:26 am

        I always love you JJ. The poor sheep’s we all are stuck on their pasture…

        Cheers, Mario

  • John Jay September 22, 2014, 4:26 pm

    Isn’t the broader market of non SP 500 stocks already in a bear market?
    I think in addition to enriching the “Higher, Tighter, Righter Hands” that Poppy Bush spoke of, the FED has another mission.
    That is to keep this countries public and private pension funds from imploding.
    Ditto for the Real Estate market.
    With 10,000 Boomers a day turning 65 it is draw down time for all those pensions and annuities.
    They have got to keep the cash flowing even if it is in an increasingly debased currency.

    With everyone saying why doesn’t the FED/Government just give every American a check instead of bailing out the banks, there is your answer.
    They have been doing just that, more and more.

    In addition to Welfare, SSDI, and the rest of it, there are millions of people with government jobs that produce nothing.
    DC just passed a law forbidding the USPS to shut any facilities for another year.
    They are printing more and more money to stop an implosion that should have happened back when Nixon/LBJ took us off a Gold/Silver backed system.
    Printing money and printing debt.
    Same difference.

    If the SP 500 type stocks tank,’ bye bye Pension Funds/Insurance Annuities.
    That is how I see it.
    A FED induced bloated market is just a back door method of feeding money to retiring Boomers.
    If they let the Deflation Implosion hit housing and pension funds there will be serious consequences to say the least.

    No good options left.
    So they Print and Pray that the Romanov Moment does not arrive here.
    What else can they do, now that they have spent 50 years destroying this Country.

    Wow, silver is trading below the $18 level that held back in August 2010 that was the base for it’s lift off to $50.

    • Chas Caldwell September 23, 2014, 12:08 am

      There is a VAST OVER SUPPLY (OVERHANG) OF SILVER in the markets, Woody, and there is no denying that irrefutable fact which is clearly established in great detail above.

      Silver obviously has nothing whatsoever to do with money or currency. Most silver is PRODUCED AS A BYPRODUCT and the production costs for silver as as low as nearly zero per ounce and average cash costs for production are now around $7.50 per ounce..


      Silver inventory reaches 16-year high after worst rout since ’81 – Mineweb

      Silver Cash Costs $7.50

      Silver could easily plummet to $4 per ounce where it was in 2001.

      Silver is the most volatile of all of the metals and there is a VAST OVERSUPPLY OF THE STUFF.

      During the GREAT SILVER CRASH OF 1980-2001 the price of silver plummeted 90% from $50 an ounce in January 1980 to $4 per ounce in 2001.

      Historically, the price of silver for hundreds of years was around $1 an ounce and went up to around $2 per ounce before the manic metals speculation began in 1972.

      • steve September 23, 2014, 3:21 am

        Chas aren’t you usually trolling on Marketwatch?
        Gold back to its median price of $200?

      • mario September 23, 2014, 6:37 am

        yea Steve, this guys arrival here is not a happy moment…

    • Chas Caldwell September 24, 2014, 4:26 am

      No money is being “printed” at all for the US economy. 100% of the QE funds have always remained inside the Federal Reserve in the excess reserves accounts of the banks there and those banks had NO NET GAIN WHATSOEVER FROM QE. None of that money ever even entered the MONEY SUPPLY but only increased the MONETARY BASE, and meanwhile the VEOLOCITY of money in the US economy has plunged to record low levels meaning that the effective money supply in the US economy has actually DECREASED.

      • steve September 24, 2014, 5:45 am

        It was said that 90% of actual USD is located out of the USA. What is the % now? Since all that freshly printed $ is in the US wouldn’t that imply eventual (hyper)inflation?
        Gold is well onto its median price of $200 an ounce….. Fruitcake

      • mario September 24, 2014, 6:24 am

        This is how Chas will make you crazy. He’s right on this point about QE and money supply and its a very good point to be aware of. So he must be a pretty smart guy. Then the other Chas appears, the one that makes the most extreme, false, asinine assertions known to man and its WTF all over again.

  • Andy Gutterman September 22, 2014, 1:27 pm

    I don’t see the insane overvaluations or the frenzy of buying by the public or anyone else for that matter. The market just keeps going up as if the Law of Gravity was repealed. I follow trendlines and the like. The market has fooled me every time I think a trendline was broken.

    They work everywhere else, just not the indexes, which keep going higher. Gold recently broke its long term bullish trendline going back to 2002 to the downside, the dollar is at the downtrend line of tops today, poised to soar into infinity. Last time we had a soaring dollar we also had a soaring stock market.

    I’ve listened to Prechter, et all for more years than I want. The market is at a top, its at a top, its at a top….

    I suppose he will be right one day, what I’m waiting for is for him to throw in the towel. THEN we will get our top.

    At the same time I look at the rot that is America and wonder if I even live in the same world as the market players. My world sucks. Debt, debt, debt everywhere and everyone has it, more empty storefronts everywhere I look, fiscal decay on the state and local level, etc. What’s to like about the underlying economy that supports the lofty stock market?

    Nothing. Yet here we are, new highs almost daily. As short term interest rates continue to fall. FED raising rates next year? Not according to my information, courtesy of Prechter, et al. (He is right in so many ways but one, the stock market)

    Prechter’s favorite chart was the triple top going back to 2000. Guess what? Any way you draw the line, prices have broken through to the upside.

    Now what?

    Does ANY technical or fundamental indicator still work?

    How about this one: “The market tops when we least expect it”

    I’ll leave you to figure that one out.


    • mario September 22, 2014, 3:13 pm

      Andy, possibly helpful to you…. bone up on and pursue the Alibaba / TmallUSA thing that’s happening. Part of both Alibaba AND’s megaplan is to add massive U.S. products to their already insanely massive platforms… Its very powerful to put more U.S. products more and more at the fingertips of China consumers….figure out how you can get in there man, set up a site or whatever…

      Cheers, Mario

      • Chas Caldwell September 24, 2014, 4:17 am

        Alibaba is a NOTHING company which has very little actual value.

      • steve September 24, 2014, 5:40 am

        Alibaba is a NOTHING company which has very little actual value.

        You mean like Facebook, Amazon, Netflix, Ebay, Twitter, etc etc.
        Gold is well onto its median price of $200 an ounce…….. Fruitcake

      • mario September 24, 2014, 6:17 am

        Told ya gang!

      • Farmer September 24, 2014, 10:55 am

        You might be onto something Mario!

      • mario September 24, 2014, 11:38 am

        Chas, …pay….attention…please…lesson….this is me doing Rick’s work as a courtesy…Rules:

        DON”T EVER at this board write an assertion, let alone a rather outrageous one, without then SUPPORTING it like a rational human being, even if we might disagree. Here’s an example.

        BABA is the leading online offline organization of the world with billions in sales across multiple cross-connected platforms, that like Huawei and other big Chinese companies, is going global, growing at a blistering 50% revenue growth per year which it appears is not going to slow down soon, with the backing of billions and the support of the Chinese govt as an icon of China in the global economy, with profit margins over 40% on its revenue that would make any businessman drool. BABA is now expanding globally in diverse ways including its new TMallUSA platform to create a way for foreign products to get piped directly into China’s households, and they are the ones with all the money, as they actually have household income 2-3x higher than officially reported, and that would be 600 MILLION Chines who are on their smartphones buying stuff on some platform that Alibaba owns. Please let me repeat 600 MILLION households, not 100 million as in the U.S., and ALL of whom buy stuff on their smartphones. Hmm.

        BABA’s platform at the same time has a genuine problem with lots of products being fakes, copies, illegal and that might very well come back and bite them in the ass as the expand globally cuz other countries are much more serious about those violations than China where copying stuff to get ahead is like brushing your teeth. And finally, some are concerned about the structure of their IPO.

        Ergo, BABA is not NOTHING just maybe doesn’t quite work. Got it?

      • Andy Gutterman September 24, 2014, 1:59 pm


        Perhaps I’m missing something but I do not see listings of individual books on Alibaba or TmallUSA . This is what we specialize on, not wholesale.

        We cater to a niche market of small booksellers, online and off. By doing this we are able to run a business with just .4 employees. I’m .35 and my much younger brother is .05, yet we are the largest software company in the used, rare and antiquarian book trade specializing in database software for the desktop market.

        Looking at Alibaba all I see is management, lots of employees and a nightmare. We are poised to do quite well over the next few years without all the headaches of developing for the wholesale market.

        Am I missing something?



  • wolanchuk September 22, 2014, 12:53 pm

    Peter Eliades, Alan Newman and Bob Hoye. …..larry curley and moe….lmazoff…have you ever heard them bullish ever? …..and you call them heavy weights…you young writers know nothing. :>)


    In fact, yes, Don, I have “heard them bullish”. All three have been forecasting the markets since you were wet behind the ears. Like all forecasters — even you — they’ve had good years, and bad.

    What’s your market call here, by the way? If you’re bullish, as always, maybe your luck is about to run out.


  • Buster September 22, 2014, 7:31 am

    Are the markets just following a Sabbath cycle, as some have described? Big market corrections every Sabbath year seems to support their case. I won’t go into the list of apparently confirming prophecies that surround other than to say that these are very intriguing, ….& ominous. I won’t try to discount anything, but keep an open mind.

    Suffice to say, the Sabbath year is purported to begin on September 24th 2014, a time when all debts are supposed to be written off, unlike in our present Bankster run perpetual debt corrupted system.

    This coming Sabbath year takes us to September 2015, when a new 7 year Sabbath cycle begins. This coming cycle may well prove to be very interesting indeed, especially if yet another collapse has by then occurred.

    Though I’m skeptical, I can’t deny that there is some strong evidence of something going on here. Maybe something really going on! If I was a believer I’d be thinking that a real escape may be coming with a shout.
    For the sake of tortured humanity, the animals & the planet I certainly would hope so, even if the medicine may well be sour.
    I know nothing.
    Time will tell.


    Nice to see you back, Buster! RA

    • Buster September 23, 2014, 10:43 pm

      Always a pleasure, Rick.
      I’ll try to overcome my increasing despondency & hang in here as TSHTF over the next year.
      I sense it’s going to be ‘interesting’.

  • Oregon September 22, 2014, 7:22 am

    I don’t think we are near THE top. I agree with many others that we are closing in on a near term top followed by a significant correction, but with most countries in worse shape than the U.S. what choice do foreigners have but to buy chips in the worlds biggest casino. Americans are gun shy and many are not participating, but ask yourself, if you lived in Europe, Japan, Russia, S. America, would you keep your money in a bank? Hell no. Domestic debt? Doubtful.

    Crazy as it may seem, in a world of pigs we have the prettiest lipstick. The US dollar and US stocks are what people must trust right now, and this will continue for a while, until we crack and capital floods to China.

    .02, and that’s what it’s worth.


    You should check out my bull-market strategy for T-Bonds, Oregon. We’ve been buying out-of-the-money calendar spreads in TLT.

    • mario September 22, 2014, 3:09 pm

      Interesting Oregon…adding…

      1. the U.S. S&P500 index is very much a global index now, not a reflection of the “domestic” economy.
      2. China is being downright mean these days if you haven’t heard…there is a pattern of making life less easy for foreign companies and support/protectionism of domestic companies/brand/the domestic economy here. Its an obvious shift in priority/policy/attitude that has taken place over past year or so that is now being reported on quite broadly. China is outwardly globalizing now, economically speaking while now making China an even less attractive, confidence inspiring place for foreign money/business interests to flow into. One might suggest with rising economic power and the one with the most cash, they are getting arrogant.

      These are impactful issues in myriad ways. 1. rising U.S. exports to China continue growing strongly and important to the U.S. economy, wouldn’t want to see that stymied. 2. Trend in China which make itself less attractive only further encourage the manufacturing industry reshoring trend, also favorable to the U.S. economy.

      Meanwhile, I can’t say enough about how strong China private sector domestic economy is, led by the online/retail/mobile sector revolution. Its breathtaking, warts and all…

      Cheers, Mario

      • Chas Caldwell September 24, 2014, 4:15 am

        China is a TOTALLY INSOLVENT COUNTRY with the largest credit bubble in the history o0f the world and that credit / debt bubble is now imploding there.

      • mario September 24, 2014, 6:15 am

        Yes Chas I know, it’s ok. Really. China is about to collapse even though they have TRILLIONS.

        You and the other anti-China village idiot Gordon Chang should meet to commiserate together on it at one of the local Starbucks here WHERE YOU CAN’T GET A SEAT AT 3PM ON A TUESDAY. And That would be I suppose right after the steady 11% retail growth along with 1.5 million $25,000 cars purchased per month 70% of which are paid for in CASH , comes to an end.

      • Farmer September 24, 2014, 10:54 am

        We are all aware of China’s consumption growth model Mario but we also know that is being offset by real declines in GDP and rising unemployment. We should not mix the two ideas to suggest one disproves the other since they are opposite sides of the same coin where a larger share of household GDP is slowly being acquired by the population even as growth falters. This is seen as desirable where internally driven consumption and utilization of services and resources offset the former export driven model. On the issue of the Trillions….well those can only be spent once and relative to the size of the population and the growing social demands it is not nearly as much as most assume. China is following a similar pattern to many other countries from the past except that it has done so with more abandon where credit creation is concerned. It will not enjoy the huge current account surpluses indefinitely though, especially as exports decline as a share of the global economy, so the national savings of today must be spread out over many years in the future. I don’t agree with Chas that they are insolvent though! I think we can all agree that some adjustments are coming. China is landing. Whether that is going to be hard or soft is anybodies guess but there is no question some challenges lie ahead and the rest of us best be prepared. Most particularly where commodity pricing is concerned. I think it’s safe to say that Australia and that group of nations whose primary source of income is derived from commodities purchased by China had best start worrying now.

      • mario September 24, 2014, 11:23 am

        Well thought out comments Farmer, great. China is landing is the right short summary. Let me add a few points as you well noted. The internal balancing is part of the slowdown but it is working.
        1. Exports are now only 10% of GDP where they were 24% of GDP a few years back, yet actually exports/imports are doing quite ok. Now with trends like Alibaba (and other) big organizations going global through the online/smartphone/tech world, you will see further increased imports into China, (note: TmallUSA and similar projects) which is very good for the exporting countries, ie. The U.S. record rising exports to China and over 1 billion per year, 10% plus per year to 2013 exports of $118 billion, impressive and important for the U.S. economy.

        2. while at the same time the domestic private sector is now the largest % of GDP, continues growing and is more profitable than the other sectors (manufacturing, Agriculture/commodities.)

        3. I’ll always suggest folks underestimate the amount of cash Chinese have, both at the govt and household level. They have SO MUCH CASH Farmer. The guy on the street selling dumplings man, he has $200,000 in the bank and he stands there in his dumpy clothes frying dumplings on the street…Houdini would be proud.

        Sorry, I wrote a bit harshly above in other post, though I wasn’t personally insulting ! 🙂

        Cheers, Mario

      • Farmer September 24, 2014, 2:21 pm

        No problem Mario. I forgive quickly and don’t hold grudges. Actually I always liked you and have enjoyed your posts because you almost always make a good effort.

        My only real criticism is that sometimes you come across as a China apologist and go too far too minimize the obvious problems there. So I suppose I just wish you were more balanced and did not keep painting yourself in a corner with effusive defences.

        Meanwhile, my own views on China had softened in the past few years. I no longer see quite the same negative outcomes I once expected. Not that they do not have challenges ahead; they most certainly do. But rather that the worst of anticipated economic problems rarely materialize.

        What I tend to worry about more lately is the impact on commodity prices that will flow from reduced consumption and production in Asia. The rest of the world cannot avoid the bullet of falling prices resulting from decreased demand that are being experienced over there.

        This is leading invariably to a deflationary outcome exactly as Rick himself has warned many times in the past. The Chinese share of resource usage is just far too large for us to not conclude that as GDP there declines it will not have consequences for the rest of us.

        Indeed, China GDP has been in decline for more than five years already despite all the interventionist policies. How much worse might it have been had nothing been done? We can only wonder. The point though is that most watchers expect growth to keep falling for many more years to come which is hardly reassuring for the major resource exporters.

        I guess we just don’t know yet how it will end or if there is a tipping point that lies ahead. We might even infer that a genuine global expansion cannot materialize until China itself has its house in order again and burned off the excesses of the past.

        If so, we probably have a decade or more of a global slowdown ahead before we see light at the end of the tunnel.

  • Jackson September 22, 2014, 7:16 am


    Just another day in the markets. The next crash may be at hand but Armageddon it is not. Hard times bring good times.

  • VegasBob September 22, 2014, 6:20 am

    I read somewhere that 80% of corporate profit growth over the past 2 years is the result of refinancing higher-rate debt into lower-rate debt. That ship has sailed.

    For 6 weeks now the dollar index has been rising. That currency translation going to do serious damage to the 3rd quarter profits of multinationals with large overseas operations.

    And note, I’m not even going to make the claim that higher interest rates are coming – that would have a hugely negative effect on earnings as lower-rate corporate debt is refinanced into higher-rate debt. Like Rick, I seriously doubt that higher rates are in the offing any time soon.

    Absent a new orgy of subprime lending or blatant accounting fraud to goose the markets higher, I frankly don’t see how the markets keep going up…

    • mario September 22, 2014, 2:59 pm

      The new world manifesto driving the new world economic model is that interest rates CAN’T go up. I should type the world CAN’T 100x to emphasize the point.

      THAT is THE plague of the new world economic model which is now baked into every one of our economic realities. Don’t ask me who what how why they won’t, the bozos in charge will figure it out, they’ll do something else unprecedented and then something else unprecedented ad nauseum…

      Cheers, Mario

      • Chas Caldwell September 24, 2014, 4:14 am

        Interest rates have already soared throughout the US economy and all interest rates that affect the US economy are set in the bond markets with the 10 year US Treasury being the key benchmark rate and it is headed to over 3% very quickly. It really doesn’t matter a hoot what the Federal Reserve does with the only 2 interest rates thta they actually control.

      • steve September 24, 2014, 5:37 am

        Mario it seems you have made a new friend.
        Good luck 🙂

  • Clay September 22, 2014, 4:56 am

    “this is it Elizabeth, it’s the big one ” Yet another cry of wolf for the 599th time. But sooner or later someone will be right. I agree this may be the most elusive top in the history of the market so I’ll have to watch at least the first leg down whenever it happens and it may well happen tomorrow … But if the “big one” does come it should be a doozy. It may even set up the mother of all ab=cd patterns to short.


    Yes, Clay, sooner or later, all will be right. But it’s interesting to me that EWT, Peter Eliades and Alan Newman — and doubtless many other savvy technicians I’m not aware of — see egregious technical divergences developing that cannot persist.

    • mario September 22, 2014, 2:54 pm

      Lets lump in the same 40:1 leverage that existed in ’08 for good measure…

      From about 2 weeks ago I went short $1000 via SPXU 3x bear… I’m only down about 5% on it to date and going to maintain the position considering the issues….there’s always that chance that the market will continue and break out to fresh new highs like a horse out of the gate….but a number of reasons are piling up why that’s less likely…

      Cheers, Mario

      • Chas Caldwell September 24, 2014, 4:12 am

        There is also always the chance that pigs will fly, mario.

    • Farmer September 23, 2014, 2:11 pm

      You have made a convincing case today Rick. I have to admit that I had lost interest in the prospect of a market decline but the action of yesterday and this morning is offering some immediate confirmation. What convinces me are a plethora of related indicators of market strength. For example, the beaten down gold, silver and commodity markets as one example. Secondly that the dollar and Euro are in the midst of a major reversal. Third that we are in a seasonal high risk time and last that broad participation in the current stock price rise has become so thin and anemic. I cannot honestly say you will not be correct that we are on the verge of a long, long overdue correction. I just don’t have confidence to risk shorting it anymore!!!!!!

  • Frank September 22, 2014, 4:54 am

    A room full of guns is no good without a house full of bullets. Just sayin’…

  • David B. September 22, 2014, 4:49 am

    Debt, debt, and more debt. Keynesians have everybody believing that it’s a sign of recovery and prosperity. Meanwhile the Chinese are paying cash for future needs such as commodity producers.

    • Chas Caldwell September 23, 2014, 12:04 am

      The MOST EGREGIOUS MONEY PRINTERS AND CREDIT CREATORS IN THE WORLD ARE THE GOVERNMENTS OF JAPAN AND CHINA which make the US look like little old lady pikers in that regard.

      China is a ludicrous, laughable, and preposterous CREDIT BUBBLE WRECKAGE. The renminbi has ZERO CREDIBILITY AS A CURRENCY. Are you not aware that China “printed” $23 trillion in renminbi over the past 10 years and that China is BY FAR THE MOST EGREGIOUS MONEY PRINTER IN THE WORLD.

      During the same time that China increased its money supply by $23 TRILLION, the Federal Reserve only increased the MONETARY BASE (not the money supply) in the US by $3 trillion China’s economy is about HALF THE SIZE OF THE US.

      China has NO BANKING OPERATIONS IN THE US other than a single branch of the PBOC in New York with a very limited correspondent branch in Los Angeles.

      China created over $23 TRILLION IN NEW MONEY to do so making China by far the MOST EGREGIOUS MONEY PRINTER IN THE WORLD and they created an unprecedented debt bubble as a result of their unprecedented credit and money creation spree and it is now imploding.

      Fitch says China credit bubble unprecedented in modern world history

      What China did with credit and money creation over the past 10 years makes the US look like a bunch of little penny pinching pikers.

      China’s economy is a CATASTROPHIC DISASTER drowning in tens of trillions of dollars of BAD LOANS for which there is highly inadequate collateral and a TSUNAMI OF BANKRUPTCIES IMMINENT AND ALREADY HAPPENING.

      China’s Li Keqiang warns investors to prepare for wave of bankruptcies – Guardian

      How China Fooled The World (Full Documentary)

    • mario September 23, 2014, 6:36 am


      Chas… Yes it is ALSO true that China debt is very high thanks for the reminder.

      Meanwhile, “How China Fooled The World” is some of the worst negative biased crap on China I ever watched and it is a disgrace that people regard it as quality major media journalism

      Meanwhile, I have read your posts at Marketwatch…YOU ARE A LUNATIC. Rick, you have been warned…he is worse than Gary, mixing in truth with utter nonsense….please I beg you, do not start polluting this forum with your nonsense. Thankfully, Rick will ban you if you do…

      Cheers, Mario

      • Farmer September 23, 2014, 2:05 pm

        Mario, Chas may have gone overboard to make his point but there is more than a few seeds of truth in what he wrote. I don’t appreciate the capitalization’s and text shouting any more than you but banning him for taking a position contrary to your own (biased) China view is hardly the answer.

      • mario September 23, 2014, 4:20 pm

        You’ll see, Farmer….

      • Farmer September 23, 2014, 6:34 pm

        A credit event in China? Is that what you mean? Like when the Wealth Management Products begin defaulting and do not get support from the government? Like some of those Ponzi’s are doing precisely now as we speak and as real estate softens thus taking out the one primary plank supporting most of the credit creation in China to date? Is that what you mean?….OK, I will see.

      • steve September 24, 2014, 2:33 am

        Farmer you should go take a look at Marketwatch. This Fruitcake will comment on every story. And its always the same comment. “gold going to its median price of $200. Quickly sell it”
        If silver goes to $7.50 as claimed I’m sure he/she wouldn’t have a problem selling me 14 oz for less than $100.
        Gary disappears and Chas appears

      • Chas Caldwell September 24, 2014, 4:10 am

        Those are false assertions, Mario. Please name one single thing in my above analysis on China that is in any way incorrect in your opinion.

      • mario September 24, 2014, 6:01 am

        Whoever you are out there in the western world, feel free to hang on to your misunderstandings about China. While they have high debt, in myriad other ways their country their financial stem and their economic system are very different including the fact that they also HAVE trillions far above what others don’t have. You make the mistake of hanging your proverbial hat on 2-3 key points and reach totally incorrect conclusions, while by the way they continue on their economic rampage of buying up the PLANET.

        I am not going to debate it here further and I highly recommend if you want to understand what China is to access all my articles and posts in the archives and also articles at my tumblr author site and published on linkedin if you like.

        Cheers, Mario

      • Farmer September 24, 2014, 10:38 am

        OK Mario. Henceforth I shall stop reading anything from the BIS, the IMF, Goldman, the World Bank, Soc Gen, HSBC, Michael Pettis and dozens of well reputed economists and analysts who have all issued warnings on China. From now on I will only read what you say because you are the one guy in China who knows better than those with staff and resources to dig into the details. I won’t even pay heed to China’s Premiere who has himself warned of a credit bubble, real estate slowdown and falling GDP. What the hell would the Premiere of China know anyway.

      • mario September 24, 2014, 11:12 am

        Thank you Farmer, you finally got it right and I’m not kidding.

        What DOES Goldman and the IMF say about China…that it IS slowing down. Have I said otherwise? Today’s headline Goldman SLASHES China growth for 2015….SLASHES??….from 7.6 to 7.1 with 7.3 this year…that’s SLASHING? Grow up.

        Any idiot expects China’s growth to continue to steadily slow down toward 6% over the coming few years, how is that disastrous news? That’s point #1. Surely it IS a concern if that slowdown happens more strongly and/or quicker than expected.

        Point #2 is how all the same such organizations and most folks in general IGNORE the strength coming from China, which I have reported on accurately and often here. It would be unwise to ignore it.

        Real estate slowdown…again, SO WHAT? It is “an area of concern” not a DISASTER. AND as I said many times, and is now happening, it was expected and reasonable and normal to finally have a slowdown in the RE market here after a blistering ten years, followed by telling you that the govt offices/banks have MANY tools to play with to implement in the event that would happen, and that is exactly what they are doing now, as I had clearly told you they would, relaxing policies to support the market, policies which were EXTREMELY tight before regarding the RE market, much tighter than in the west. And for heaven’s sake, how many times do you need to be reminded that in the RE market here, there is loads more equity, with min 30 to 40% downpayments being required to even get a mortgage, not 5%, AND that in fact the majority of homes don’t even HAVE a mortgage.

        Why am I bothering to beat my head against the wall on these things, I’ve told you it all, the FACTS, before, whether the media wants to cover them or not because they don’t WANT to cover them and by the way, NONE of the organizations you name have ever reported that what I have reported to you here is NOT completely TRUE. Its not my problem that they don’t focus on these points and report them completely to deliver an unbiased view. That’s not my problem. Its for the reader to be wary that they have their underlying biased agendas while I do not. How utterly annoying to repeat myself on known realities.

        Finally, who is one of MY key sources for China analysis. CLSA. And who is their client?…Goldman and the other institutional investors. And what did Goldman just do…they reasonably lowered their growth forecast from the current 7.3% for 2014 to 7.1% to 2015. Oh no!!!! Chas needs to tell us the country is COLLAPSING…oh really, I want to vomit I am typing this to try and explain…

        Cheers, Mario

      • Farmer September 24, 2014, 1:52 pm

        Easy Mario. I didn’t think that modest sarcasm would make you totally snap. Maybe we can discuss recipes instead. My latest venture is candied and salted peanuts. Big favourite around the house. Better than the store bought stuff too. For the life of me I cannot figure out how to make a decent M&M’s copy though and trust me on this, I have really tried. You think the Chinese Premiere is a fan of nuts?

      • mario September 24, 2014, 2:17 pm

        🙂 truly, today I made a perfect sandwich and sent a photo of it to my friend in wechat…toasted buttered dark rye, a fat slice of melted sharp swiss, thick sliced tomato, mustard and a fried egg…it was heavenly 🙂

      • Farmer September 24, 2014, 8:06 pm

        Oh man! That sounds good to me. I live in an area of majority Muslim’s and Orthodox Christians and around here us Westerners would kill to get hold of bacon, ham and pork sausages. No luck though unless someone flies them in for me when they are visiting. The locals figure I am a sinner but I tell them they would give up religion after tasting pork. We do well with lamb though. It’s my substitute when I smoke the meat myself and fry it up with eggs. But it will NEVER truly be the bacon I know from home. Cheers!

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