Another Atrocious Week Going Out With A Bang

Guest Post by John Rubino

On days when lots of financial numbers are released, the normal pattern is for some to point one way and some another, giving everyone a little of what they want and overall presenting a reassuringly muddled picture of the economy.

Not today. A wave of economic stats flowed out of Washington, almost all of them terrible, while corporate news was, in some high-profile cases, shocking. Let’s go to the highlight reel:

Retail sales fell again in December, bringing the 2015 increase to just 2.1% versus an average of 5.1% from 2010 through 2014. This kind of deceleration is out of character for year six of a gathering recovery, but completely consistent with a descent into recession.

The New York Fed’s Empire State Manufacturing Survey index plunged to -19.37 in January from -6.21 in December. This is a recession — deep recession — level contraction. Not a single bright spot in the entire report.

U.S. industrial production fell for the third straight month in December, and the previous month was revised down sharply. Factories are already in a recession that appears to be deepening.

On the company-specific front:

UK resource giant BHP Billiton wrote down the value of its US shale assets by $7.2 billion — two-thirds of its total investment — in response to plunging oil prices. Now everyone is wondering who’s next, and the list of likely candidates spans the entire commodities complex.

Chip maker Intel reported okay earnings but really disappointing margins and outlook. Its stock is down 9% as this is written mid-morning.

Walmart is closing nearly 300 stores and laying off most of the related 16,000 workers. It also cut its forward guidance aggressively.

There’s more, much of it related to plunging oil prices and their impact on developing world economies. For countries that grew temporarily rich on China’s infrastructure build-out, the end of that ill-fated program has produced something more like a depression than a garden-variety slowdown.

Now the panic is spreading. China stocks entered a bear market last night, oil is down huge, and as this is written (1 PM EST on Friday) the Dow is off 450 points. A tidal wave of terrified capital is pouring into Treasury bonds, and a smaller but still significant amount is moving to precious metals. Everything else is down varying shades of big.

Readers of a certain age will notice that this feels a lot like late 2007, when pervasive optimism hit a brick wall made up of subprime mortgages and credit default swaps. Everyone then headed for exits that were far too small to accommodate all the semi-worthless paper.

But this time around there are some big differences:

1) In the 2000s the world’s central banks weren’t prepared for the scale of the carnage and had to improvise. Today they’re already intervening in virtually every major market and so presumably have plans drawn up for the mother of all manipulations should 2008 come calling again. So we should expect some bold, experimental (let’s just say crazy) monetary policies from major governments in the year ahead.

2) The big banks are now seriously out of favor, so when their derivatives books blow up they might not be able to blackmail a sitting president with threats of martial law should Goldman and JP Morgan fail. Today that’s an experiment that a lot of people would actually like to run, on the assumption that because the same number of factories, farms and hospitals would exist the day after such an event, real wealth would hardly change at all and mega-banks would be proven irrelevant.

3) The world is vastly more indebted today, the carnage in commodities is global rather than sector-specific as with mortgages, and formerly rock-solid political systems like the eurozone and China are now unstable — to put it mildly. A new financial crisis would energize fringe (i.e., anti-status quo) parties everywhere, vastly complicating the official response. In the US, another bust could easily result in a 2017 presidential race between Bernie Sanders and Donald Trump, neither of whom would favor bailing out the big banks.

And then of course there’s the Middle East, which is now in end-to-end civil war.

Add it all up and, the picture is already grim, with lots more bad news in the pipeline. So it’s not surprising that traders are nervous about going into the weekend with long positions in retail, tech, banks, commodities, or anything, really.

8
Leave a Reply

avatar
  Subscribe  
Notify of
robert h siddell jr
robert h siddell jr

No problem, Happy Days are here again; enjoy the free Rainbow Stew Hussein has for the Useful Idiot voters. A free chicken for every pothead; share with the Mr & Mr or Mrs & Mrs in love. More of his Liberal Hope & Change is landing in the middle of the night on-board filled up unmarked UPS planes from the Middle East (ref Youtube: Still report #462 US taking 100k muslim refugees/year).

nkit
nkit

But, but, but Barry said that “Anyone claiming that America’s economy is in decline is peddling fiction.” Dagnabit, what’s a mouth-breathing moron supposed to believe these days?

yahsure
yahsure

This well help push Trump into office. He keeps saying that things will be great if he is elected,So our troubles are over. If he really wants to win he should announce that he will push for term limits to get rid of the brain dead turds that got us to this point.

Kill Bill
Kill Bill

When I try to watch Trump.

Cant want to. He is arrogant, insulting, bombastic bloviator with a tendency toward manic.

He is talking about me, I think, and not talking to others either….instead he sees a audience full of Minion tRumpf.

MuckAbout

Regardless of whom is elected in 2016 the damage that rolled from 2008 is still in motion, none of proper action has been taken to arrest the decline of both the U.S.A. and the global panic which is now coming ever closer.

Old Muck’s sure fire solution (albeit selfish) is simply to die off before TSHTF and TEOTWAWKI proceeds to disassemble modern civilization.

Trump? A clown in any suit. Sanders? Doesn’t know squat about anything. Billary? She’s so loaded down with Federal criminal crimes, lies and skulduggery she doesn’t have a chance. Cruz? A nice Canadian boy by most accounts but ineligible to run for President (and no – the LAW about “natural childbirth” in the U.S.A. is NOT settled with an American Mother and a Canadian birth. Rand Paul? He’s on the wrong side of one half (at a minimum) of American voters. His stand on women’s rights rank right up there with the Saudis. That black surgeon (I forget his name) has absolutely no connection with the real world, foreign policy or government. Anyone else in that forgotten group of those running and standing still?

I don’t know, can’t remember any more anyhow.

Maybe we should pass a constitutional amendment to allow an Imperial Obummer (he’s running the country with only the Executive Branch operating anyhow) —- Can’t do any worse than any of the others running for Pres. (If you don’t count the last 8 years!)

Jeez – I think I’m gonna puck.

MA

Fiatman60
Fiatman60

Ya I betcha the FED is just shitting themselves watching the carnage in the stocks and all the numbers from retail, after they raised interest rates. If it looks like a recession,feels like a recession,quacks like a recession, then it probably IS a recession!!! They’ve lost all credibility to even those that believe in them.

Hate to be a negative Nelly, but I think were just getting started here. Even the Walton’s saw the handwriting on the walls of the shitter, and closed their stores…..

JC Penny, Sears et al will be next……….

Won’t be long before the energy sector bites the bullet, and defaults…..
Then the banks will be right behind them…..

Yep…. there goes my pension……..

That’s what fiat is all about……. empty promises that can’t be kept

IndenturedServant

For those of us rooting for total collapse and reset, that report was filled with nothing but good news! My dark heart feels all warm & fuzzy after reading that! Now, if we can just get this market collapse to pick up some real momentum, we’ll have a chance. A DOW level of 99.01 should get us there. It will be worth losing my trapped 401k for that! My biggest fear is that they kick this can another 5-10 years down the road. Seizing retirement accounts under the guise of a “national emergency” or WWIII would give them another $20 trillion to piss away if they survive the attempt.

Even if the owners are wiped out entirely they can get it all back “with the flick of a pen”. You might wipe out the owners but you’ll never wipe out all the sheep and that is the conundrum we face.

VegasBob
VegasBob

This feels eerily like the beginning of 2008.

Our worthless mulatto President just said that “Anyone claiming that America’s economy is in decline is peddling fiction.” That sounds an awful lot like the shifty-eyed goddamn liar Ben Bernocchio’s famous statement that “Subprime is contained.”

What we’ve really done over the last 7 years is to blow trillions of dollars to try to gin up a fake recovery. All we have to show for it is a level of unpayable debt that has been ratcheted up to unimaginable highs. We’ve papered it all over with trillion$ of money printing, zero interest rates, and legalized corporate accounting fraud, and then declared “Victory!”

Naturally, most of the sheeple are blissfully unaware of the looming economic disaster as the gorge themselves into diabesity at their local Olive Garden or Red Lobster.

The reality of course is that no nation in world history has ever brought about long-term prosperity by printing or borrowing money. So I think that this Potemkin economy is resuming its collapse.

As good old Yogi Berra once said, ‘It’s déjà vu all over again.”

Discover more from The Burning Platform

Subscribe now to keep reading and get access to the full archive.

Continue reading