A fall in the markets will hit everyone
Rick continues to think that we should see a hit to the markets that will impact everyone.
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” A Fall in the Markets Will Hit Everyone”
I believe there has NEVER been a time in the last 200 hundred years, when “everyone” has been hit.
So, is this time different?
People need to hedge correctly; diversify correctly.
The only thing that will hit everybody is a complete collapse.
For that only the stackers will have guess correctly, but the odds of a complete collapse in the US are not that high yet. We can muddle through a lot longer than most gloom and doomers think.
Thanks Rick for your time…………..OOTB
Off message – Hillary is just so funny where being criminal is now seen to be cute.
Rev Andy:
lord Acton had it right when it comes to Hillary…………………..
I say send Hillary to the Big House, not the White House.
Me too Dai Uy!
Rick so do you see gold fall a lot during big stock market decline if and when it happens and if so then do you also see dollar rising a lot during that same time frame as flight to safety trade? If you can explain why that would be appreciated.
Since Rick has not answered maybe I can throw in an answer stewie. Back in late 2008 when Lehman bankrupted the dollar took a great big face plant and sold off hard even as the DOW posted a record single day loss.
But that was primarily because the problems were associated with loss of confidence in the US financial and banking sector itself as all the Lehman debts and hypothecations came to light and the vast interconnections between all parts of the system send a shiver down the spines of investors pretty much all over the planet.
It was a remarkable time. But I don’t think anyone is expecting the next troubles to be so US centered nor do American financial houses look to be in the same kind of jeopardy.
With Lehman we did have plenty of early warning signs of trouble. Anyway, the dollar bounced right back by early 2009 once everyone came to their senses. My only point here is that today’s events are not like what we saw back then and I would therefore rule out a dollar decline as an outcome should stocks sell off.
Actually, I am not in the camp expecting a sudden crash either because of the make-up of the buyers of markets. I mean, it is primarily institutional’s, sovereign funds, Central Banks, Mutual and insurance, pension plans and the like. Retail and small private investors are pretty thin on the ground so there is more stability that would suggest a decline akin to China’s sudden bloodbath (dominated by farmers and housewives)are less likely.
Not that it cannot happen….and it certainly has in the past. But can you see a scenario that is on anyone’s mind these days suggesting US equities are about to fall hard over the course of a few days? I cannot and even the prospect of rising interest rates does not appear to pose systemic risks as did Lehman or the crash in US housing or 9/11 etc etc etc.
If anything, US markets have been very well prepared on policy objectives and the focus has been primarily on worries over Europe’s primary deflation trend and China’s panic adjustments as its stock market imploded and trade data came in at such dismal numbers.
There are precious few real worries in sight at this time though. Employment data is acceptable, inflation is low but looks as though it will tick up once commodities finally bottom, an interest rate hike has already been priced in by the market and on the political front we have just the usual distracting antics but no big worries.
I guess that leaves Black Swans……but as we already know, bad news is actually good news!
I am not meaning to suggest we get complacent by the way. We can all agree markets are high by many standards and we do know that internals have weakened as so many stocks are below major MA’s. But even with all we know and all the talk of various stock price metrics being misaligned that has still not precipitated a major (or even minor) sell off on the US indices. And on that basis there is still not a narrative that suggests any moonshots for precious metals. What is most interesting is how stable these markets appear even as we approach what is going to be more than a decade long lows in resource prices (on an index basis). So we have the entire market watching and waiting and there have been precious few fireworks. Even the rotational shift has yet to materialize in any significant way and my suspicion is many would prefer to wait and see if the 15 year bottom in the CRB actually breaks lower thus confirming a solid ongoing deflation trend. What I do not sense though is fear and loathing that usually accompanies market instability and confusion about policy initiatives. Nor is there unusual discord within the government on the economy or debt even though we are all aware of the problems we face down the road. Who knows….maybe this is merely the calm before the storm. I do know it is not helpful listening to some of the most shrill commentators who are doing us all a disservice but sowing panic and fear. Tune them out and US market waters look surprisingly placid.
I think another of the tell-tale signs of market intervention in the US, other than a vertical sudden change, is a substantial difference in behavior of the TSX compared to the NYSE not caused by currency fluctuation.
E.g. today, both markets opened down.
The NYSE took a sudden jump up (manipulation most probably)
The TSX did no sudden jump up; in fact it is only now beginning to drift upwards, although still down.
(One has to be careful comparing the TSX (commodity dependent) with the NYSE, because of the difference in their compositions, but this appears to provide a secondary analysis to see if manipulation is concurring. )
Darn! spell incorrecting again! not concurring, but occurring.
Who wants to be FRONT RAN……..just asking……….OOTB