If you were wondering what happens when margin debt is at the highest level in history and the market abruptly drops because a corrupt Chinese central banker devalued their currency, welcome to Black Monday 2015. I hope you aren’t leveraged. Enjoy the show. The calls from Wall Street bankers and CNBC talk show morons for a bailout to follow shortly.
by Karl Denninger
Heh Pumpers: Shut Up
It is absolutely stunning to watch the cryfest this morning on CNBC — or as I have said repeatedly, CNBS: All the BS you’re willing to watch.
I’ve pointed out since the days I was on with Dennis Kneale (remember?) that you cannot “spur demand” by simply emitting more debt. The same point was all through Leverage.
Debt is only productive when it is used to finance an asset that produces more than it costs, including the carrying expense of the debt, and is paid down from the cash flow produced by that asset.
Almost none of the debt issued by corporations and governments over the last eight years has been of that character. It has instead been spent on social programs, buybacks and other balance sheet games.
Yes, you can levitate a market for a while by doing that. But it’s simply leverage expansion and lies, not economic expansion that is behind your alleged “gains” and the “roaring” stock market.
To view the state of the economy accurately you must remove the new debt issued in a given quarter from the GDP computation; this is first-year Algebra. If you do that then most of the so-called “growth” since 2009 disappears like a fart in the wind.
How much should you pay for a dollar of earnings when the so-called “growth” is mostly fictional and generated by issuing more and more debt instead of building things because you sent all your manufacturing to China and Mexico? Oh, and they have been playing the same debt-issuance game too, backed up by a government that can and does simply lie about their economic statistics.
You’ve had eight years to do something about this crap instead of singing the praises of this faux ‘expansion’ and ‘market’, which in reality was nothing more than computer programs passing shares back and forth while taking tiny bites out of you in each transaction.
But you forgot, it appears, that those computers are faster than you are both on the buying and SELLING side.
Time’s up.
Expect the usual lying Wall Street pricks to be rolled out by CNBC today in order to tell you to remain calm. Meanwhile, it’s the Wall Street assholes fleeing the market.
[img
[/img]
Oil below $38
Stick a fork in Putin . He’s done.
Stick a fork in US shale companies. They’re done.
Dow Futures Down 2500 From Highs, Crashing To 2013 Levels
Submitted by Tyler Durden on 08/24/2015 08:13 -0400
Dow futures are now well below the 16,000 level – down a stunning 2500 points from the May highs. The Dow has given up all its gain since December 2013…
The next few days the shitforbrains on CNBC decision making skills will be like a squirrel trying to cross a road.
Should I stay or should I go now? Splat, too fucking late.
A few weeks ago I bought some VIX calls when VIX was trading at 12. As of close Friday the position was only up 35% despite VIX having a record jump for the week. We’ll see if they start moving today…
Nasdaq Futures Halted Below 4,000 After Hitting Circuit Breaker Down 5%
Submitted by Tyler Durden on 08/24/2015 08:31 -0400
NASDAQ 100 SEPTEMBER FUTURES HIT CIRCUIT BREAKER, HALTED – RTRS
Nasdaq Futures below 4,000!
8:32 am — NASDAQ 100 SEPTEMBER FUTURES RESUME TRADING
8:36 am — *NASDAQ 100 FUTURES FALL BY 5% OVERNIGHT LIMIT
The Nasdaq is now notably underwater for 2015, trading at levels first seen over a year ago.
I have never watched more than 2-3 minutes of Fox Business channel … that shit just bores the fuck out of me.
But, I like the picture of the bear Admin posted, soooo, what the fuck let’s take a peek.
So, they have this guy Dick Grasso on … he’s the former CEO of the stock exchange. None of this will be news to any of you, but here’s what he’s saying;
— the USA economy is really really strong, unemployment low, blah blah
— banks are in great shape
— no one loses money until they sell (no idea wtf that means)
— traders trade because they follow trends cuz the “trend is their friend”
— BUT …. real investors are ignoring the past few days
— BECAUSE … there’s tremendous money to be made for smart investors right now
— this is nothing but a minor market correction
I’m not bullshitting, folks.
So, please ignore Admin the fea-rmonger!!!
Admin
Yes! They talked about “circuit breakers” kicking in.
I have no idea what the fuck that means. So, I quick googled it. Up pops all these financial charts. Can’t understand them. fuckit
BUT … then I see this picture. I’m guessing it’s a bad thing.
[/img]
[img
Stuck
Circuit breakers were put in after the 1987 crash. At certain levels the markets stop trading so people can supposedly come to their senses and think about whether they should sell. When trading resumes, they usually keep selling anyway.
Last report …. you can watch the Fox Biz clowns yourself ..
… so, now they are comparing the market to heroin-addicts, and the Fed being the heroin dealer …… and whenever addicts get off heroin that’s a good thing. I’m not kidding.
Just before the end of the show (for this hour) one of the talking dicks said he can’t stress enough — “the fundamentals are strong!!!”
I think I just might watch the Fox Biz Comedy Hour all day. These fuksticks are funnier than George Carlin.
Trump was just on the phone with the Fox Plunge Team ………. he’s blaming all this on China …. “they have serious problems and they are pulling us down with them”
NYSE Invokes Rule 48 (Once Again) To Pre-Empt Panic-Selling Open
The status quo must be maintained…
NYSE granting “triple width opening quote relief in all option classes for August 24, 2015”, Invokes Rule 48
The last time this was invoked was in Jan 2015 (during the blizzard), in June 2012 (amid a dramatic drop in pre-open futures) and in Sept 2011 amid the chaotic 400-point swings in The Dow. Funny they do not use this “Rule” when futures indicate massive upside opens?
As WSJ explains, basically it means the designated market makers “will not have to disseminate price indications before the bell, making it easier and faster to open stocks.
The rule was approved by the Securities and Exchange Commission on Dec. 6, 2007 and has been used rarely since then.
[img
[/img]
Good day for the smart people………
Gold is up 4.60USD this morning and rising.
A 1,000 point drop should get the attention of the willfully ignorant masses.
Here Comes The Plunge Protection Team
Submitted by Tyler Durden on 08/24/2015 09:46 -0400
Losses have been cut in half after the opening collapse as a mysterious buyer in massive size lifts The Dow 600 points off its lows, cutting losses in half for now…
If oil drops a little farther I may have to try my hand at commodities…..out of everything its the only one I’m confident will go back up.
Down 604 last I checked, but the average P/E is still 16.4.
Lotta potential downside left, should stabilize at 8-12 which is a reasonable valuation range.
Figure for your self what percentage of drop that could represent, and where you should get back in to take advantage of the next (one way or another Fed sponsored) bull.
[img
[/img]
“If oil drops a little farther I may have to try my hand at commodities…..out of everything its the only one I’m confident will go back up.” ————- TPC
You are almost certainly correct. (See how I hedged that comment? lol)
You might want to read this article “Oil Prices Must Rebound. Here’s Why”
http://oilprice.com/Energy/Oil-Prices/Oil-Prices-Must-Rebound-Heres-Why.html
Oil will not rebound in the midst of this Fourth Turning, debt crushing, depression that we are walking into.
@Stucky – Even ignoring past data we know the following:
#1 Oil is a REAL commodity. It physically exists. It can’t be manufactured via spreadsheet.
#2 Its finite. New sources have been found for it, but those sources aren’t even economically viable until the price is much higher than it is now ($100/barrel?).
#3 We KNOW the US is keeping its thumb on Russia to force them into a corner by keeping world oil prices low. This can only last so long.
#4 Oil has real uses, uses that are incredibly varied. Our entire society hinges not only on the various fuels it produces, but the enormous number of plastic feedstocks and other chemicals it is used to create.
The price will come up, the only question is if I have the balls enough to try and pull the trigger and then sit on my hands until the price is up….
TPC,
The question may end up being who can last longer, Russia or the US?
I think Russia may be in better overall financial condition than we are, but real statistics are hard to find and limited in nature.
“#4 Oil has real uses, ………” ———- TPC
Bada Boom!! Bada Bing!!! THOUSANDS of uses!!!
There were only one billion people on the planet as recently as the turn of the 19th century. In 1999, world population was 6 billion. It increased another Billion ….. in just TWELVE YEARS.
Yea. Right. Sure. Oil will never recover!!!!! hahahaha
Oil is in literally everything you see around you. Every building, every gadget, everything you eat and drink, everything. And as Herr Stuckmeister points out it is the reason for the incredible exponential population growth over the past 150 years.
However, The key value with oil is not price…it is EROIE (Energy Returned over Energy Invested). The financial side of things can be obscured and has been…but again you can’t fake the Laws of Thermodynamics. There is a certain amount of energy in a barrel of oil and it takes a certain amount of energy to extract that barrel from the ground. If the latter exceed to the former (or even approaches it) no amount of financial shenanigans will EVER get it out of the ground (at least not for long).
Ultimately, it is diminishing returns (in terms of energy) and positive feedback loops that destroy empires. We are well into the first…it is only a matter of time before the downward spiral (positive feedback) begins.
ADMIN’s pic of the NYSE lying on it’s side Too Funny…… made my day!
NYSE Invokes Rule 34, Reminds Traders That Panic-Selling Is Sexy
by Karl Denninger
The Toughest Trade….
Is to go against the market.
The open today was so extreme and liquidity so poor that it was basically impossible to enter an order and have any reasonable expectation that you’d get a decent fill. For that reason the only wise choice today is to sit it out. A lot of people sold into the spike low and got flat-out murdered — less than an hour later that act looks damn stupid.
However, you will soon have an opportunity to sell the bounce that comes when you get spike-down moves like this. It is unwise to try to get too far in front of that petering out, and if you’ve been long and just watched 10% or more of your account vaporize in names like Netflix and Amazon it will be intoxicating to see your balance creep back toward where it was a few days ago.
It will be very hard to sell into that rip because you won’t be “made whole.” But that still may or may not be the right choice, whole or not, on a cold, stone-faced analysis of the stocks you hold.
Prepare yourself to be coldly analytic now.
This is not a day to trade, it’s a day to go the bar and drink.
In the coming days you will need that cold, analytic view to make a wise decision.
Go find it today, whether it’s a day at the range, a day at the bar, a 10 mile run or a wild night of sex.
This isn’t over folks. In fact you’re just seeing the beginning, even as you watch the DOW come back by 2/3rds of its opening-print loss.
Karl Denninger is a bright light in a dim world.
By Bailout, you mean QE 4.
Ya! China’s the blame. Not the reckless financial mess caused by over spending government, irresponsible central bank, financial opportunists and others (shall we call them greedy parasites wanting more freebies from government).
I guess China has us on a short string. lol
Yeah but where will the Dow be at 4:00 Karl? HFT in the last 30 seconds to stop another 500 point drop? Sure it is just the beginning of large negative closes between now and October so why wait to take the losses? They love it when the sheep ride it out and vaporize ALL their money.
Bea Lever–from an earlier post but apropos.
The stock market (Dow) fell today almost 1,000 pts. and all the financial newscasters were out in force giving the unwashed many hope and reasons why now is the time to buy. Hahahah!
Administrator says, “This is not a day to trade, it’s a day to go the bar and drink.”
Pray tell when is it a day to jump out a 10 story window?
Paper gold drives down phizz gold from up $6.37 this morning to down $5.90 at 3:00pm with the Dow sliding fast toward being down 700 points.
Nothing to see here, move along. Right.
Bea Lever–Per Andy Hoffman–PPT never lets gold rise in a falling stock market.
We have a control problem, ‘Houston”.
Oh man! I’ll bet those margin calls hurt!