Weekend Oct 29 2016
I have been following Eric for some time at Inside Track. And with rates actually negative, the potential for a debt crash is inevitable. Who would even bid on a bond that pays no interest?
I suspect no one will, meaning those bonds cannot be sold, ore the seller would have to guarantee the current market rate of interest to sell them.
Exxon Mobil is one of the largest companies in the world. But a casual reading of its cash flow statement iondicates XOM is borrowing to pay its dividend!
As one of my students asked, gee who would lend them the money? Well social mood is such that no one thinks XOM would default, miss a dividend payment, or stop investing in oil fields, unless of course they had to.
Or if you refuse to read it here it is
In short the Central Banks are out of ammunition as commodity prices and interest rates rise.
NYSE A/D Line Turns Down
Really this is THE most reliable indicator. And the 13 day line in blue has now crossed over the 34 day line in red.
The Index is at a new low.
The lat time this happened in 2015 I thought the bear market had begun. Instead the NYSE lost 2,000 points and top and then re bounded.
Now that the A/D line is much higer the potential for a fall is much greater.
Trump is already telegraphing his own loss due to a 'rigged election.' Chris Wallace objected to his not adhering to the results.
But that is nexactly what Gore did in 2008.And imagine what Hillary would do if somehow Trump was the indicated winner. At any rate we have a fundamental event to validate the technicalo.
And we have the same set up in the SPX.
That move eventually took some 250 points out of the SPX. And if we are correct that we have a confluence of cycles
The potential for a drop is huge. Remember this has been a rally fueled by buying stock at low to no interest rates, boosting E/ S with fewer shares,and exercising options.
Or as teh sheriff remarked to Butch and Sundance, don't you get it,it's over!
TLT broke its 200 day MA. This will lead the way for REITs an Utilities that retirees have depended on to collapse. Now what will they do, hold on to a losing asset that pays or let it go?
This dividend payer is likely headed lower.
Gold silver and mining stocks have probably corrected enough to begin buying again.
The Bottom Line Important indicators are flashing warnings of a potential impending sell off.
Interest rates are rising along with commodity prices, many of which like gold are already correcting from an earlier run up
Energy prices are pulling back. See our accompanying article on the difficulty at XOM.
The New Civil War
This is the 2012 map of the election outcome. The New Civil War is clearly between the urban dwellers, big city Democrats versus those that live in rural America.
Rural America is not doubt more independent and relies on itself. The big city welfare programs define those areas.
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