"My daughter asked me when
she came home from school, “What’s the financial crisis?” and I said, it’s
something that happens every five to seven years."
Jamie Dimon, US CEO of JP Morgan Chase
Robo traders 10 Fed
Plunge Protection Team 0.
The above says it
all. The rent seeking robo traders routed one and all. Whatever it’s called it’s
not capitalism. Central bankster fuelled financialised gambling perhaps, another
unintended consequence of the Great Nixonian Error of Fiat Money. If the
collateral damage spills over into the remaining real economy, the tail has
taken over wagging the dog.
Below, how misplaced
hopium turned into despair. There was no hiding place. Did Goldilocks just get eaten by the three bears?
So is it the long overdue bout of reality and a correction, or the start of a massive rotation out of stocks as global interest rates start to normalise? Will stocks round trip if it is? Well they won’t round trip in a matter of days, but months if not years, but the immediate concern is how much financial damage was caused, and did it give rise to the next Lehman? In the next 30 days we will likely find out. Next though, the dead cat bounce.
So is it the long overdue bout of reality and a correction, or the start of a massive rotation out of stocks as global interest rates start to normalise? Will stocks round trip if it is? Well they won’t round trip in a matter of days, but months if not years, but the immediate concern is how much financial damage was caused, and did it give rise to the next Lehman? In the next 30 days we will likely find out. Next though, the dead cat bounce.
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
February 6, 2018 / 12:19 AM
Stocks crumble in vicious sell-off as 'goldilocks' trade unravels
TOKYO
(Reuters) - A rout in global equities deepened in Asia on Tuesday as inflation
worries gripped financial markets, sending U.S. stock futures sinking further
into the red after Wall Street suffered its biggest decline since 2011 in a
vicious sell-off.
S&P mini futures fell as much as 3.0 percent to four-month lows in
Asia, extending their losses from the record peak hit just over a week ago to
12 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 4.3
percent, which would be its biggest fall since the yuan devaluation shock in
August 2015, turning red on the year for the first time in 2018.
Japan’s Nikkei dived 6.8 percent to near four-month lows while Taiwan
shares lost 5.5 percent and Hong Kong’s Hang Seng Index dropped 4.9 percent.
Monday’s stock market rout left two of the most popular exchange-traded
products that investors use to benefit from calm rather than volatile
conditions facing potential liquidation, market participants said.
The ructions in markets come after investors have ridden a nearly
nine-year bull run, with low global rates sparking a revival in economic growth
and bright corporate earnings.
That good times may be nearing at end if Wall Street is anything to go
by. U.S. stocks plunged in highly volatile trading on Monday, with the Dow
industrials falling nearly 1,600 points during the session, its biggest
intraday decline in history, as investors grappled with rising bond yields and
potentially higher inflation.
----Before Monday’s fall, the index had not seen a pullback of more than 5 percent for more than 400 sessions, which analysts said was the longest such streak in history.
“Since last autumn, investors had been betting on the goldilocks economy
- solid economic expansion, improving corporate earnings and stable inflation.
But the tide seems to have changed,” said Norihiro Fujito, senior investment
strategist at Mitsubishi UFJ Morgan Stanley Securities.
The trigger for the sell-off was a sharp rise in U.S. bond yields
following Friday’s data that showed U.S. wages increasing at the fastest pace
since 2009, raising the alarm about higher inflation and with it potentially
higher interest rates.
More
U.S. Stocks Sink Most Since 2011 as Rout Deepens: Markets Wrap
By Sarah Ponczek and Jeremy Herron
Updated on 5 February 2018, 21:05 GMT
U.S. stocks plunged the most in 6 1/2 years, with the Dow
Jones Industrial Average sinking more than 1,100 points, as the equity selloff
reached a fever pitch amid rising concern that inflation will force interest
rates higher. Treasuries rallied and gold rose on haven demand.
Volatility roared back into American equity markets, as the S&P 500
Index sank 4.1 percent to wipe out its January gain and turn lower on the year.
The index capped its worst day since the U.S. lost its pristine credit rating,
topping the rout that followed China’s shock devaluation of the yuan, the
Brexit selloff and jitters heading into the presidential election. Trading
volume was almost double the 30-day average. All but two stocks in the broad
gauge declined.
“This is classic risk off that may not end any time soon,” says Win
Thin, head of emerging-market currency strategy at Brown Brothers Harriman.
Selling accelerated shortly after 3 p.m. in New York, with the Dow
sinking more than 800 points in a matter of 15 minutes only to snap back. The
blue-chip index ended lower by 4.6 percent -- its steepest drop since August
2011, and is also lower for the year. The Cboe Volatility Index more than
doubled to its highest level in 2 1/2 years.
Treasuries popped, sending the 10-year yield down more than 10 basis
points, and gold future pushed higher. The dollar stabilized while the yen
advanced.
While Friday’s market rout came amid U.S. wage data on Friday that
pointed to quickening inflation, which would lead to higher rates and, in turn,
rising borrowing costs for companies, the selling Monday came amid few major
data points.
“I think sentiment was a little too optimistic,” said Brad McMillan,
chief investment officer for Commonwealth Financial Network. “What was driving
the market up in January? It wasn’t the fundamentals, as good as they were, it
was excessive confidence.”
Elsewhere, oil extended declines after U.S. explorers raised the number
of rigs drilling for crude to the most since August. Copper climbed the most in
a week. Bitcoin slid below $7,000.
More
Machines Had Their Fingerprints All Over a Dow Rout for the Ages
By Sarah Ponczek, Elena Popina and Lu Wang
Updated on 6 February 2018, 00:31 GMT
- Selling pushed the Dow down about 900 points in 10 minutes
- Rout was the worst for U.S. equities since August 2011
Risk
parity funds. Volatility-targeting programs. Statistical arbitrage.
Sometimes the U.S. stock market seems like a giant science project, one that
can quickly turn hazardous for its human inhabitants.
You didn’t need an engineering degree to tell something was
amiss Monday. While it’s impossible to say for sure what was at work when the
Dow Jones Industrial Average fell as much as 1,597 points, the worst part of
the downdraft felt to many like the machines run amok. For 15 harrowing minutes
just after 3 p.m. in New York a deluge of sell orders came so fast that it
seemed like nothing breathing could’ve been responsible.
The result was a gut check of epic proportion for investors, who before
last week had been riding one of the most peaceful market advances ever seen.
The S&P 500, which last week capped a record streak of never falling more
than 3 percent from any past point, ended the day down 4.1 percent, bringing
its loss since last Monday to 7.8 percent.
“We are proactively calling up our clients and discussing that a
1,600-point intraday drop is due more to algorithms and high-frequency quant
trading than macro events or humans running swiftly to the nearest fire exit,”
said Jon Ulin, of Ulin & Co. Wealth Management in Boca Raton, Fla., in an
email.
More
Bitcoin Tumbles Almost 20% as Crypto Backlash Accelerates
By Olga Kharif
Bitcoin tumbled for a fifth day, dropping below $7,000 for the first
time since November and leading other digital tokens lower, as a backlash by
banks and government regulators against the speculative frenzy that drove
cryptocurrencies to dizzying heights last year picks up steam.
The biggest digital currency sank as much as 22 percent to $6,579,
before trading at $7,054 as of 4:08 p.m. in New York, according to composite
Bloomberg pricing. It has erased about 65 percent of its value from a record
high $19,511 in December. Rival coins also retreated on Monday, with Ripple
losing as much as 21 percent and Ethereum and Litecoin also weaker.
----SEC Chairman Jay Clayton said he supports efforts to bring clarity to cryptocurrency issues and that existing rules weren’t designed with such trading in mind, according to prepared remarks for a Senate Banking Committee hearing Tuesday on virtual currencies.
Bitcoin’s longest run of losses since Christmas day has coincided with investors exiting risky assets across the board, with stocks retreating globally. Bitcoin so far seems to be struggling to live up to any comparison with gold as a store of value, which is an argument made by some of its supporters. Bullion edged higher as other safe havens -- the yen, Swiss franc and bonds -- also gained.
More
February 6, 2018 / 1:55 AM
Oil prices fall more than 1 percent amid global market rout
SINGAPORE
(Reuters) - Oil prices dropped by more than 1 percent on Tuesday, extending
falls from the previous session as global financial markets tumbled lower in
the wake of one of the biggest intra-day falls ever registered on Wall Street.
Brent crude futures were at $66.91 per barrel at 0530 GMT, down 71
cents, or 1.1 percent, from the previous close. That was more than $4 below
their high-point for 2018, hit last month.
U.S. West Texas Intermediate (WTI) crude futures were at $63.46 a
barrel, down 69 cents, or 1.1 percent, from their last settlement and more than
$3 off their 2018 high.
“The fall (in crude futures) is mainly attributable to a global sell off
in equities,” said Sukrit Vijayakar, director at consultancy Trifecta Energy.
“People ran to the U.S. dollar as a safe haven currency. Therefore the
dollar strengthens. This makes commodities more expensive to buy, hence oil
futures get sold off,” he added.
More
Years of Big U.S. Treasuries Holdings Are ‘Over’ for Swiss Fund
By Narae Kim and Lianting Tu
5 February 2018, 11:00 GMT
When it comes to calling the end of the decades-long bull run in bonds, Switzerland’s
Pictet Wealth Management is putting its money where its mouth is, and cutting
its allocation to U.S. Treasuries.
“Huge regime change” is how Christophe Donay, head of asset allocation
and macro research at Pictet, describes what’s going on in the bond market,
with yields surging. The old simple strategy of putting 60 percent in equities
and 40 percent in Treasuries, which scored handsome returns for decades, won’t
work any more, he said. "This story is over.”
A “reasonable allocation” in U.S. Treasuries now would be around 10
percent, Geneva-based Donay said in a Feb. 2 interview while visiting Hong
Kong. Pictet Wealth Management says it oversees 195 billion Swiss
francs ($210 billion).
While bonds were added to portfolios to balance the risk from investing
in stocks, they didn’t just provide insurance, but offered great returns in
their own right -- thanks to inflation and yields trending lower since the
early 1980s. Investing in Treasuries maturing in 10 years or longer gave
average annual returns of 9.25 percent over the past four decades.
It was like getting paid for taking out car insurance, Donay said. Now,
"you have to pay for buying the protection.” Longer-dated Treasuries have
lost 3.2 percent so far this year, according to ICE BofAML’s U.S. Treasury
index.
“Today, if you want returns, you need to invest in more risky bonds,
emerging-market bonds or high-yield bonds,” said Donay. “It was crazy in a way.
Now we are back to normal."
“Those who don't know history are destined to repeat it.”
Edmund Burke.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today the rout in Unicorns. No mythical animals
were hurt in the rout, just greedy gullible humans.
Cryptocurrencies Drop With Risk Assets as Stock Rout Endures
By Todd White and Eric Lam
5 February 2018, 09:15 GMT Updated
on 5 February 2018, 13:34 GMT
Bitcoin declined for a fifth day and led cryptocurrencies lower as a global
equities selloff
deepened and investors migrated toward havens.The biggest digital currency sank 11 percent to $7,649 at 1:20 p.m. in London, according to composite Bloomberg pricing. It has tumbled by more than 20 percent since the end of January, and by last week had erased more than half of its value from a record high $19,511 in December. Rival coins Ripple, Ethereum and Litecoin also retreated, according to data compiled by Bloomberg.
“If we don’t hold the $8000 level, Bitcoin may fall to $5000, where the next big support is,” Simon Tobler, a trader at Swiss-based Crypto Finance AG, said by phone. “The market is lacking big buyers,” said Tobler, a former derivatives trader with Credit Suisse Group AG.
Investors exited risky assets across the board Monday, as stocks in Asia and Europe retreated following a slump in U.S. markets Friday. Bitcoin is hardly living up to comparisons with gold as a store of value, made by some its supporters over past months. Among so-called havens, bullion edged higher, up 0.3 percent to $1,337 an ounce in spot trading. The yen and European bonds also gained.
Bitcoin has been buffeted by weeks of negative news, including reports of various vendors stopping to accept it and on the jump in its transaction fees. Lloyds Banking Group Plc will block attempts to buy digital currencies using its credit cards, a spokesman for the financial-services company said on Monday. The decision was made to protect customers, who still will be able to buy them using debit cards, he said.
North Korea is trying to hack South Korea’s cryptocurrency-related programs to steal digital currencies and has already stolen tens of billions of won worth, Yonhap News reported. Authorities in South Korea and other countries are weighing increased regulatory scrutiny of the cryptocurrency industry, which has sparked a selloff to start the year.
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
J. K. Galbraith.
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section. Updates as
they get reported. Is converting sunlight to usable cheap AC or DC energy
mankind’s future from the 21st century onwards?
Bitkom: Digitalization to wipe out millions of jobs in Germany
Millions of workers in Germany will likely lose their jobs
and be replaced by robots and AI algorithms by 2023, German IT association
Bitkom said in a study. The group urged politicians to take the issue more
seriously.
Digitalization is expected to claim some 3.4 million jobs in Germany within the next five years, according to a new study by the IT industry association Bitkom.
The study also predicts that — when it comes to German companies employing more than 20 people — every fourth firm will face the risk of disappearance due to digitalization.
With the labor market performing at near-record highs, Europe's strongest economy has about 44.5 million people who are classified as employed and residing in Germany as of December 2017.
Read more: Scrap 'outmoded' 8-hour workday in Germany, experts say
Half of the jobs may grow obsolete
However, Bitkom warned that the good times might be coming to an end. In the article published by the Frankfurter Allgemeine Zeitung on Friday, the organization's head Achim Berg cited the example of the telecommunications industry. The sector was among the first to be transformed by digitalization.
In the 1990s, according to Berg, some 200,000 people were employed in the field of communications technology. Today, only 20,000 remain.
"We have lost 90 percent of jobs in this sector in just 15 years," Berg told the newspaper, adding that employment at banks and insurance companies as well as chemical and pharmaceutical firms were digitalization's likely next targets.
Read more: Germany in the digital slow lane
For example, tax advisors might soon be replaced by algorithms, while 3D printers could create dental molds rather than them being made by human dental technicians. Within the next two decades, according to Bitkom, half of the current job profiles will become obsolete.
More
http://www.dw.com/en/bitkom-digitalization-to-wipe-out-millions-of-jobs-in-germany/a-42429668
A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.
Walter Bagehot. Lombard Street. 1873
The monthly Coppock Indicators finished January
DJIA: 26,149 +282 Up. NASDAQ: 7,411 +310 Up. SP500: 2,824 +212 Up.
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