Stock Market Update - The Immovable Force vs the Immovable Object
Submitted by The Market Vigilante
It's been a couple weeks since our last update and we are overdue. There has been a lot going on so it's time to catch up and anticipate WHAT COMES NEXT.
In our last update, we warned that Bitcoin was about to explode to $13,000. We also issued bearish warnings with regard to credit markets (HYG), corporate bonds (LQD), and the insurance sector (KIE).
Let's start off with Bitcoin. As predicted, Bitcoin hit it's target. At the time of this writing, Bitcoin is currently trading at $17,000. In the next few hours, it could easily reach $20,000 before it decides to pull back. When it does, we are currently looking at a retracement to between 11k and 14k but with this massive ramp up it's difficult to tell. Bitcoin is looking more like a bubble with the charts currently but we know that it's way too soon for a bubble with less than 1% of the population participating in Bitcoin and a large percentage of folks believing the MSM hype that Bitcoin is not real currency and that it's a bubble.
Both the CME and CBOE are launching markets with Bitcoin in the coming days and these derivatives COULD cause problems for Bitcoins continued meteoric rise. Folks may opt for the derivatives instead of the real thing and if that happens, then it could have a negative affect on the actual demand for bitcoin and suppress the market (similar to the paper/physical precious metals market). In the gold market, physical gold is a fraction of the derivatives trade.
We are still very bullish on Bitcoin for the time being. If the markets manage to spoil Bitcoin, we expect a mass exodus to alternatives like Ethereum, Litecoin, and Bitcoin Cash. Only time will tell.
Onto the markets...
While we do not yet see a bubble in Bitcoin, we see bubbles almost everywhere we look in the stock market. A few that continue to look especially worrisome include the above mentioned credit markets (HYG), corporate bonds (LQD), and the insurance sector (KIE).
Since our last update, the markets from best to worst are LQD, KIE, and HYG.
Corporate bonds are still consolidating at this level but are setting up for a huge plunge.
The insurance sector has actually made NEW HIGHS but the reinsurance sector tells us otherwise and have provided us with multiple confirmations that the next major move lower is imminent. Given the expanding fires on the West Coast, in addition to the historic hurricane season, it's not hard to understand why. When it's all said and done, we are anticipating losses in the TRILLIONS. Insurance companies are not funded to be able to handle those kinds of claims (bailout?).
Finally, credit markets are also giving us multiple confirmations and the monthly chart is looking especially worrisome. We are seeing a continuation of the downward trend that began in 2014 and bottomed in 2016 (when the DOW was crashing more than 1000 pts per day). Credit markets are signalling something very dark on the horizon. This is not hard to understand when you realize the new highs in credit card debt, subprime auto loans, and student loans, with all of them increasing in defaults. This is what happens when you reward too big to fail banks bad behavior folks. They just made the problem worse. Soon everyone will come to realize this... some only after losing everything they've worked hard for.
THAT is why we don't think Bitcoin is a bubble yet! Bitcoin is launching because the traditional markets have systemic risk and cannot correct without crashing because banks (and now governments) are so over-leveraged, that they cannot possibly meet their debt obligations without hyper-inflating their respective currencies. Doing so, only creates MORE loss of faith and flight to safe havens - Bitcoin obviously being one of them.
It should be stated that we still favor hard assets in addition to Bitcoin like land and PHYSICAL precious metals. When the next financial crisis hits, these assets will protect you - if anyone can be protected from what is to come.
As the markets continue to deteriorate, we've noticed the DRUMS OF WAR continue to beat louder once again. While ISIS has been officially defeated in Syria, approx 2000 US troops remain in the region and the Pentagon has no intention of withdrawing them. Israel continues to strike inside Syria and both Israel and Saudi Arabia are becomming increasingly hostile towards Syria and Iran. With the ISIS proxy army that the West funded and trained nearly destroyed, it appears that the Middle East is about to erupt into a much larger conflict. And of course Turkey is the wildcard in all of this. Regardless, the Middle East is set to erupt into WWIII and by all of our accounts, historians will likely look back and recognize 2015 as the beginning of the third world war.
As if that weren't enough, the US is positioned to completely destroy N. Korea and may be planning a simultaneous attack against China - who has vowed to defend N. Korea if the us attacks pre-emptively (which is the standard these days). If the US expects a response from China, expect them to pre-emptively attack them as well.
But the US would never launch an all out pre-emptive nuke assault against China and/or Russia right? Think again.. In fact Paul Craig Roberts (former Reagan cabinet official) claims that Washington is more hellbent than ever on a first strike.
It truly is the best of times and the worst of times. Bitcoin holders are up more than 1700% for the year! Western economies are on the brink of collapse under the weight of their debt based economies and systemic risk. And when they do, it appears that they will launch an all out nuclear assault in a last ditch effort to maintain their hegemony and justify the inevitable martial law that follows.
We are very unsure if anyone will survive what is to come. We are more confident THAN EVER that a major economic collapse is on the horizon.
Hug your loved ones tight. Be thankful for every day. And remember...
Act accordingly,
The Market Vigilante