THE FEDERAL RESERVE 2014 STOCK MARKET CRASH

THE ABOVE CHART IS NOT WHAT "LEARNBONDS.COM" CALLS JEFFREY GUNDLACH'S "MOST INTERESTING CHART", BUT IT SERVES TO SHOW ANYONE WITH EYES THAT THE FED HAS DONE ALRIGHT FOR ITSELF AFTER ALL THOSE BAILOUTS, AFTER THAT LAST LITTLE MARKET CRASH!
ECONOMIC CATASTROPHES PAY...THE FED!

BUT, AS THE CHART BELOW SHOWS, WE ARE RIDING THE SAME RAIL THAT LED TO THE BIG CRASH OF 1928-1929, WHICH GAVE US THE "GREAT DEPRESSION".


THAT IS UNCANNY, IS IT NOT?

SINCE BEFORE THE BAILOUTS WERE ALL COMPLETE, SINCE PERHAPS 2009, SOME ECONOMIC WIZARDS HAVE BEEN SAYING THE STOCK MARKET IS DUE AND EVEN PAST-DUE FOR ANOTHER SERIOUS CRASH.
<<At this point, it's quite possible that the high-water mark has been reached and that the tide may be turning. >>

NOT MANY HAVE AGREED, NOT AFTER 5 YEARS OF HEARING THE FAINT WARNINGS, BUT LATELY, SINCE PERHAPS SPRING OF 2013, A FEW "BIG NAMES" HAVE JOINED THE OLD SEERS IN STATING THAT THE MARKET JUST CAN'T GO ON AS IT HAS, AND MORE THAN A FEW ARE BLAMING THE FED, MUCH AS SOME IN CONGRESS AND IN THE FINANCIAL WORLD BLAMED THE FED FOR THE CRASH THAT BEGAN THE GREAT DEPRESSION.

<<A recent article by Paul B. Farrell of MarketWatch said that there is a 98% risk of a stock market crash before the end of 2014.
One key reason Farrell expects a crash?
Federal Reserve policies>>

JUST LIKE THE 1930s CRASH...THE SAME SET-UP.

OR, PERHAPS IT LOOKS MORE LIKE PRE-1987 CRASH?

TIME MAGAZINE WROTE, Oct. 22, 2012:
<< the crisis of 1987 was coincidental with Alan Greenspan taking over the Federal Reserve — and Greenspan’s attitude towards crisis management and regulation greatly influenced the 2008 panic.
I spoke with Charles Geisst, a professor of finance at Manhattan College and author of Wall St: A History, to discuss what the 1987 crash says about the stock market today. It’s impossible to pin down for certain the cause of the ’87 market crash, but the most important ingredient was an overvalued stock market.
  The years leading up to the crash had seen incredible gains in the market. >>

WHETHER IN `929 OR 1987, MANY PEOPLE DID BLAME, AND STILL BLAME, THE FEDERAL RESERVE.

WHY WOULD THE FED DO IDIOTIC THINGS TO BRING ABOUT ANOTHER ECONOMIC CATASTROPHE?

WHY WOULD THE FEDERAL RESERVE PUSH AMERICA OVER ANOTHER FISCAL CLIFF?

WELL, ISN'T "QUANTITATIVE EASING" JUST A WAY THE FED USES TO INFLATE THE S&P 500?

DOESN'T THE FED ALWAYS MANIPULATE THE MARKET? 

DOESN'T THE FED FIX GOLD PRICES?

DON'T THE CENTRAL BANKS IN EVERY NATION CONTROL THINGS?

ISN'T OUR FED UP TO NO-GOOD ON A DAILY BASIS?
SOME FAIRLY "BIG NAMES" THINK SO!

DARE WE SUGGEST THAT THE FED HAS A HELLUVA LOT OF "INSIDER INFORMATION" ABOUT WHAT MAY GO ON ON WALL STREET?

I READ SEVERAL "RUMORS" THAT OLD GEORGE SOROS HAS BEGUN BETTING AGAINST THE MARKET!

HUFFINGTON POST REPORTED:
George Soros Bet $1.3 Billion The Stock Market Will Fall

<<02/21/2014
Soros definitely jacked up the bet going into the end of the year, to $1.3 billion from $470 million in the third quarter. And just last month he warned about risks to the global economy, mainly from China.

Soros Fund Management had $1.3 billion worth of options at the end of 2013 that pay off if the Standard & Poor's 500-stock index falls, the Bullion Baron blog reported last week, citing the fund's latest regulatory filing. It was Soros' biggest position, making up 11 percent of his fund's holdings.>>

<<22 February 2014 IN A BRITISH NEWSRAG
George Soros is now betting against a rising Dow, and the rush of private equity flotations has an end-of-the-party feel>>

THAT ARTICLE GOES ON TO SAY...
<<the best way to deal with these bubbles is to revive the real economy; after all, "bubble" is a relative concept and even a very high price can be justified if it is based on a strong economy. This will require a more sustainable increase in consumption based on rising wages rather than debts, greater productive investments that will expand the economy's ability to produce, and the introduction of financial regulation that will make banks lend more to productive enterprises than to consumers.
Unfortunately, these are exactly the things that the current policymakers in the US and the UK don't want to do.
We are heading for trouble.>>

ASK YOURSELF, WHY HAVEN'T THE "POLICYMAKERS" TAKEN SUCH STEPS, AND WHY ARE THE 'PUBLICANS SO DISTRAUGHT EVERY TIME WE SEE ANY RAY OF HOPE FOR THE U.S. ECONOMY?

I THINK WE MIGHT JUST SEE BOEHNER COMMIT SUICIDE IF THE OBAMA ADMINISTRATION DOES NOT SEE A MAJOR STOCK MARKET CRASH! 

WHO LOVES WALL STREET MORE, THE FED OR REPUBLICAN CONGRESSMEN?

WHO HATES OBAMA MORE OF THOSE TWO?

WHO WOULD LOVE TO SEE A CRASH AND A RUIN GREATER THAN BUSH OR REAGAN MANAGED TO PULL OFF IN 1987 AND 2001-2009?

THE FED'S "POLICY" HAS CAUSED THE MEGA-COMPANY CEO TO CARE ONLY ABOUT WHAT HIS STOCK IS SELLING FOR.

THE BIGGEST BUSINESSES ARE SIMPLY NOT HIRING, NOT EXPANDING THEIR BUSINESSES, AND HAVE REALIZED THEY CAN GOUGE GREATER PRODUCTION OUT OF FEWER EMPLOYEES AND STILL KEEP THEIR PRODUCT PRICES HIGH, HIGHER, HIGHER.

AMERICANS, AS THEY KNOW, WILL PAY HIGH PRICES RATHER THAN DO WITHOUT!

THE FED DOESN'T GIVE A TINKER'S EARTHEN DAM ABOUT UNEMPLOYMENT RATES.
IT IS NOT IN THE BUSINESS OF HELPING "AVERAGE JOE" BUT IS ALL ABOUT CATERING TO THE SUPER-RICH, THOSE WHO WILL, LIKE SOROS, HEDGE THEIR BETS AND WALK AWAY WINNERS AFTER THE NEXT CRASH.

WE SAW MANY FORTUNES MADE DURING THE 'GREAT DEPRESSION' AND WE ALSO SAW WHO CAME OUT 'SMELLING LIKE A ROSE' AFTER BOTH 1987 AND THE MESS OF THE BUSH ADMINISTRATION'S FIASCO UP TO THE FIRST MONTHS OF 2009.

THE FED, THE BIG BOYS WHO RUN THE FED, SIMPLY NEED A CRASH TO TRANSFUSE THEIR BUSINESSES A BIT MORE.

THEY NEED FOR MORE AMERICANS TO DROP OUT OF THE JOB MARKET FOR A BIT SO THE PROFITS CAN SKYROCKET.

THEY NEED TO LOAN MORE, MORE, MORE BIG MONEY TO OUT-OF-COUNTRY BORROWERS WHO MIGHT NOT NEED SO MANY LOANS IF BUSINESS WAS GOOD WHEREVER THEY ARE.

ONE WEBSITE'S ARTICLE MADE THIS STATEMENT:

<< the Fed has been proven unable to stop significant stock-market declines.>>

UNABLE, OR UNWILLING?

EITHER WAY, WHO WANTS TO BELIEVE THAT THE FED CAN FAIL TO "SAVE AMERICA"?

THOSE WHO OWN AMERICA ... THEY ARE COUNTING ON A NO-SAVE.
THOSE WHO ARE UNSINKABLE, THOSE WHO KNOW A STORM IS COMING BEFORE THE REST OF US SEE A SINGLE CLOUD ON THE HORIZON.

JEREMY GRANTHAM, MARK SPITZNAGEL, 'UNIVERSA INVESTMENTS' NASSIM TALEB,  JEFFREY GUNDLACH AND A GROWING LIST OF "GURUS" ARE THINKING MAJOR CRASH...AS IS WARREN BUFFET. 

May 24, 2013:
Doomsday investors betting on market crash

Stocks have had a stellar year so far. In fact, the rally has gotten so heated that some investors are making bets on a big crash.

Universa Investments, which spends hundreds of millions of dollars a year buying crash protection, has attracted a record amount of money into its fund this quarter.

"People are starting to recognize that these market moves are unnatural and distorted," said Universa president and chief investment officer Mark Spitznagel, who declined to say how much is spent on crash protection, citing SEC rules.

Spitznagel says he's pretty confident that the market will crash, or fall by more than 20%, in the next six months -- a year max.

 "There are plenty of crazy things Bernanke can do," he said, referring to the Fed chairman. "But it will end badly." 

The Federal Reserve, with its massive bond buying program, is seeing its actions become less effective, said Spitznagel. The Fed, he says, can continue to forestall a crash but only for so long. 

Universa's view that a crash is coming is not widely held, making crash protection cheap, he said. Universa buys this protection in the form of options that generate huge returns when the stock market falls by more than 20%.
Universa's adviser, economist and former derivative trader Nassim Taleb calls it 'black swan' hedging.>>

Warren Buffett, billionaire investor who predicted the derivatives based 2008 financial crash way back in 2004, is also said to be preparing the 2014 crash.


The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is pointing to an imminent and devastating crash

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

John P. Hussman Warns S&P 500 Over-Valuation Now Higher Than Housing In 2006http://www.hussmanfunds.com/wmc/wmc140310.htm

<<To believe that the housing bubble caused the 2008 crash was is to ignore its origin in Federal Reserve policies that forced investors to reach for yield. 

Tragically, the Federal Reserve has done the same thing again – starving investors of safe returns, and promoting a reach for yield into increasingly elevated and speculative assets.
Thinking about the crisis only from the perspective of housing, investors and policy-makers have allowed the same process to play out more broadly in the equity market.

On a quantitative basis, the overvaluation of the equity market is greater percentage-wise, and greater dollar-wise, than the overvaluation of housing in 2006-2007.>>

[LET'S PAUSE HERE AND PONDER THIS:

THE FEDERAL RESERVE HAS MANAGED TO GET THE TREASURY TO PRINT SO MUCH MONEY AND HAS SO FLOODED THE GLOBE WITH USDs THAT IT SHOULD BE CRIMINAL TO PRINT ONE DOLLAR MORE, BUT NOW, "ALL OF A SUDDEN", THE FED IS BACKING OFF "QE", IS WILLING TO SEE INTEREST RATES CLIMB, AND HAS THUMBED ITS NOSE AT UNEMPLOYMENT RATES AND CONCENTRATED INSTEAD ON LOANING AMERICAN DOLLARS TO FOREIGN COMPANIES/BANKS...SO, IF WE ADD 1+1+1, WON'T WE GET THE ANSWER OF 3?

THE FED IS VERY POINTEDLY, DELIBERATELY TAKING A PATH IT KNOWS WILL LEAD TO A MARKET CRASH.  

HASN'T THE FEDERAL RESERVE, HISTORICALLY, BEEN THAT "BLACK SWAN"?

Jan. 23, 2014
http://www.marketwatch.com/story/how-about-a-50-crash-2014-01-23

<<How about a 50% crash?
Bond guru Jeffrey Gundlach gave a webcast presentation on Jan. 14, which raised more than a few eyebrows.
Gundlach explained that as the Federal Reserve proceeds to taper its monthly bond purchases, stock market volatility will escalate.
He considered the record-high margin-debt levels on the New York Stock Exchange as a signal of a stock market "top."

Gundlach's presentation included a handy chart depicting the effects of the various quantitative-easing programs on the stock market, from March 18, 2009, through Jan. 6, 2014. The chart makes it very clear that the stock market's advance during the past five years has been fueled by the Fed's liquidity pump. As the pump gets throttled back, what can we expect to happen?

Using Robert Shiller's Cyclically Adjusted Price/Earnings (CAPE) formula, the CAPE ratio comes to 25.4. As a result, it the stock market "corrects" to the point where Robert Shiller's CAPE ratio declines to where it was in the late 1980s, (approximately 12.5) the S&P 500 would have to drop 50% from its current level to 919.

Even if a less-extreme correction were to occur, wherein the trailing 12-month price-to-earnings multiple would fall from the current P/E multiple of 17.3 back to the 12.8 observed in 2012, the S&P 500 index would sink 35% to 1,195. 

There are quite a number of S&P 500 stocks with trailing 12-month price/earnings ratios in excess of 20. What will happen to the S&P 500 if/when those shareholders start running for the exits?

The triggering event for such a sell-off would most likely be somehow associated with the Federal Reserve.

Inability to control interest rates or a misstep in the taper could trigger extreme volatility. Just a simple loss of confidence in the Fed and/or its new Chair could be a catalyst for the first significant decline in years.

Complacency is at extreme levels, based largely on confidence in the Federal Reserve being able to stave off any and all evil forces in global financial markets. However, during previous periods of confidence and extreme bullishness, the Fed has been proven unable to stop significant stock-market declines. >>

<<Aug. 22, 2013
I sat down this week with one of the most experienced bond market gurus I know. When I asked him for his advice, he first suggested — only half jokingly — “panic.”

At the start of May, the U.S. government could borrow money for 10 years at 1.6% interest. 
Today, barely four months later, it has to pay 2.88%.  

At the start of May, someone buying a new home with a $200,000 mortgage was locking in monthly interest costs of $566.
Today, thanks to the surge in mortgage rates, someone making the exact same purchase will have to pay $766 a month in interest.

Mortgage costs are up about a third in a short period, from 3.4% to more than 4.4%. Uncle Sam’s cost of 10-year money has rocketed by 80%. 

Traders continue to focus on the minutiae of Federal Reserve minutes and the timing of the Fed’s likely moves in the bond market.

Ordinary investors should focus on the bigger picture.

The Fed has announced that the era of quantitative easing, and aggressive manipulation of long-term interest rates, is coming to an end. 

People forget that the infamous 1987 stock market crash followed a surge in bond rates.

In the months leading up to the October crash, the interest rate on 10-year Treasurys jumped about 45%, compared with the 80% hike we’ve just seen. 

I asked my bond market guru over lunch what the risks were that the latest surge in interest rates could precipitate an ’87-style crash.
“Quite significant,” he said.

THE FED IS KILLING RECOVERY!
http://finance.fortune.cnn.com/2014/03/24/jeremy-grantham-federal-reserve/?iid=s_mpm

    March 24, 2014
<<The money manager argues that the Fed's interventions have ruined the very recovery it was supposed to stimulate and that the market is poised to disappoint investors.
A few weeks ago, Jeremy Grantham, the co-founder of money management firm GMO, called newly appointed Federal Reserve chairman Janet Yellen "ignorant" in the New York Times. 
He also said the reason for the slow recovery was not the severe financial crisis, continued high unemployment, or the many standoffs in Washington. 

Instead, he blamed the Fed for ruining the recovery it was supposed to stimulate. To someone who believes in the laws of economics, it's hard to overstate how odd that claim is. 
It's positively bonkers.

Low interest rates stimulate the economy. The Fed has done everything in its power to keep interest rates down, lower and longer than anyone can remember. That should have helped the economy. 
And yet the recovery has been just meh. 
So, either Grantham is bonkers, or he is onto something. Fortune recently caught up with him to find out.

Fortune: You believe the Fed's policies, particularly quantitative easing, have slowed the recovery. What's your proof?

Grantham: It's quite likely that the recovery has been slowed down because of the Fed's actions. 
Of course, we're dealing with anecdotal evidence here because there is no control. 

But go back to the 1980s and the U.S. had an aggregate debt level of about 1.3 times GDP. Then we had a massive spike over the next two decades to about 3.3 times debt. And GDP over that time period has been slowed. 

There isn't any room in that data for the belief that more debt creates growth.

Fortune: Okay, but that's still not proof that quantitative easing slowed the recovery.

Grantham: There's no proof on the other side, that the economy is any stronger from quantitative easing. 
There's some indication that the crash would have been worse and the downturn would have been sharper had the Fed not stepped in, but by now the depths of that recession would have been forgotten, the system would have been healthier, and we would have regained our growth.

Fortune: But the Fed does seem to have boosted stocks. Even if it did nothing else, doesn't a better market help the economy?

Grantham: Yes, I agree that the Fed can manipulate stock prices. 

That's perhaps the only thing they can do. 
But why would you want to get an advantage from the wealth effect when you know you are going to have to give it all back when the Fed reverses course. 
At the same time, the Fed encourages steady increasing leverage and more asset bubbles.
 It's clear to most investing professionals that they can benefit from an asymmetric bet here. The Fed gives them very cheap leverage on the upside, and then bails them out on the downside. And you should have more confidence of that now. 

The only ones who have really benefited from QE are hedge fund managers.

Fortune: Okay, but then I guess that means you think stocks are going higher? 
I thought I had read your prediction that the market would disappoint investors.

Grantham: We do think the market is going to go higher because the Fed hasn't ended its game, and it won't stop playing until we are in old-fashioned bubble territory and it bursts, which usually happens at two standard deviations from the market's mean. That would take us to 2,350 on the S&P 500, or roughly 25% from where we are now.

Fortune: So are you putting your client's money into the market?

Grantham: No...We invest our clients' money based on our seven-year prediction. And over the next seven years, we think the market will have negative returns. 

The next bust will be unlike any other, because the Fed and other centrals banks around the world have taken on all this leverage that was out there and put it on their balance sheets. 

We have never had this before. 
Assets are overpriced generally. They will be cheap again. 
That's how we will pay for this. 
It's going to be very painful for investors.

WELL, NOT FOR ALL INVESTORS, NOT FOR THE FEDERAL RESERVE, NOT FOR THOSE, LIKE SOROS, WHO KNOW THE "SCORE" AND CAN DANCE TO THE TUNE THAT IS PIPED TO THE FED, PIPED BY THE FED, PIPED BY THE ONES WHO CONTROL THE FED AND THE MARKET.

IF THE MARKET IS NOT SENT INTO A NOSE-DIVE BEFORE OBAMA LEAVES OFFICE, I WILL EAT THIS COMPUTER...AND IT IS NOT A WEE LAPTOP!
THE "OLD MONEY", THE ULTRA-BIG BOYS WHO CALL THE SHOTS FOR AMERICA, INC. WILL CRASH THE MARKET, SOON OR A BIT LONGER THAN IMMEDIATELY.

WITHOUT A MAJOR WAR SOMEWHERE TO PUT MEGA-BUCKS IN THEIR FAMILY COFFERS, WITHOUT SOME AMAZING "NATURAL DISASTER" ON A GLOBAL SCALE, ANOTHER MARKET CRASH HAS TO BE THE SOLUTION FOR A DIP IN PROFITS.

AND, BESIDES PROFITS, WHAT ELSE COULD THE "POWERS THAT BE" USE TO STRIKE FEAR INTO THE HEARTS OF THE POPULACE?
WE'RE ALL A BIT BURNED-OUT ON THAT TERRORISTS LIE.
WE DON'T FALL FOR THAT CRAP SO MUCH ANYMORE....DO WE?

SO LET'S HAVE "FINANCIAL RUIN" INSTEAD...
THAT SHOULD KEEP THE SERF CLASS DOWN!