If This Weakest, Wobbly Link Snaps… Look Out!
The Global Rout Intensifies
from The Wealth Watchman:
Well folks, the Global Stock Market Trade Equity Energy Credit rout that began with the start of 2016 has continued. Everywhere you look, asset valuations are getting completely monkey-hammered.
I intend to survey the damage, and focus on the weak link in the system here that I’ve been watching carefully. Firstly though, let’s take a gander at a laundry list of absolutely horrifying data points around the world. Let’s start with a very revealing chart, which should tell everyone with eyes to see, precisely what they need to know:
The Baltic Dry Index tracks the shipping industry in international trade. Greece factors heavily in this equation. This picture is unbelievable. I honestly keep thinking to myself:
“Wow, we made another new low in the BDI, surely it’s gotta find a bottom here somewhere,” only to find there is no bottom!
It just keeps falling!
The 700 level, which was important due to the final bottom the shipping industry found during the Great Financial Crisis of 2008, was finally taken out with gusto in the last two business quarters. Something snapped and snapped hard!
It has now dropped to nearly half the previous lowest level that global shipping had reached during the Great Financial Crisis of 2008/2009. Half of the worst level that we’d seen in the last century!
Everywhere you turn, there is excess capacity in shipping. Shipping lanes are becoming backed up, and there is far too much product waiting to make its way through the “just in time” chain of command. Poor Greece! First they were gutted by globalist bankers, then their vote to reject the newest “bailout” was literally tossed in the trash by Brussels, and now their golden-child industry, international shipping, is literally dead in the water right now.
Oh, and their pain is being shared and felt in spades throughout their continent. Just take a look at these charts(via zerohedge).
Europe’s Growing Financial Calamity
The equity bloodbath that the world is feeling, is spreading quickly over Europe. Most major stock markets there have now either reached the December lows of last year or have made new lows!
This is partially the result of cheap credit drying up all over the world(as we covered in my last article). If you look closely, the correlation between credit and their stocks is absolutely undeniable:
Credit is tightening, taking the oxygen from the primary dealer banks and large corporate buy-backs, that have helped levitate their stock markets. Tens of millions of stock-owners, pensioners, and savers are getting hosed. Their savings, their 401ks, their retirement plans are taking a beating.
If it’s any consolation though, there is a silver lining to all of what’s going on, and it should bring a smile to your face!
For as ugly as global trade and global equities are right now, the banks are faring much worse! Italy, whose banks have been bobbing for air for months, have finally succumbed to the renewed selling pressure, which is being exacerbated by the withdrawal of liquidity and credit.
Ouch, that’s a wrecking ball to the face!
What happens next though, should make you nervous. Things are getting so bad for Italian banks, that the CEO of Monte Paschi Bank said this:
*MONTE PASCHI CEO CONFIRMS FINANCIAL STABILITY OF BANK
*MONTE PASCHI CEO: STOCK DECLINE NOT JUSTIFIED BY FUNDAMENTALS
Shield brothers, there is an old saying, which you should ALWAYS keep at the forefront of your mind:
“Never believe anything until it has been officially denied”.
The fact that Monte Paschi’s CEO is coming out to assure everyone that:
1)They’re stronger than ever…
2)That the actions of investors selling their stocks, aren’t “justified” by the big picture
3)That stability and calm reign supreme…
Should have you hunkering down! Also their ridiculous assertions, do not match the actions of the Italian government,who just made this announcement:
PRESS RELEASE
Consob adopts a temporary ban on short selling on Banca MPS shares.The ban shall apply immediately and shall last until Tuesday 19 January 2016 end of day.
Consob decided to temporary prohibit short sales of the share Banca MPS (ISIN code IT0005092165).
The ban will apply immediately and will be enforce for the entire trading session of tomorrow, Tuesday 19 January 2016, on the MTA market of Borsa Italiana.
Yes, brothers, the Italian government has begun the policy of banning short-selling again! Now, granted, it’s only one bank, and it was only for one day, but that’s how it starts, not how it ends.
Look at the general picture of their CDS market(which is used to insure against risks on these banks):
Uh oh! Folk, that’s a huge spike, in fact the last time there was this little trust in their banking system, and this much hedging, was nearly 3 years ago, and this spike has occurred in just a few weeks’ time.
There’s a lesson here:
It doesn’t take long to lose confidence in the entire system,when that system is built on the rock-solid foundation of unicorn tears and puppy dog tails! There is absolutely nothing to this financial system of ponzi/debt pyramids, and increasingly, everyone’s putting their money in places which state that the emperor has no clothes!
The banking carnage is not contained to Europe or to Italy either….it is spreading here, and fast! Just look at a few of the major US banks:
1) CitiBank
Share price 6 weeks ago: $55
Share price today: $40.50
A decline of 28% in one month.
2) Goldman Sachs
Share price 9 weeks ago: $199
Share price today: $153.78
A decline of nearly 28% in two months.
3) JP Morgan
Share price 7 weeks ago: $67.89
Share price today: $55.51
Decline of roughly 19% in 7 weeks.
4) Bank of America
Share price 6 weeks ago: $17.80
Share price today: $13.70
Decline of 33% in 6 weeks!
Banking is bearing the worst of the brunt, because of tightening credit, and folks’ concern over the liquidity and equity picture. However, there is another huge teetering pillar that I’ve been watching for weeks(along with oil, which just caved to $26 and change per barrel, by the way), and if this wobbly pillar goes….watch out!
The Banking Cabal’s Foot Soldiers
