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Legendary Investor Jim Rogers Warns That The Worst Stock Market Crash In Your Lifetime Is Coming ‘This Year Or Next’ June 11, 2017

If Jim Rogers is right, the worst stock market crash that any of us has ever seen is right around the corner.  For the past 15 years, Rogers has been a frequent guest analyst on CNBC, Fox News and elsewhere, and he is immensely respected for the depth of knowledge and experience that he brings to the table.  So the fact that he is warning that we are about to see the worst stock market crash in any of our lifetimes is making a lot of waves in the financial community.  And of course Rogers is far from alone.  Previously, I have written about several other prominent experts that are warning that a new financial crisis is imminent, and I have also discussed how a number of big investors are quietly positioning themselves to make an enormous amount of money when the markets crash.  Could it be possible that all of these incredibly sharp minds could be wrong?  Yes, but I wouldn’t bet on it.

I was actually quite stunned when I first learned what Jim Rogers had told Henry Blodget of Business Insider during a recent interview.  Rogers has built up a tremendous amount of credibility, but now he is putting that credibility on the line by warning that a great stock market crash will happen by the end of next year.  Here is the key portion of the interview

Blodget: Well, yeah, TV ratings do seem to go up during crashes, but then they completely disappear when everyone is obliterated, so no one is hoping for that. So when is this going to happen?

Rogers: Later this year or next.

Blodget: Later this year or next?

Rogers: Yeah, yeah, yeah. Write it down.

There is no backing out of a statement like that.

If Rogers is wrong, he will never hear the end of it.

Subsequently, Blodget and Rogers also discussed how severe the coming crisis would be…

Blodget: And how big a crash could we be looking at?

Rogers: It’s going to be the worst in your lifetime.

Blodget: I’ve had some pretty big ones in my lifetime.

Rogers: It’s going to be the biggest in my lifetime, and I’m older than you. No, it’s going to be serious stuff.

So that means that Rogers is convinced that the coming crisis is going to be even worse than what we went through in 2008.

Of course this is something that I have been warning about for quite a while, but for Jim Rogers to make a statement like this is a really, really big deal.

Later in the interview, Rogers shared more details about what he believes the coming crisis will look like…

You’re going to see governments fail. You’re going to see countries fail, this time around. Iceland failed last time. Other countries fail. You’re going to see more of that.

You’re going to see parties disappear. You’re going to see institutions that have been around for a long time — Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.

That definitely sounds like an “economic collapse” to me.  Of course the truth is that the U.S. economy is already in the midst of a slow-motion economic collapse that stretches back for decades, but this coming crisis that Rogers is talking about is going to great accelerate matters.

Let us hope that it is put off for as long as possible, but at some point we are simply going to run out of time.

And when markets do start falling, they can move very, very rapidly.  Just look at what happened on Friday.  Technology sector stocks were down 2.7 percent, and the FAANG stocks were some of the biggest movers

Facebook fell $5.11, or 3.3%, to $149.60.

Apple fell $6.01, or 3.9%, to $148.90.

Amazon fell $31.96, or 3.2%, to $978.31 now demoted from the elect group for 4-digit stocks back to the large group of 3-digit stocks.

Netflix plunged $7.85, or 4.7%, to $158.20.

Alphabet – the G in FAANG – fell $33.58, or 3.4%, to $952.23, moving further away from everyone’s dream of closing at $1,000.

If we are indeed moving toward a new crisis, one of the things that we will want to watch for is an inverting of the yield curve.

We saw this happen in 2000 and in 2006, and on both occasions it foreshadowed that a huge stock market crash was coming in the not too distant future.

Unfortunately, CNBC says that a new inversion of the yield curve could happen “by the end of this year”…

The bounce in Treasury yields witnessed after the election of Donald Trump is now decaying in the D.C. swamp. If the Federal Reserve continues to ignore this slow growth and deflationary signal from the bond market and continues along its current rate hiking path, the yield curve will invert by the end of this year and an equity market plunge and a recession is sure to follow.

An inverted yield curve, which has correctly predicted the last seven recessions going back to the late 1960’s, occurs when short-term interest rates yield more than longer-term rates. Why is an inverted yield curve so crucial in determining the direction of markets and the economy? Because when bank assets (longer-duration loans) generate less income than bank liabilities (short-term deposits), the incentive to make new loans dries up along with the money supply. And when asset bubbles are starved of that monetary fuel they burst. The severity of the recession depends on the intensity of the asset bubbles in existence prior to the inversion.

Another key indicator is the growth of commercial and industrial loans. According to Zero Hedge, this indicator has correctly foreshadowed every single recession since 1960…

While many “conventional” indicators of US economic vibrancy and strength have lost their informational and predictive value over the past decade (GDP fluctuates erratically especially in Q1, employment is the lowest this century yet real wage growth is non-existent, inflation remains under the Fed’s target despite its $4.5 trillion balance sheet and so on), one indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon.

So considering the fact that this indicator has been so accurate, it is extremely alarming that we could see our “first negative loan growth” since the last financial crisis “in roughly 4 to 6 weeks”

After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011 – after slowing to 2.3% and 1.8% in the previous two weeks.

Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks.

And when you throw in all of the other signs that the U.S. economy is slowing down, a very clear picture begins to emerge.

It has been said that those that do not learn from history are doomed to repeat it.  As a society, we certainly didn’t learn much from the horrible financial disaster of 2008, and now so many of the exact same patterns are repeating once again.

An unprecedented financial crisis is most definitely heading our way, and the only thing left to be answered is how soon it will get here.

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Why Are So Many Big Investors Positioning Themselves To Make Giant Amounts Of Money If The Stock Market Crashes? June 5, 2017

I keep hearing from people that think that the stock market is going to crash by the end of the year.  Hopefully that will not happen, but the ridiculous stock prices that we are seeing right now certainly cannot last forever.  On Sunday, I was chatting with a friend that had just been to a financial conference.  He was quite surprised that one of the things being taught to the attendees of this conference was how to position themselves to make an enormous amount of money when the stock market crashes dramatically in the near future.  Markets tend to go down a lot faster than they go up, and so when the inevitable market crash does take place those that have made large bets against the market will make huge fortunes.  It happened in 2008, and it will happen again.  But it was unsettling to my friend Robert that there were so many people that were gleefully looking forward to this.

Of course some of the biggest names in the investing world are also anticipating a major downturn very soon.  I have previously written about how Warren Buffett’s Berkshire Hathaway Inc. is sitting on a pile of 86 billion dollars in cash right now.  Nobody ever knows exactly what Buffett is thinking, but it isn’t too hard to figure out that he plans to use those billions to buy up stocks for a song after a big market crash happens.

I have also previously written about many other big names throughout the financial world that are warning that a new financial crisis is imminent.  The last time I saw so many prominent investors sounding the alarm was just before the market crash of 2008, but most people didn’t listen that time around either.

And of course those that believe that a market crash is coming are doing a lot more than just talking about it.  According to Zero Hedge, there are now more short positions betting against the Russell 2000 than we have seen at any time in the last six years…

The Russell 2000 Index posted a 2.2% decline in May, its worst month since October, and it appears a large swath of investors is now betting it has further to fall.

As Bloomberg notes, hedge funds and other major speculators have a combined net short position of 73,030 contracts in the small-cap index’s futures, according to the latest data from the Commodity Futures Trading Commission.

Russell 2000 sentiment has sharply declined since January, when future contract positioning reached record bullishness. It’s now the most short since May 2011.

The last time investors were this short the Russell 2000, it fell by almost 30 percent.

Can we expect something similar this time?

We will just have to wait and see.

Meanwhile, there has also been a surge in the number of investors betting that we will soon see increased market volatility

As Bloomberg notes, with the VIX down more than 30% this year through the end of last week, investors have been using options to bet on volatility.

As the chart above shows, the volume of contracts wagering on a resurgence of market turmoil has reached its highest level since last February relative to those calling for a drop in price movements.

Because markets tend to go down much faster than they go up, most of those that bet on increased volatility are typically doing so because they believe that a stock market crash is coming very soon.

And it is also interesting to note that hedge funds are jumping into gold at a rate that we have not seen since 2007

Hedge funds are jumping back into gold.

Money managers boosted their long positions in U.S. futures by the most in almost a decade in the week ended May 23, Commodity Futures Trading Commission data show.

Gold is a safe haven asset, and it is a very good place to be during a major financial crisis.  So if hedge funds are anticipating that we are on the verge of a major market downturn, it would make sense for them to be piling into gold.

All of the moves that I have discussed above will end up looking quite foolish if stocks just keep going up and up and up.

But if the market crashes, those that have positioned themselves ahead of time will end up making a killing.

Today the stock market bears absolutely no resemblance to economic reality, but at some point that will change.  And with each passing day we just continue to get more bad economic news.

Yesterday, I showed that according to official U.S. government figures there are 102 million working age Americans that do not have a job right now.  Today, we got more confirmation that the U.S. economy is slowing down.  We learned that new vehicle sales fell on a year-over-year basis for the fifth month in a row in May, and we learned that factory orders and new orders for durable goods both declined last month.  And for a lot more numbers just like those, please see this article.

The U.S. economy is not “healthy” and it hasn’t been for a very long time.  Because we have shipped so many jobs overseas, manufacturing’s share of U.S. employment has fallen to an all-time record low.  The middle class is shrinking, and somewhere around two-thirds of the country is living paycheck to paycheck.  We have been able to maintain our national standard of living by going on the greatest debt binge of all time, but every additional dollar of debt that we take on makes our long-term outlook even worse.

Just because he is living in the White House does not mean that Donald Trump can automatically turn things around.  Without the help of Congress, he cannot cut taxes, repeal Obamacare, eliminate unnecessary federal agencies or implement many of the other items on his economic agenda.

And the truth is that because of the way that our system is structured, the Federal Reserve actually has much, much more power over the economy than Donald Trump does.  When the financial markets crash and we officially enter the next recession, most of the blame will be placed on Trump, but it won’t be his fault.  Instead, it will be primarily the Federal Reserve’s fault, and we need to educate the American people about this ahead of time.

What goes up must come down, and this irrational stock bubble has been living on borrowed time for quite a while now.

It isn’t going to take much to push things over the edge, and there are all sorts of candidates for what the next “trigger event” will be.

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Are We Being Set Up For A Crash? Stocks Hit A Level Only Seen During The Bubbles Of 1929, 2000 And 2007 December 8, 2016

stock-market-overvalued-public-domainWill the financial bubble that has been rapidly growing ever since Donald Trump won the election suddenly be popped once he takes office?  Could it be possible that we are being set up for a horrible financial crash that he will ultimately be blamed for?  Yesterday, I shared my thoughts on the incredible euphoria that we have seen since Donald Trump’s surprise victory on November 8th.  The U.S. dollar has been surging, companies are announcing that they are bringing jobs back to the U.S., and we are witnessing perhaps the greatest post-election stock market rally in Wall Street history.  In fact, the Dow, the Nasdaq and the S&P 500 all set new all-time record highs again on Thursday.  What we are seeing is absolutely unprecedented, and many believe that the good times will continue to roll as we head into 2017.

What has been most surprising to me is how well the stocks of the big Wall Street banks have been doing.  It is no secret that those banks poured a tremendous amount of money into Hillary Clinton’s campaign, and Donald Trump had some tough things to say about them leading up to election day.

So you wouldn’t think that it would be particularly good news for those banks that Trump won the election.  However, we seem to be living in “Bizarro World” at the moment, and in so many ways things are happening exactly the opposite of what we would expect.  Since Trump’s victory, all of the big banking stocks have been skyrocketing

Financial stocks in particular have been on fire. Citigroup (C) and JPMorgan Chase (JPM) are up about 20% since Donald Trump defeated Hillary Clinton — and that makes them laggards!

Morgan Stanley (MS) has gained more than 25%. So has troubled Wells Fargo (WFC), despite the lingering fallout from its fake account scandal. Bank of America (BAC) is up more than 30%.

And so is Goldman Sachs (GS) — the former employer of both Treasury Secretary nominee Steven Mnuchin and Trump chief strategist Steve Bannon.

But are these stock prices justified by the fundamentals?

Of course not, but during times of euphoria the fundamentals never seem to matter much.  Stocks were incredibly overvalued before the election, and now they are ridiculously overvalued.

Earlier today, a CNBC article pointed out that the cyclically-adjusted price to earnings ratio has only been higher than it is today at three points in our history…

“The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble,” Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.

Newman said even if the market’s earnings increase by 10 percent under Trump’s policies “we’re still dealing with the same picture, overvaluation on a very grand scale.”

And of course a historic stock market crash immediately followed each of those three bubbles.

So are we being set up for a huge crash in early 2017?

There are some out there that believe that this is purposely being orchestrated.  For example, Mike Adams of Natural News believes that the markets “will be deliberately and destructively imploded under President Trump”

Right now, the U.S. stock market is surging, with the Dow leaping toward 20,000, a number rooted in fiscal insanity and delusional expectations. There are no fundamentals that support a 20,000 Dow, but fundamentals have long since ceased to matter in a financial world hyperventilating on debt fumes while hallucinating about utopian economic models that will soon prove to generate fools instead of real wealth.

Today I’m going on the record with a prediction that I’ll offer with near absolute certainty: The rigged markets that now seem to defy gravity will be deliberately and destructively imploded under President Trump for all the obvious reasons. There will be financial chaos like we’ve never seen before: Investors leaping off tall buildings, banks declaring extended “holidays” that freeze transactions, and California pensioners slitting their wrists after they discover their promised pension funds were just vaporized by incompetent bureaucrats.

On the other hand, there are others that believe that Trump is just walking into a very bad situation and that a crash would be inevitable no matter who was president.

History tells us that there is no possible way that stock prices can stay at this irrational level indefinitely.  But for now a wave of optimism is sweeping the nation, and many of those that are caught up in it will get seriously angry with you if you try to inject a dose of reality into the conversation.

But like I said yesterday, let’s hope that the optimists are correct.  A survey that was just taken of 600 business executives found that 62 percent of them were optimistic about the U.S. economy over the next 12 months.

Incredibly, that number was sitting at just 38 percent the previous quarter.

For the moment, business leaders seem to be quite thrilled that we have a business executive in the White House.

Hopefully Donald Trump’s business experience will translate well to his new position.  And it is certainly my hope that he is as successful as possible.

But even during the campaign Trump talked about how stocks were in a giant bubble, and the euphoria that we have seen since his election victory has just made that bubble even larger.

Throughout U.S. history, every giant financial bubble has always ended very badly, and this time around will not be any exception.

Trump may get the blame for it when it bursts, but the truth is that the conditions for the coming crisis have been building for a very, very long time.

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