I cannot say the “d word” enough. Derivatives are going to play a starring role during this financial collapse, and so that is a word that you will want to be listening for very carefully in the weeks and months to come.
The meltdown that has already been affecting much of the rest of the planet is now starting to affect us. And it was inevitable that it would. I like how Clive P. Maund put it recently…
Many lesser markets around the world are toppling, but somehow the big Western markets of Europe, Japan and the US are staying aloft. If you have ever made a sand castle on the beach and watched what happened when the tide comes in, you will recall that it is the weaker outer ramparts and smaller turrets that collapse first, and the big central towers that hold out the longest. The weaker outer ramparts and smaller turrets are the Emerging Markets which are already crumbling, and it won’t be long until the big central towers – the big Western Markets, go the same way – everything is pointing to it.
The funny thing is that even though all of the signs are pointing to a nightmarish global financial crisis, the mainstream media continues to insist that everything is going to be just fine.
In fact, CNBC says that the recent dip in stock prices is a “bull indicator” and they are encouraging everyone to pour lots more money into stocks.
But of course the truth is that what financial conditions are really telling us is that stocks have much, much farther to fall.
For instance, high yield credit is starting to crash just like it did prior to the stock market crash of 2008. Stocks and high yield credit usually tend to track one another quite closely, and so when there is a divergence that is a huge red flag. And as this chart from Zero Hedge demonstrates, a very large divergence has developed in recent months…
Sadly, the 358 point plunge for the Dow on Thursday was just the beginning.
Yes, there will be up days and down days, but we are now officially entering the “danger zone” as we roll into the months of September and October.
So will 2015 soon be mentioned along with the famous market crashes of 1929, 1987, 2001 and 2008?
Please feel free to share what you think by posting a comment below…
This article is brought to you courtesy of Michael Snyder.