This article was written by Michael Snyder and originally published at his Economic Collapse blog.
Editor’s Comment: There are always limits to a problem, and eventually things will crash, and could easily cause a disaster. But as people often comment, it is remarkable how far down the road the establishment powers can kick the can, and keep the charade going. But at some point, even those running the game reach a conclusion point where it is time to leave someone holding the bag while the others run away, regroup and enjoy the spoils of their efforts.
There is no real way of knowing if 2016 will be such a point on the timeline, but the frequent comments by investors like George Soros and institutions like Goldman Sachs and JP Morgan Chase that disaster is coming are ominous indeed.
20th Largest Bank In The World: 2016 Will Be A ‘Cataclysmic Year’ And ‘Investors Should Be Afraid’
by Michael Snyder
The Royal Bank of Scotland is telling clients that 2016 is going to be a “cataclysmic year” and that they should “sell everything”. This sounds like something that you might hear from The Economic Collapse Blog, but up until just recently you would have never expected to get this kind of message from one of the twenty largest banks on the entire planet. Unfortunately, this is just another indication that a major global financial crisis has begun and that we are now entering a bear market. The collective market value of companies listed on the S&P 500 has dropped by about a trillion dollars since the start of 2016, and panic is spreading like wildfire all over the globe. And of course when the Royal Bank of Scotland comes out and openly says that “investors should be afraid” that certainly is not going to help matters.
It amazes me that the Royal Bank of Scotland is essentially saying the exact same thing that I have been saying for months. Just like I have been telling my readers, RBS has observed that global markets “are flashing the same stress alerts as they did before the Lehman crisis in 2008″…
RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that the major stock markets could fall by a fifth and oil may reach US$16 a barrel.
The bank’s credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008.
So what should our response be to these warning signs?
According to RBS, the logical thing to do is to “sell everything” excerpt for high quality bonds…
“Sell everything except high quality bonds,” warned Andrew Roberts in a note this week.
He said the bank’s red flags for 2016 — falling oil, volatility in China, shrinking world trade, rising debt, weak corporate loans and deflation — had all been seen in just the first week of trading.
“We think investors should be afraid,” he said.
And of course RBS is not the only big bank issuing these kinds of ominous warnings.
The biggest bank in America, J.P. Morgan Chase, is “urging investors to sell stocks on any bounce”…
J.P. Morgan Chase has turned its back on the stock market: For the first time in seven years, the investment bank is urging investors to sell stocks on any bounce.
“Our view is that the risk-reward for equities has worsened materially. In contrast to the past seven years, when we advocated using the dips as buying opportunities, we believe the regime has transitioned to one of selling any rally,” Mislav Matejka, an equity strategist at J.P. Morgan, said in a report.
Aside from technical indicators, expectations of anemic corporate earnings combined with the downward trajectory in U.S. manufacturing activity and a continued weakness in commodities are raising red flags.
Major banks have not talked like this since the great financial crisis of 2008/2009. Clearly something really big is going on. Trillions of dollars of financial wealth were wiped out around the world during the last six months of 2015, and trillions more dollars have been wiped out during the first 12 days of 2016. As I noted above, the collective market value of the S&P 500 is down by about a trillion dollars all by itself.
One of the big things driving all of this panic is the stunning collapse in the price of oil. U.S. oil was trading as low as $29.93 a barrel on Tuesday, and this was the first time that oil has traded under 30 dollars a barrel since December 2003.
Needless to say, this collapse is absolutely killing energy companies. The following comes from USA Today…
There aren’t many people who feel bad for oil companies. But the implosion in oil prices is causing a profit decline that almost invokes pity.
The companies in the Standard & Poor’s 500 energy sector are expected to lose a collective $28.8 billion this calendar year, down from $95.4 billion in net income earned during the industry’s bonanza year of 2008, according to a USA TODAY analysis of data from S&P Capital IQ. That’s a $124 billion swing against energy companies – and one you’re probably enjoying at the pump. The analysis includes only the 36 S&P 500 energy companies that reported net income in 2008.
If we are to avoid a major global deflationary crisis, we desperately need the price of oil to get back above 50 dollars a barrel. Unfortunately, that does not appear to be likely to happen any time soon. In fact, Dallas Fed President Robert Kaplan says that the price of oil is probably going to stay very low for years to come…
You’d expect at least some artificial optimism when the president of the Dallas Fed talks about oil. You’d expect some droplets of hope for that crucial industry in Texas. But when Dallas Fed President Robert Kaplan spoke on Monday, there was none, not for 2016, and most likely not for 2017 either, and maybe not even for 2018.
The wide-ranging speech included a blunt section on oil, the dismal future of the price of oil, the global and US causes for its continued collapse, and what it might mean for the Texas oil industry: “more bankruptcies, mergers and restructurings….”
The oil price plunge since mid-2014, with its vicious ups and downs, was bad enough. But since the OPEC meeting in December, he said, “the overall tone in the oil and gas sector has soured, as expectations have decidedly shifted to an ‘even lower for even longer’ price outlook.”
In recent articles I have discussed so many of the other signs that indicate that there is big trouble ahead, but today I just want to quickly mention another one that has just popped up in the news.
The amount of stuff being shipped across the U.S. by rail has been dropping dramatically. The only times when we have seen similar large drops has been during previous recessions. The following comes from Bloomberg…
Railroad cargo in the U.S. dropped the most in six years in 2015, and things aren’t looking good for the new year.
“We believe rail data may be signaling a warning for the broader economy,” the recent note from Bank of America says. “Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009.”
BofA analysts led by Ken Hoexter look at the past 30 years to see what this type of steep decline usually means for the U.S. economy. What they found wasn’t particularly encouraging: All such drops in rail carloads preceded, or were accompanied by, an economic slowdown (Note: They excluded 1996 due to an extremely harsh winter).
The “next economic downturn” is already here, and it is starting to accelerate.
Yes, the financial markets are starting to catch up with economic reality, but they still have a long, long way to go. It is going to take another 30 percent drop or so just for them to get to levels that are considered to be “normal” or “average” by historical standards.
And the markets are so fragile at this point that any sort of a major “trigger event” could cause a sudden market implosion unlike anything that we have ever seen before.
So let us hope for the best, but let us also heed the advice of RBS and get prepared for a “cataclysmic” year.
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.
Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
If you want to know what things in America are going to look like in a few years read his new book The Beginning of the End.
Today from this Day Forward, YOU Literally Only have ONE & A HALF MONTHS Left, to Figure Out How to Purchase, Buy & Store a Years worth of Food, Water, Pet Supplies, Medical Supplies, Bathroom Supplies, Personal Protection Gear, & Cooking Supplies, & ANYTHING else you can think of, for the ENTIRE YEAR of 2016. (And Well Beyond that for that Matter).
The Planet Nibiru / Planet 7X can be seen now near the sun, as it will go around behind the sun, then come out & then it will start to head towards the EARTH. Arrival Date is March 26, 2016.
On the week of Feb 28, through March 6 ALL the Banks of this Country will be Closed, Shut-Down, & Locked-up. You will have NO access to your MONEY in your bank accounts, what so-ever. The FIRST-EVER Bank Bail-ins will be in effect. Your Money will be Confiscated & Stolen right from YOU.
The Kenyan bathhouse boy must not start a trend of constitutionally unqualified “Presidents.”
Washington Post: Constitutional Law Professor Rips Harvard Law Review Article II Propaganda – Declares Ted Cruz Ineligible
“Surging” Chinese Trade Data
“China’s ‘fake’ trade data and abundant discrepancies”
“capital outflows are being disguised as exports with “over-invoicing” back in play.”
Baltic Dry Index: This little-known index shows the true strength of the global economy. The Baltic Dry Index is the barometer that gauges the shipping dry bulk commodities around the globe.
The Baltic Dry Index is an indicator of the direction the global economy is HEADED. It indicates that the numbers of manufacturing ORDERS have DROPPED significantly.
1/13/16 – Baltic Dry Index Crashes to 394
“The overall index, which gauges the cost of shipping dry bulk cargoes including iron ore, cement, grain, coal and fertilizer, … is down to 394 points – below 400 points for the first time – and the lowest level in records that date back to January 1985.
“The recovery in demand no longer appears to be a 2016 event and even 2017 is in question.”
In september of last year, I predicted that the FED would raise rates by 25 bp in December or January, and said it was was good thing (when everyone was claiming it would cause teotwawki) because it would mitigate “froth” in the markets.
The Dow is down 1600 points in the last ten days. 🙂
Robbie 41 You’ve been watching to many reruns of “The Outer Limits”! I’ll mark March the 26th on my calendar as another day that nothing really happens.
Im going to get more popcorn
Be sure to ask your doctor if depression, rectal bleeding, and suicide are right for you.
robbie41 please show links of what you indicated in regards to planet x and exactly where near the sun its at ? the timing is right on ? polar shifting,sink holes,earth quakes,tornadoes,floods,eratic weather world wide,tecktonic plates shifting,land mass moving and gravitational; fields changing, and the list goes on . neural confusion on humans due to change of climate.gravitational massive change,but I was wondering that with all the D.U.M.B.S. government underground tunnel shelters , and all the moving tecktonic plates shiftingwhich creates land mass to move or shift dramaticly and all of the members of the elite ones would also perish when planet x arrives and the planet reacts to the gravitational field in which not just planet x but all it moons ? I have been noticing how people around me are acting differently , like a hostile non caring mode. gravitational fields effect the mind . and if ones who are not affected have to protect themselves from the so called zombies everyone is talking about is that its the ones who are affected by gravitation field shifting ? help me here if I’m wrong , I need to know how caos would affect me and my family if I do not go outside nor go anywhere beans are for muscle mass and has protein like eggs,meat,peanuts . if only water and beans and some spices you good to go . with a high ph level in the body is 7.5 ph , your immune system will be strong to handle polar shifting ? and a tin foil cap to block frequencies of any type . thank you .
Umm… no. Sorry, but I don’t have time to concern myself with some supposed phantom planet that is coming to kill us all. I can’t prep for that and neither can anyone else as it would likely destroy the planet. The best case scenario for something like that is to be prepared to live as a scavenger as no location would be secure. Then again… why am I even talking about this? This theory has been around for a long time and I can’t even count the number of times I have heard a date for it only to have nothing happen. Prepare for economic uncertainty. Prepare for weather events. Heck, prepare for a possible civil war if you must but Planet X? Sorry… but no.
And you know this how, oh great seer of the future ???
Robbie41, is Geezuss on that planet? Maybe he’s finally coming back to “save” all the religious bible-thumping nuts on this planet?
Or maybe not. Thought so.
Where are you getting these dates from about the bank closures? I believe this could happen here in the USA, but why March?
NO. I’m pretty sure the date is September 23,2015. There are 33 other things that will also have happened on that date…..!
The Royal bank of Scotland giving financial advice? This is the same bank that fiddled its books, excelled at dodgy accounting, and paid out huge wodges of money to its directors during the banking crisis!
It was eventually saved from bankruptcy by the British taxpayer. Are we supposed to listen seriously to crooks like these?
RBS was saved from BK by the FED who gave the BOE $50 billion to support the UK banking system. Those were US taxpayer funds. 🙁
It kind of is like listening to a fox telling you how to secure the hen house! In all honesty though, they are correct. They are just late to the game and covering their asses so that they can say they warned people and divert blame from themselves.
Robbie41 I do not have much of a plan for planet X other then general preps and my relationship with God
Michael Snyder seems to have lightened up a little bit at least he did not send a bunch of fear porn to my email this Christmas as he did in 2014 however he does put out a lot of good information many things we have heard for a number of years now but that we also know are coming
Don’t really have any money to lose so I just continue to prep however I can and focus on being self sufficient
Cool handle. How did you come up with it? Your employer perhaps?
Robbie 41 – here’s the deal. If planet x exists I promise to send you $10,000 in gold. If planet x does not exist you just take your weird notions elsewhere and stop talking nonsense!
WERE FLIRTING WITH DISASTER EVERYDAY!
Any American who isn’t on a government watch list should be ashamed of themselves.
Rule 1.: If a bank tells you to do a think, do the exact opposite.
Baltic Dry Index falls again to 402! Never before. International trade has imploded. Can it fall to zero? It was over 2000 at one time. Is this it? Is this the real deal?
yes, it’s the real deal.
1/13/16 – Baltic Dry Index Crashes to 394
“Nothing Is Moving,” Baltic Dry Crashes As Insiders Warn “Commerce Has Come To A Halt”
For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America.
All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving. This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped.”
The only movement is bowel (not bow) movement.
Im there riiiight now
Made me laugh…
From a Mish article titled, ‘Investigating Claims “North Atlantic Trade Ground to a Halt, No Ships Moving”; The Real Shipping Story’
“Claims have surfaced that not a single transport ship in the North Atlantic is moving. […]
The Real Shipping Story
Let’s sort out reality from hype from Marine.Com. […]
As you can easily see, the numbers vary from chart to chart. Ships are moving.” …
Do you have any in-depth analysis? One argument is the low cost of oil sways the index. Is that wrong?
Oil could crash to $10 a barrel, warn investment bank bears
Headlines from Drudge-
1-Iran says seizure of boats lesson to ‘troublemakers’ in Congress…
2-Releases Humiliating Images of Sailors in Captivity…
3-Warns Missiles Locked on US Aircraft Carrier…
5-Sanctions Seen Lifted by Monday as Nuke Deal Implemented…
obola would even make the peanut farmer proud!!!
He’d even make ‘Miss Me Yet George’ and the Jimmy ‘The Peanut” Carter look like Einstein(s)
He makes Carter look like Patton
OREGON UPDATE: Went to the refuge yesterday and with our 5 tubs of oatmeal we drove 1000 miles in a 20 year old Jeep to deliver to brave TRUE American patriots. Spoke with our new great American hero Lavoy Finicum, and I have never met a more wonderful brave determined hero in my life. Stayed in a hotel our first night with a military recon team, and my son and I spoke with them. We told them why we were here as we talked about our two dogs we were walking when we met them, they came up to us. My son and I told them we did not want to see another Waco, and they both dropped their heads and one of the said “we hope it does not come to that. Our pop-up trailer spring broke, so we have to get it fixed before we can camp at the RV Park right out side the refuge. It is a nice Good Sam Park with hook-ups only a few miles from where the brave patriots are located. We will be camping there until Sunday night, and our son might stay longer if he can get a ride back to Colorado. My wife and I have to get back to our organic farm and chickens a neighbor was kind enough to watch over. The RV Park is owned and managed by a great patriot. We invite all patriots and their families to join us in a protest camp in support of the patriots. A local business gave us some more supplies to take to the patriots today. We will be going out to the press conference at 11:00, where a patriot judge from Colorado we met will be speaking today. I will try to give daily updates from here on out.
Thanks Ron, keep up the good work!
May God bless you and keep you and yours safe.
When you make money (greed) your bottom line you will eventually find yourself and everyone else you know at the………………….
(And it’s going to get crowed down here too!)
“If Americans ever allow banks to control the issue of their currency (Federal Reserve, central bank, IMF) , first by inflation and then by deflation (Economic bubbles), the banks will deprive the people of all property until their children wake up homeless in the streets.”
Seems as though TJ is an American Prophet!
If only more people would study the man’s wisdom.
“Sell everything!” and keep it in other paper promises…govt fiat and bonds.
Yeah….real half butt advice, RBS.
Better advice would be buy the stuff you need to keep you alive (beans/bullets/bandaids), and if you have left over fiat, gold/silver.
Sell everything, apart from Silver Gold and food!!!
The rats are jumping ship.
I thought it the crash would happen two years ago. It did not. All evidence is pointing to this year being it. I know things can change. I know that they can kick the can down the road. I just don’t think they will this time because of world wide trouble. Lets all hope we are ready.
Stay alert, prep, pray, and enjoy the good things in life when they come.
With all shipping and rail statistics looking horrible it is only a matter of time. I still don’t understand why so few are reporting this.
We must try our best to get the word out to all. That should be a part of prepping even if they are deer in the head lights.
The way it looks from the stock market for 2016 there will be a crash….however it want be the first time nor the last….The Government and American people have too much debt, and companies keep sending out credit cards and stores making it sound wonderful to have their credit cards. God Bless us all.
if you read the entire Zerohedge article they say “they are not experts in shipping, so if anyone else can confirm please do”.
Look at BDI< what does that tell you…..I mean come on folks enough with the denial that everything is "fear porn"…Lord Almighty I cannot stand that term!!!!!
Dave Ramsey on what happens to bonds when interest rates rise will throw some cold water on the “Sell Everything!” and invest in bonds crowd.
DOW had a difficult day.
9:00 a.m., 16582
4:00 p.m., 16151
chip,chip,chip…….chipping away. funny it sounds so bad especially after Obama says things are going so good. Did anyone notice the faces of the Joint Chiefs of Staff while Obama talked about the military last night?
I am sorry. I did not watch it. I just can’t take it. Can’t stand to hear that man talk knowing every other word is a lie.
pity for the energy sector ? we need oil at $50+ ? #u@% that . we need oil at $1 a barrel so the energy sector and their minions can starve to death . the planet is over populated and someone needs take a galactic hike so let it be the ratbastards that screwed the planet !
$50 a barrel is sustainable. $1 a barrel will just ensure that we will see $200 a barrel fairly quickly. I just wish I was off grid with a decent size solar array and an electric car so as to minimize my exposure to the oil price nonsense.
The only reason banks would tell their investors something like this is to insure a crash. If they can get people to do panic selling the market will definitely crash, which they want. Then they will take your accounts and thumb their noses at you.
Snyder, issues Red Alert for September 2015. Then it was before the end of 2015. If Snyder predicts it, it will never happen.
I’m in the freight business and it has slowed down 8 guys laid off and heard more might be too. The work is bidded it’s a union barn and the bids ar lousy lot of guys staying in shitty start times. The thing is if they need these guy to cum in they get a phone call and it’s usually everyday. Bottom 8 guys. Im not worried don’t think I’d get touched in round two either. Just get put back on a tow motor. Yes barn is the shop and tow motor is a forklift. Just not what I call them. Right side in trailer is low side left is high side. The tall skids go on the low side because if they go on left they will tip over. Oh a tractor is a horse. Old school trade trucking. I’ve talked to driver old as hell who tells me we got it made compared to the old days. Hard rubber tires no heat and a chain drive that you have to brush with grease from a bucket hanging from the frame. Fuck all that mess. These guys were folk heros and legends. Fucking rich snobs wouldn’t last a day in these boots. Cunts. I laugh at the suits. These are the same assholes that try to micro manage my efforts. I’ve yet to have a manager I felt knew what he was doing. They are all in over their heads. Don’t give a shit really anymore just want my envelope on Thursday. I got my own agenda. My opinion is the shit house is gonna go up in flames from what I’m seeing. The cost to profit ratio is it takes a buck to make 80 cents to me that is a sinking ship. Poor planning wasted fuel damage claims through the roof injuries. Honestly I don’t know how they aren’t out of business. Look at how the company you work for operates. If the management don’t know what they are doing or just don’t care the days are numbered. For me I’m riding this submarine to the bottom.