This report was originally published by Michael Snyder at The Economic Collapse
We have not seen Wall Street this jumpy since just before the great financial crisis of 2008. As I have explained so many times before, when the waters are calm and there is low volatility, markets tend to go up. And when the waters are choppy and volatility starts to spike, markets tend to go down. That is why the behavior that we have been witnessing from investors during the first two quarters of 2018 is so alarming. A high level of market turnover is often a sign of big trouble ahead, and according to Bloomberg our financial markets “are churning at the fastest rate since 2008″…
From junk bonds to emerging-market stocks, market turnover is through the roof, reaching multi-year highs. Within the S&P 500 Index, investors traded more than $2.9 trillion worth of shares in each of the past two quarters, a feat last achieved in early 2008.
Bloomberg is not prone to hyperbole, and so when they say that “market turnover is through the roof”, I hope that you will take that statement seriously.
We truly are facing a scenario that Wall Street has never seen before. The Wilshire 5000 stock index to nominal GDP ratio has been hovering near all-time highs, and what that tells us is that stock prices are more overvalued today than they have been at any other point in modern American history. Meanwhile, all sorts of red flags continue to indicate that big trouble is on the horizon, but most investors are ignoring those red flags.
But if you look closely, it is becoming clear that the most savvy investors are getting out while the getting is good. In a previous article, I explained that the “smart money” is getting out of stocks at a pace that we have not seen since just before the last financial crisis. Fortunately for them, the “dumb money” has been willing to buy what they are selling at these massively inflated prices.
We see a similar spike in the “churn rate” when we look at emerging markets. In fact, Bloomberg says that we have not seen this much volatility in emerging market stocks since the international financial crisis of 1998…
It’s a similar story for developing-nation assets at the mercy of a strengthening U.S. dollar and trade tensions. Volume on the MSCI Emerging Market index reached $1.9 trillion in the three months through June, the most since 1998 when a wave of currency devaluations and defaults ripped through emerging economies from Thailand to Russia.
As I mentioned a couple of days ago, global stocks lost approximately 10 trillion dollars in value during the first six months of 2018.
Just think about that.
10 trillion dollars is almost half of the U.S. national debt.
If global stocks continue to fall at a similar pace during the second half, it is only a matter of time before U.S. stocks get absolutely slammed.
One of the emerging markets that is showing significant signs of trouble is India. According to Bloomberg, India’s banks are now dealing with 210 billion dollars of bad debts…
India’s nearly $1.7 trillion formal banking sector is coping with $210 billion of soured or problem loans, and some regional banks have been ensnared in fraud scandals.
If U.S. banks had 210 billion dollars of bad debts that would be a big problem.
In India, a number like that is a complete and utter financial catastrophe that is not going to be easy to clean up.
According to CNBC, most of the bad loans are owned by India’s state-controlled banks…
India’s public-sector financial institutions control about 70 percent of all banking assets in the country, but they have the highest exposure to soured loans amounting to as much as $150 billion. In fact, the 21 state-owned banks had stressed loans of about 8.26 trillion rupees ($120 billion) as of Dec. 31, Reuters reported. Private sector lenders, meanwhile, reportedly had a bad loan pile of just about 1.1 trillion rupees.
Things have already gotten so bad in India that some people are starting to panic.
In fact, it is being reported that ATMs in some areas of the nation have been “running dry”…
On top of that, ATMs in some parts of the country have been reported to be running dry in recent days. There’s an unusually high demand for cash, according to the Finance Ministry. The rupee shortage is being blamed on everything from farm spending to looming elections and hoarding by some families.
This is yet another example that shows that it always pays to not put all of your eggs in one basket. In the event of a major emergency, you will want access to cash, and you cannot necessarily count on your bank to always be there for you.
As we move forward into the second half of 2018, red flags continue to appear on an almost daily basis. The Federal Reserve is steadily raising interest rates, civil unrest is erupting in the streets of America, and the Trump administration is starting trade wars with virtually everyone else on the planet.
In the end, these trade wars are going to prove to be very painful for U.S. businesses. Earlier today, CNBC posted a piece about the impact that tariffs are likely to have on our pork producers…
U.S. pork producers are about to be bitten by a second batch of hefty retaliatory tariffs from China and Mexico — and that has some large producers predicting they could lose big money and be forced to invest overseas.
Executives say the pork industry has been expanding in recent years, in part on the expectation of export opportunities that would continue to support growth. However, the threat of a trade war is adding uncertainty and driving fear. One in 4 hogs raised in the U.S. is sold overseas, and the Chinese are the world’s top consumers of pork.
As I write this article, I can hear fireworks going off in the background. The 4th of July is always a time for celebration, and without a doubt many Americans are extremely optimistic right now.
But as I have just explained, major storm clouds are gathering, and it isn’t going to take much to push the U.S. economy into another major crisis.
***
Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.
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 is coming and what you can do to prepare, read his latest book [amazon text=Get Prepared Now!: Why A Great Crisis Is Coming & How You Can Survive It&asin=150522599X].
Not to be overlooked in this ^^ is that there are a LARGE number of imbeciles that actually think Trump fixed it, we’re tired of all the winning, everything is ok and we’re draining swamps.
A large number of those imbeciles will point out S&P or DOW numbers, SCOTUS appointments, SCOTUS decisions (that have ZILCH to do with Trump), and on and on with stupid shyte that matters not one whit when markets melt down HARD.
A lot of “our” side are ignoring all the same things they were screaming about 2 years ago.
WHY DIDNT THE SKINNY BITCH WHITE KIDS FIGHT BACK?????????
CAUSE THEY HAVE NO FATHER FIGURE????
CAUSE MOM TOLD THEM IF THEY EVER FIGHT BACK IT IS THEM THAT WILL GO TO JAIL PLUS THE MUD PERSON WOULD SUE THEM AND WIN (PROBABLY TRUE)
CAUSE MOM TOLD THEM ITS OK TO BE A SKINNY BETA PASSIVE BITCH BOY AND WEAR SANDALS AND SKINNY JEANS?????
CAUSE MOM MADE SURE THERE ARE NO MORE HIGH SCHOOL BOXING TEAMS ANYMORE SO LITTLE JOHNNY CANT SCRATCH UP HIS NAIL POLISH??????
CAUSE OF ANTI BULLYING CAMPAIGNS THEY NEVER HAD TO FIGHT BEFORE?????
CAUSE THEY WERE TOLD THE MUD PEOPLE ARE JUST LIKE US????
CAUSE MOM THINKS MEN ARENT NECESSARY CAUSE THE GOVERNMENT WILL PROTECT EVERYONE (IT CANT)
CAUSE WOMEN VOTED TO LET THE 80 IQ MUD PEOPLE IN TO BEGIN WITH?????
WHEN I WAS THAT AGE I ALREADY HAD TWO BLACK BELTS
YOU BEST BELIEVE I DIDNT PUT UP WITH BOOMER SMARTASSES EASILY
I HAVE THE SCARS AND BROKEN BONES TO PROVE IT
WE DIDNT HAVE JOSE AND TYRONE LIVING ANYWHERE NEAR US
I DONT WANT JOSE AND TYRONE LIVING NEAR ME
YOU BEST BELIEVE THE KREUTZ AINT NO KEYBOARD COMMANDO
YOU THROW A DRINK IN MY FACE YOU AINT GONNA BE PRETTY MUCH LONGER
DIVORCE CULTURE MUST END
FAMILY VALUES MUST BE RESTORED
FEMINISM MUST END
WOMEN MUST BE BARRED FROM GOVERNMENT
Wow!!!!!! YOU have issues, please seek help.
Sorry, you’re a racist and an imbecile and therefore have no relevance to normal conversation.
Amen, ALL TRUE as the day is long boys!
Emerging markets ALWAYS collapse first at the end of a business cycle as the dollar strengthens and money flows into the USA. ALWAYS.
I explained this phenomena to this community several years ago and told you to expect it went the end of the business cycle was near. Yeah. Its in the archives.
“U.S. pork producers are about to be bitten by a second batch of hefty retaliatory tariffs from China and Mexico …”
Americans can mitigate this tactic by eating more pork. 🙂
eat more…….chicken?
“and money flows into the USA. ALWAYS.”
Money flowing into the US? LMAO! Trade wars are SENDING it overseas.
No, Trade Wars are NOT sending cash overseas. Do the research. Any company that sends its factories offshore to take advantage of cheap labor and manipulated currencies will discover TARIFFS on their goods and services if they try to import either into the USA. Even a cursory read of the financial press could educate you about that.
The markets are ALWAYS awash in global investor cash at the end of the Business Cycle. And that is before the repatriation of $4 trillion in cash that Americans and/or American companies have stashed offshore that is in the process of returning to the US with the new tax law DESIGNED to repatriate those dollars.
Make it your your business to know. 🙂
For years I have stated that the real danger to the World Economy was either China or the EU. This recent article on zero Hedge illuminates the potential DEBACLE that would/will ensue in China when it crashes from TRUMP’S TRADE WAR.
A war that China cannot win. 🙂
https://www.zerohedge.com/news/2018-07-07/china-threatened-vicious-circle-panic-selling-marketwide-margin-call
I am no apologist for Trump, despite having voted for the guy. And, I am the first one to hold his feet to the fire when he does stupid things or when he reneges on any of his 2016 campaign promises.
However, calling the 63 million heroic voters who saved this nation from the Hildebeast and the Communist, Socialist, Marxist gaggle of radical, anti-White, anti-Western, anti-American, foaming at the mouth lunatics that she would have unleashed upon America – ‘imbeciles’ is a clear indication that NunyaBidness needs to look into a mirror if he or she wants to see what a real imbecile looks like.
Trump is far from perfect, but he is one hell of a lot better than the alternative.
agreed!!!!!!!
Sorry moron, try reading what I said again. NOWHERE did I come close to intimating that I’m a dumbocrat.
LOL actually I said you’re an imbecile for believing that Trump is better than anything.
Guys the truth is that NOTHING has changed, hell if anything it has all continued to spiral out of control and she is going to blow and blow hard. Trump cannot fix this massive cluster of cow feces this country and this world for that matter. Guys, it is ALL going to implode on us, so get ready, it will be very ugly!! No one can save this train with no brakes.
Not seen since 2008….says a guy who know squat about the market
Not seen since 2008….says a guy who know squat about the market and “other comments from a guy with a bias….yea guy’s I want stock market advice from morons ……not
Snyder again? HO HUM, back to sleep.
Have you ever been awake?
Deplorable, how’s trailer park life going? You stinky low IQ goat humping clown.
Attacking BH Tharsheblows? Coward! Hiding behind ascreen.
“Fortunately for them, the “dumb money” has been willing to buy what they are selling at these massively inflated prices.”
Real estate, equities, and PMs all apply to this comment.
Prices are too high. They are going to adjust.
Prepare for the depression.
Silver is most certainly not overvalued.
Real estate values have normalized in my area, finally, after ten years. They are still cheap compared to other areas so valuations vary based on location. That is normal for real estate.
People with excessive debt or HELOCs or secondary liens on their property will get caught, the same as the last time.
Many people live in a financial depression, now. The reasons are varied. Drug use, not educated, welfare, other benefits. The day those benefits end is the day US cities burn.
Let them burn and kille each other off! We need a good cleaning
I don’t think that people can be saved from themselves.
Due to my geographic location Silver or Gold isn’t worth much.
From my point of view, 4 head of weaner cattle are worth way more than a Krugerrand and I have a really good ocean view.
Real estate here is still going up and rich people are buying it
like it is candy. I’m not selling mine and most my neighbors are digging in for the duration.
I purposely do not own equities. I do buy bonds.
Location, location, location.
If you are in a city, get OUT!
“If you are in the city, get OUT!”
Best advice there is.
All good until people start shooting them for fun in the middle of the night.
If you have any left alive after it gets real bad people will kill them for food unless you watch over them 24/7.
I follow the luxury real estate markets in particular, and in the Western US. They have been declining for 6-8 months. Even in Park City, although there are some holdouts who will be caught holding the bag because they refuse to recognize reality.
The BIG BANKS are unloading their inventory if they can, but buyers at the High End are scarce. The handwriting is on the wall. 🙂
“and PMs”
LOL, sorry no. PMs are being traded and priced via derivative manipulation by sovereign govts and mega corps, not based on availability of physical metals.
China owns the largest pork producer in the USA. SMITHFIELD PORK. they are hurting if themselves.
Well, if the 1% elite anti-Trumpers are selling their stocks
because they think Wall Street is about to go belly up….
good for our side !!! They will lose big time !!!
By the way….I think the market shares should be held for
at least 12 months before they can buy and sell on the
“inside trade information” only they have privy to.
Maybe that would cool the profits of CONTROLLING
INTERESTS WITH BILLIONS TO INVEST WHICH
CHANGES THE GAME FOR SMALL INVESTORS.
In spite of a tradition against foreign entanglements, the US has reportedly incurred war debts, since Revolutionary times — in the neighborhood of 250 years ago. (Apparently, not counted by Hamilton, until 1790.)
By Snyder’s figures, “global stocks lost approximately 10 trillion dollars in value during the first six months of 2018.
Just think about that.
10 trillion dollars is almost half of the U.S. national debt.”
This means that your rhetorical, virtual, mathematical problem, of many generations, could have been solved in a matter of hours.
“Americans are extremely optimistic” nowadays, he says.. and in the next breath he’s talking about economic collapse– thanks to Idiot trump doing his trade-war thing.
(They tried that just before the Great Depression in the 20’s… we saw how that turned out!!)
Snyder is doom and gloom d!ck and never right about anything