The chatter builds

  • The ‘magic number’
  • Something just isn’t right
  • Too negative
  • Fortune tellers
  • Send us your questions

Time is ticking down.

It’s now only just over 24 hours until our FREE and LIVE online special event begins.

That event is ‘The Day the Bull Market Ends’.

The demand to tune into the event has already exceeded our expected numbers. We’ve had to increase capacity to 5,000 from 3,000.

But based on the number of people who have registered so far, we’re not sure that will be space enough!

But, there’s still time to register. You can do so here. Then, tomorrow we’ll send you the link for the FREE and LIVE online event.

I suggest tuning in early. It’s sure to fill fast.

Anyway, I believe this is the most important event Port Phillip Publishing has ever held. It’s certainly the timeliest, as chatter about a potential crash begins to build.

So, don’t miss it. Tune in. Register here.

Markets

Overnight, the Dow Jones Industrial Average closed down 54.99 points, or 0.25%.

The S&P 500 gained 1.47 points, or 0.06%.

In Europe, the Euro Stoxx 50 index ended the day down 37.67 points, for a 1.07% fall. The FTSE 100 lost 0.19%, and Germany’s DAX index fell 1.25%.

In Asian markets, Japan’s Nikkei 225 index is up 21.58 points, or 0.11%. China’s CSI 300 is up 1.13%.

In Australia, the S&P/ASX 200 is up 38.01 points, or 0.67%.

On the commodities markets, West Texas Intermediate crude oil is US$46.35 per barrel. Brent crude is US$48.78 per barrel.

Gold is trading for US$1,241.77 (AU$1,566.63) per troy ounce. Silver is US$16.27 (AU$20.52) per troy ounce.

The Aussie dollar is worth 79.27 US cents.

The ‘magic number’

By the way, tomorrow night, I reveal the ‘magic number’, what it is, how to find it, and why it’s important.

It could be the key to knowing when the next crash will happen.

As for the latest ‘magic number’. Today, it’s 0.86.

If you have a good memory, you’ll notice today’s number is smaller than yesterday’s. Yesterday, it was 2.2.

The fact it’s smaller, is significant. I’ll explain why in tomorrow night’s live event. Register here now.

Something just isn’t right

Speaking of timely, check out this report from Bloomberg today:

Next month could prove to be a volatile one for securities, living up to its track record as a tough time for stocks, according to Prudential Inc.’s Quincy Krosby.

“We’re getting into August, which statistically is probably the least favourable month for the market, and there is probably something out there that should come and bring that market down a bit,” Krosby, a market strategist at Prudential, said Tuesday in an interview on Bloomberg Television.

Krosby said that stocks could drop 5 percent or even 10 percent. The S&P 500 Index fell during August in three of the past four years, even as markets extended a bull run that started in early 2009.

Record equity prices have spurred concern among money managers such as Paul Tudor Jones and Scott Minerd that the market has reached unsustainable levels. Federal Reserve Chair Janet Yellen said in June that some asset prices had become “somewhat rich,” although she noted in July that gains in markets had not been accompanies by a substantial borrowing increase.

Interesting.

Two things about that. First, we’re not actually saying that a major and catastrophic market and financial collapse will begin next month.

We’re not even saying it will begin before the end of this year…or before the end of next year.

We’ll be upfront and say that we don’t know for certain when the crash will happen. The only thing we do know is that it will happen.

That’s why we’re holding tomorrow night’s event. We want you to prepare for the worst. History shows you that markets don’t rise forever.

Recessions happen. Crashes happen. Even depressions happen from time to time. We’ve shown this chart before, but we’ll show it again. It’s the Dow Jones Industrial Average, going back to the late 19th century:



chart image

Source: Bloomberg
Click to enlarge

The red vertical bars show the duration and frequency of US recessions. You can see that they happen regularly.

And, arguably, if you look at the right-hand side of the chart, you could say the next recession, while perhaps not overdue, is (again, arguably) due.

And if you think US recessions don’t matter to Australia, think again. The following chart also shows US recessions. But this time, overlaid on the All Ordinaries index:



chart image

Source: Bloomberg
Click to enlarge

Again, it’s clear. Whenever the US suffers a recession, it has an effect on the Aussie market. Sometimes it’s a big effect. Other times it’s a small effect.

We see no reason, big or small, why the Aussie market won’t take a hit next time.

And comments from someone like Quincy Krosby at Prudential shouldn’t be ignored.

As far as Wall Street firms go, Prudential is about as ‘blue-chip’ as you can get. However, we do have one disagreement. And that brings us to the second point we wanted to mention.

Krosby says the market could fall 5–10%. Again, we’re not saying it will or won’t.

All we will say is that if the crash we expect to happen, does happen next month, a 5–10% fall won’t be the half, or even the quarter of it. You’re looking at a 50% or more collapse.

That’s in large part due to what we see as the fragility in the system. And by fragility, we mean debt.

We only need to look at two pieces of evidence to show you what I mean. Before I show you, first remember the phrase widely used among the mainstream for most of the past eight years.

They always talk about ‘deleveraging’. By that, they mean less debt. We’ll show you that’s not true. There’s more debt in the system…way more.

The following chart shows Australian household debt levels:



chart image

Source: Bloomberg
Click to enlarge

In early 2006, before the 2008 financial meltdown, Australian household debt was $853 billion.

Today, it’s $1.81 trillion.

It has more than doubled. We don’t need intimate knowledge of the dictionary, to know that the doubling of debt isn’t the common definition of ‘deleveraging’.

The following chart shows you US outstanding government debt:



chart image

Source: Bloomberg
Click to enlarge

In 2005, before the 2008 financial meltdown, US government debt was US$7.8 trillion.

Today, it’s US$19.8 trillion.

It too, has more than doubled. Before long, it will have tripled. We just wonder whether it will hit the triple before or after the next crash.

Trouble is brewing. We’re not the only ones to think so. But we think we’re the only ones planning to help investors do something about it.

If you haven’t yet, register for ‘The Day the Bull Market Ends’ now.

Too negative

More on this subject.

Something we haven’t looked at in a while is the issue of negative interest rates.

It seems that it’s no longer a major topic of conversation. Yet, as far as we can see, the problem of negative yields is just as bad today as it was a year ago.

To our mind, that makes it even more of a sham to think that the world’s economy is improving.

Check out the following screenshot from Bloomberg:



chart image

Source: Bloomberg
Click to enlarge

Of all the countries in the Eurozone, only two have a positive interest rate for their two-year bonds — Cyprus and Greece.

The rest yield less than nothing. And once you factor in inflation, they yield even less than less than nothing!

So we wonder how that ties in with the notion that somehow the Eurozone has been revived by the election in France of Emmanuel Macron.

We just don’t see it.

And it doesn’t get much better for the five-year bonds:



chart image

Source: Bloomberg
Click to enlarge

Of the 13 bonds, eight have a negative yield. The best elsewhere, is a 1.225% yield from Portugal’s government debt.

But the mainstream wants you to believe everything is just fine. Governments also want you to believe everything is fine, as do the world’s central bankers.

Call us an old gloomy-guts if like, but, we just don’t believe a word of it. Hence, why we’re holding tomorrow night’s special event, ‘The Day the Bull Market Ends’. Register here.

Fortune tellers

Last night, the Netflix Inc [NASDAQ:NFLX] went bonkers. Its share price gained 13.5%. That’s huge for what is now a US$183 stock.

Impressive. But we note with interest, the following report in the Financial Times:

Netflix executives are hitting bonus targets with almost uncanny accuracy, raising questions among investors and tax experts over whether they are a fait accompli…

The FT produces the following chart:



chart image

Source: Financial Times
Click to enlarge

It continues:

Regulatory filings show the three executives have hit the target squarely in seven out of eight quarters between the beginning of 2015 and the end of 2016, never exceeding it, and missing by just one percentage point in the other quarter.

The report doesn’t suggest any ‘funny business’ is going on. And neither do we. We just admire their forecasting skills.

Well done.

Send us your questions

Tomorrow night, we host the special live event ‘The Day the Bull Market Ends’. It’s live, so we’ll take questions on the night.

However, you have an opportunity to mail us questions in advance.

Send your questions to letters@portphillipinsider.com.au, and type ‘Questions for live event’ in the subject line.

Along with your question, include your first name, last initial, and the city or town where you live. We’ll aim to get through as many questions as possible.

And as I say, we’ll take as many questions as we can on the night, live. But this is your opportunity to get in first.

We look forward to hearing from you.

Cheers,
Kris