(News & Editorial/ Things don’t feel right, Part 1 of 2)
A. Insider selling
__1. Do Wall Street Insiders Expect Something Really BIG To Happen Very Soon?
6 February 2013, The Ecomonic Collapse Blog, by Michael
Pasted from; http://theeconomiccollapseblog.com/archives/do-wall-street-insiders-expect-something-really-big-to-happen-very-soon
Why are corporate insiders dumping huge numbers of shares in their own companies right now? Why are some very large investors suddenly making gigantic bets that the stock market will crash at some point in the next 60 days? Do Wall Street insiders expect something really BIG to happen very soon? Do they know something that we do not know? What you are about to read below is startling. Every time that the market has fallen in recent years, insiders have been able to get out ahead of time. David Coleman of the Vickers Weekly Insider report recently noted that Wall Street insiders have shown “a remarkable ability of late to identify both market peaks and troughs”. That is why it is so alarming that corporate insiders are selling nine times as many shares as they are buying right now. In addition, some extraordinarily large bets have just been made that will only pay off if the financial markets in the U.S. crash by the end of April. So what does all of this mean? Well, it could mean absolutely nothing or it could mean that there are people out there that actually have insider knowledge that a market crash is coming. Evaluate the evidence below and decide for yourself…
For some reason, corporate insiders have chosen this moment to unload huge amounts of stock. According to a CNN article, corporate insiders are now selling nine times more of their own shares than they are buying…
Corporate insiders have one word for investors: sell.
Insiders were nine times more likely to sell shares of their companies than buy new ones last week, according to the Vickers Weekly Insider report by Argus Research.
What makes this so alarming is that corporate insiders have been exceedingly good at “timing the market” in recent years. The following comes from a recent CNBC article entitled “Sucker Alert? Insider Selling Surges After Dow 14,000″…
“In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply — falling to its lowest level since late March 2012,” wrote David Coleman of the Vickers Weekly Insider report, one of the longest researchers of executive buying and selling on Wall Street. “Insiders are waving the cautionary flag in an increasingly aggressive manner.”
There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company’s stock this aggressively was in early 2012, just before the S&P 500 went on to correct by 10 percent to its low for the year.
“Insiders know more than the vast majority of market participants,” said Enis Taner, global macro editor for RiskReversal.com. “And they’re usually right over a long period of time.”
There are other indications that the stock market may be headed for a significant tumble in the months ahead. For example, as a Zero Hedge article recently pointed out, the last time that the financial markets in the U.S. were as “euphoric” as they are now was right before the financial crisis of 2008.
And as I mentioned above, some people out there have recently made some absolutely jaw-dropping bets against stocks which will only pay off if there is a financial crash at some point in the next few months.
According to Business Insider, the recent purchase of 100,000 put options by a mystery investor has a lot of people on Wall Street talking…
According to Barron’s columnist Steven Sears, someone made a big bet against the financials ETF yesterday (ticker symbol XLF), and it has everybody buzzing.
The trader bought 100,000 put options on the ETF (a put option increases in value when the price of the underlying asset, in this case, the ETF, goes down).
To put that number in perspective, Sears writes, “Few investors ever trade more than 500 contracts, so a 100,000 order tends to stop traffic and prompt all sorts of speculation about what’s motivating the trade.” According to Sears, the trade “has sparked conversations across the market.”
Reportedly, those put options expire in April.
And as Art Cashin of UBS has noted, there was also another extremely large bet that was placed recently that is banking on a financial crash within the next two months…
A Very Big Bet In A Somewhat Unlikely Instrument – My friend, Jim Brown, the ever-alert consummate professional over at Option Investor pointed us to a rather unusual trade. Here’s what he wrote in last night’s edition of his valuable newsletter:
In past years I have reported on trades that were so large it appeared someone had inside knowledge of a pending event. Sometimes those were massive put positions on the S&P. A new trade just appeared that suggests there will be a market event in the near future. Last week somebody put on a call spread on the VIX using the April 20 and 25 puts. They bought 150,000 contracts for a net of $75 per contract. That is an $11,250,000 bet that the VIX will move over 20 over the next 60 days. You would have to be VERY confident in your outlook to risk $11 million on a directional position with the VIX at five year lows and the markets trying to break out to new highs.
So does all of this guarantee that the stock market is going to move a certain way?
Of course not.
But when you step back and look at the bigger picture, it does appear that Wall Street insiders are preparing for something.
Meanwhile, the government continues to assure us that happy days are here again for the U.S. economy and that we don’t have anything to worry about.
The Congressional Budget Office has just released a report that contains their outlook for the next decade. The report is entitled “The Budget and Economic Outlook: Fiscal Years 2013 to 2023”, and if you want a good laugh you should read it.
Here are some of the things that the CBO believes will happen…
– The CBO believes that government revenues will more than double by 2023.
– The CBO believes that government revenue as a percentage of GDP will rise from 15.8 percent today to 19.1 percent in 2023.
– The CBO believes that the unemployment rate will continually fall over the next decade.
– The CBO believes that the federal budget deficit will fall to just 2.4% of GDP in fiscal year 2015.
– The CBO believes that the federal budget deficit will only be $430 billion in 2015.
– The CBO believes that we will not have a single recession over the next decade.
– The CBO believes that inflation will stay at about 2 percent for the next decade.
– The CBO believes that U.S. GDP will grow by a total of 67 percent by 2023.
Wow, all of that sounds great until you go back and take a look at how CBO projections have fared in the past.
In fact, Bruce Krasting has gone back and looked at the numbers from the Congressional Budget Office’s Budget and Economic Outlook 2003. I think that you will find the differences between the CBO projections and what really happened to be very humorous…
Estimated 10-year budget surplus = $5.6T.
__Reality = $6.6T deficit. A 200+% miss.
Estimate for 2012 Debt Held by Public = $1.2T (5% of GDP).
__Reality = Debt Held by Public = $11.6T. A 1000% miss.
Estimated fiscal 2012 GDP = $17.4T.
__Reality = $15.8T. A $1.6T (10%) miss.
So should we trust what the CBO is telling us now?
Of course not.
Instead, perhaps we should listen to some of the men that successfully warned us about the last financial crisis…
– “Dr. Doom” Marc Faber recently stated that he “loves the high odds of a ‘big-time’ market crash”.
– Economist Nouriel Roubini says that we should “prepare for a perfect storm”.
– Pimco’s Bill Gross says that we are heading for a “credit supernova”.
– Nomura’s Bob Janjuah believes that the financial markets will experience one more huge spike before collapsing by up to 50%…
I continue to believe that the S&P500 can trade up towards the 1575/1550 area, where we have, so far, a grand double top. I would not be surprised to see the S&P trade marginally through the 2007 all-time nominal high (the real high was of course seen over a decade ago – so much for equities as a long-term vehicle for wealth creation!). A weekly close at a new all-time high would I think lead to the final parabolic spike up which creates the kind of positioning extreme and leverage extreme needed to create the conditions for a 25% to 50% collapse in equities over the rest of 2013 and 2014, driven by real economy reality hitting home, and by policymaker failure/loss of faith in “their system”.
The truth is that no matter how much money printing the Federal Reserve does, it is only a matter of time before the financial markets catch up with economic reality.
The U.S. economy has been in decline for a very long time, and things just continue to get even worse. Here are just a few numbers…
-The percentage of the civilian labor force that is employed has fallen every single year since 2006.
– According to John Williams of shadowstats.com, truly accurate numbers would show that U.S. GDP growth has actually been continuously negative all the way back to 2005.
– U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
– One recent survey found that nearly half of all Americans are living on the edge of financial ruin.
– According to the U.S. Census Bureau, there are more than 146 million Americans that are considered to be either “poor” or “low income” at this point.
For many more statistics that demonstrate that the U.S. economy has continued to decline in recent years, please see this article: “37 Statistics Which Show How Four Years Of Obama Have Wrecked The U.S. Economy”.
So where is all of this headed?
Well, after the next major financial crisis in America things are going to get very tough.
We can get a hint for how things are going to be by taking a look at what is going on over in Europe right now.
Can you imagine people trampling each other for food? That is what is happening in Greece. Just check out this excerpt from a Reuters article…
Hundreds of people jostled for free vegetables handed out by farmers in a symbolic protest earlier on Wednesday, trampling one man and prompting an outcry over the growing desperation created by economic crisis.
Images of people struggling to seize bags of tomatoes and leeks thrown from a truck dominated television, triggering a bout of soul-searching over the new depths of poverty in the debt-laden country.
The suffering that the Greeks are experiencing right now will come to this country soon enough.
So enjoy this false bubble of debt-fueled prosperity while you can. It is going to end way too soon, and after that there will be a whole lot of pain.
__2. Google chairman to sell up to 3.2 million shares
8 Feb 2013, Excite News, by
[Two days after the previous article was published, this one followed. Mr Larry]
SAN FRANCISCO (AP) – With Google’s stock hovering at record highs, Executive Chairman Eric Schmidt plans to sell more than 40 percent of his stock in the Internet search leader this year.
The plan disclosed Friday calls for Schmidt to sell up to 3.2 million shares. If he were to sell all that stock at Google’s current price, Schmidt would realize a $2.5 billion windfall.
Schmidt ended December with 7.6 million Google shares, or a 2.3 percent stake in the Mountain View, Calif., company.
He would be left with about 4.4 million shares of Google stock worth another $3.5 billion if he follows through on his divestiture plan for this year. He has gradually been winnowing his holdings in Google in recent years, without giving a specific reason.
Google Inc. declined to comment Friday.
Google’s stock rose $11.42 to close at $785.37 Friday. Earlier in the day, it traded at $786.67 – its highest price since the company went public at $85 per share in August 2004.
Google co-founders Larry Page and Sergey Brin are the only company executives who own more stock than Schmidt.
Page controls an 8.7 percent stake and Brin holds an 8.5 percent stake. Each stake is currently worth nearly $20 billion.
Schmidt, 57, was Google’s CEO for a decade before turning over the job to Page, 39, in April 2011.
B. The 2nd Crash, The Big One, Is Coming, And It’s Coming Soon…
7 February 2013, Modern Survival Blog, submitted by Ken (MSB)
Pasted from: http://modernsurvivalblog.com/
This one is going to be different. It’s not a correction, it’s a crash.
Economic forecaster Harry Dent says “I see the Dow Jones Average winding down, week after week… falling through the 12,000 mark… below 10,000, then 9,000, 8,000… to 6,440 – where it’s likely to rally briefly… before ultimately dropping as low as 3,300. And there’s nothing you or I, or any politician or government, or any team of monetary experts can do to stop the Dow Jones Index from dropping.”
He told CNBC recently that he sees a stock market crash in the United States starting in the third quarter of 2013 and continuing for a year and a half.
He also said real estate prices and stocks would plummet more than 60% by the end of 2014, or sooner, meaning the Dow Jones Industrial Average would fall below 6,000. He also said the United States would be close to bankruptcy by then.
If you believe any of it, many investors are apparently making the mistake of thinking the downturn is over, and Dow stocks will continue to roar upward. The thing is, if you take out government spending, we’ve been in an depression since 2008… If it had it not been for the U.S. Federal Reserve’s moves to pump money, the stock market would already have collapsed.
To prepare, and to survive such a collapse, you will have to be smart and resourceful with the ability to adapt a life with less, a life of harder times. There will be grave dangers around heavily populated regions. People who lived through the 1930′s depression were largely hard working decent Americans who were down on their luck. Today, it will be quite a different story. A disaster.
Harry Dent (interviewed in the article posted above):
Pasted from: http://en.wikipedia.org/wiki/Harry_Dent
Harry Dent received his B.A. from the University of South Carolina, where he graduated #1 in his class. He earned an MBA from the Harvard Business School as a Baker Scholar.
Dent is the Founder of HS Dent Investment Management, an investment firm based in Tampa, Florida that advises the Dent Strategic Portfolio Fund mutual fund. Dent is also the president and founder of the H.S. Dent Foundation and H.S. Dent Publishing.
Harry Dent writes an economic newsletter that reviews the economy in the US and around the world through demographic trends focusing on predictable consumer spending patterns, as well as financial markets, and has written seven books, of which two recent ones have been bestsellers:
- The Great Crash Ahead (2011)
- The Great Depression Ahead (2009)
- The Next Great Bubble Boom (2006)
- The Roaring 2000s Investor (1999)
- The Roaring 2000s (1998)
- The Great Jobs Ahead (1995)
- The Great Boom Ahead (1993)
- Our Power to Predict (1989)
[Mr Larry note: Harry Dent’s book titles and when they were copyrighted.
Dent’s trend analysis has been accurately tracking the US economy for quite some time. From article above, The 2nd Crash, The Big One, Is Coming, And It’s Coming Soon… we see that Mr. Dent is now targeting a general time period when the collapse should begin. From his record we might correctly expect a major decline in the global -US economy; however, do not know the timing, when the “imminent collapse phase will be reached.”
From article Do Wall Street Insiders Expect Something Really BIG To Happen Very Soon? at the top of this post, note that Wall Street Corporate insiders are already selling their shares in their own companies.
I suggest 4dtraveler.net readership take these omens seriously. Don’t wait until the 3rd quarter of 2013 to put your preparedness plans in order. I recommend you advance your plans so that the most important parameters are complete by the beginning of summer, that should put you ahead of the popular fear reaction curve. If things hold together three months or a year longer, you remain insured “ahead of the storm” and can use the extra time to concentrate on tuning your strategy when everyone becomes aware that conditions have changed. Mr. Larry.]
C. Kondratieff Waves and the Greater Depression of 2013 – 2020
11 Feb 2012, The Market Oracle, by Christopher Quigley
Pasted from: http://www.marketoracle.co.uk/Article33292.html
There are very few heroes in economics but for me one of the patron saints of that profession should be Nikolai Kondratiev who was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. This truth Stalin did not want to hear, thus Nikolai was exterminated and his work suppressed for over two decades.
Kondratiev’s analysis described how international capitalism had gone through many such “great depressions” and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called “Kondratieff” cycles or “K” waves.
The K wave is a 60 year cycle ( a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter: • Spring phase: a new factor of production, good economic times, rising inflation
• Summer: hubristic ‘peak’ war followed by societal doubts and double digit inflation
• Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
• Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A ‘trough’ war breaks psychology of doom.
Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this “cyclical” phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900’s. His thesis states that “modern” economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.
William R. Thompson:
“Most people are quite familiar with business cycles that tend to be denominated in terms of months. Sales are good, people are confident about the future, and unemployment is reduced. Then sales fall off, the immediate future seems gloomier, and unemployment increases. The Kondratieff wave is a longer version of economic fluctuation, albeit with the added traits of initial spatial concentration of technological innovation and subsequent diffusion at the world level. It also has some rather major implications for war, peace, and order in the world system that conventional, short-term business cycles lack. Therefore, the k-wave is a core component part of the most significant processes of the world system. Precisely what drives k-waves has been the subject of considerable analytical dispute.
Arguments have been advanced that bestow main driver status on investment, profits, population growth, war, agricultural-industrial tradeoffs, prices, and technological innovations. This debate has by no means been settled but at this time the emphasis on technological changes appears to be the best bet……
In the case of the Kondratieff, the argument is that the first appearance of a paired K-wave pattern in economic innovations is found in the 10th century in Sung China which is sometimes credited with developing the first modern economy. The expansion of maritime trade in the South China Sea and the Indian Ocean, as well as the revived use of the Silk Roads on land, facilitated the transmission of long wave, paired growth impulses to the other end of Eurasia. Thus Modelski and Thompson analyze 18 k-waves encompassing some one thousand years between 930 and 1973……..
In sum, the Kondratieff wave appears to be a highly pervasive and hence a critical process in the functioning of the world system. As such, it deserves more recognition than it currently receives. When more attention is paid to its influences, we will no doubt discover that it is even more central to world system development than we suspect currently.”
In addition to technology being a major factor in K cycles, credit and banking also play a crucial role. This is due to the fact that new technology spurs growth, initiative and risk taking. This mindset encourages investment and lending thus when the multiplier effect kicks in, economies expand rapidly. Thus as we focus our analysis on more modern times we find that periods of “K” expansion and contraction bring with them phases of bigger booms and busts. The picture is doubly exacerbated by increasingly more integrated world funding mechanisms which means these booms and busts are global rather than local and increasingly more political than economic.
Implications for 2012 and beyond:
Based on Professor Thompson’s analysis long K cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a “recession” to a “depression” phase in the cycle about the year 2013 and it should last until approximately 2017-2020. Like all cycles, K wave analysis is more “descriptive than prescriptive”, but provides enormous insight into our current economic condition. This it would be wise for our political and economic leaders to accept the lessons of history and realize that based on comprehensive economic evidence, following the 2007 systemic collapse of world banking and credit, things are likely to get much worse before they get better. Such evidence also supports the proposition that the USFED and the EUROECB instead of prolonging the agony through 5 trillion of credit expansion should liberate the “international market” and let it intelligently and efficiently do what it has done 18 times before. World bankers if they were properly versed in their craft would realize that Kondratiev’s heroism has given them the understanding they require to correctly comprehend and deal with the crisis. However, instead of seeing “it” as an acceptable development based on the natural result of technological stagnation they have panicked and mis-diagnosed it as a credit/monetary problem. Thus the epiphany of truth will only finally dawn when the both the FED and the ECB go bust and as every financial dog on Wall Street knows, this is not a matter of “if” but “when”.
The good news is that after this creative destruction period is over the world economy will be ready for a new epoch making spring boom which will propel it to new levels of political, social and economic development. Hopefully enough reasoned minds will prevail to prevent the only catastrophe that will completely destroy this paradigm blossoming into fruition and that prospect I do not even wish to contemplate or enunciate as I desire to end this brief article on a resoundingly positive note.