Marc Faber Expects the Stock Market to Fall 20-30% (Video)

I think he's going to be right this time! I will show you why on Dvolatility.com (Dvolatility Research).

On CNBC's Fast Money Halftime Report yesterday, Marc Faber, founder of the Gloom, Boom & Doom Report, said:
"I think we'll make a peak in the next 30 to 60 days and then go down meaningfully—20 to 30 percent. Don't forget many stocks are already down 10 percent. The home builders are down roughly 15 percent. Airlines have just dropped around 10 percent."

President Obama Delivers a Statement on the Situation in Ukraine (Video)


Learn About Total Return Swaps, Interest Rate Swaps and Asset Swaps (Videos)

With all the talk about total return swaps these days, this video by Rahul Soni explains everything you need to know about these opaque over-the-counter derivatives.

John Hussman: Yes, This Is An Equity Bubble

From John Hussman's Weekly Market Comment today at hussmanfunds.com:

Charles Nenner: Six Year Crisis Coming

I've been analyzing Charles Nenner's market predictions since 2010, when he told CNBC that the stock market moved in tandem with the sunspot cycle. That was interesting to me, so I started following the sunspot cycle on NASA's site. The sunspot cycle and stock market had a negative correlation between 2003-2007, but if you put the sunspot cycle up against ABX mortgage indexes, where the real market action was, the divergence only occurred for a few years. Nenner, who used to work as a technical analyst at Goldman Sachs, is founder of the Charles Nenner Research Center. I find it interesting that he believes the Federal Reserve's ability to manipulate cycles doesn't really influence the stock market. He said this about Alan Greenspan's Fed as well, which, as you know, brought down the financial system after he handed off the baton to Ben Bernanke.

After Being Halted, CYNK Falls 80% to $2.75

The financial media's obsession with Herbalife and CYNK, a penny stock, shows how much complacency is in the stock market.

Linkfest on the New Bubble, Recession Risk

  • Greenspan says bubbles can’t be stopped without ‘crunch’ (MarketWatch)
  • Levy Forecasting Center on Why US Could Dip Into Recession (AP)
  • Auto Leasing Rates Back At Pre-Recession Levels (Benzinga)
  • Goldman to sell up to €10bn bonds with new swap (FT Alphaville)
  • Fed’s Junk Loan Bubble-Busting Faces Trouble as Sales Jump (Bloomberg)
  • Shorting Junk Loans Just Got Easier as New Derivatives Unveiled (Bloomberg)
  • In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates (NYT)
  • Blackstone Said to Prepare $700 Million Sale of Home Debt (Bloomberg)
  • French manufacturing PMI falls to 7-month low of 47.6 in July (Investing.com at NASDAQ)
  • Don’t Tell Anybody About This Story on HFT Power Jump Trading (Bloomberg)

Important geopolitical/economic updates (Russia/EU)

Bill Ackman: Tomorrow You Will Learn Why Herbalife Is about to Collapse (CNBC Video)

On CNBC today, Bill Ackman, founder of Pershing Square Capital Management, said "we are going to expose an incredible fraud tomorrow" and "you will learn why Herbalife is about to collapse." He gave more details in the video. HLF fell 11% today on the news. Holy sh*t.

President Obama: The Escalating Conflict in Eastern Ukraine Is Not Going to Be Localized and Not Going to Be Contained (Full Remarks)

Below are President Obama's full remarks on the Malaysian passenger plane that was shot down in eastern Ukraine yesterday and the situation in Gaza.
THE PRESIDENT: Well, I think that this certainly will be a wake-up call for Europe and the world that there are consequences to an escalating conflict in eastern Ukraine; that it is not going to be localized, it is not going to be contained. What we’ve seen here is -- just in one country alone, our great allies, the Dutch, 150 or more of their citizens being killed. And that, I think, sadly brings home the degree to which the stakes are high for Europe, not simply for the Ukrainian people, and that we have to be firm in our resolve in making sure that we are supporting Ukraine in its efforts to bring about a just cease-fire and that we can move towards a political solution to this.

Rick Santelli vs. Fast Money Half Time Report

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S&P 500 and Federal Reserve in 2014 vs. 2007 ($SPX)

Don't these moves in the S&P look alike?

How John Law, Fiat Money and the Mississippi Bubble Caused France's Financial Crisis in 1720 (Videos)

This is important history on fiat money, gold and asset price bubbles. The Mississippi Bubble was one of the first modern financial crises. Great Britain's South Sea Bubble happened in the same year (1720).

OCC: Credit Risk Is Building in the Indirect Auto Market and Syndicated Leveraged Loan Market

Source: Office of the Comptroller of the Currency's Semiannual Risk Perspective for Spring 2014 (PDF, emphasis mine)
The OCC sees signs that credit risk is now building after a period of improving credit quality and problem loan clean-up. Examiners have observed erosion in the underwriting standards for syndicated leveraged loans, as well as loosening of standards and increased layering of risk in the indirect auto market. Recent examinations of commercial loan portfolios have identified an increase in policy and underwriting exceptions, including some examples of risk layering (e.g.,increasing collateral advance rates, waiving or loosening of guarantees, and more liberal repayment terms such as extended periods of interest-only payments). A recent horizontal review of midsize and community bank asset-based lending (ABL) found evidence of gradually loosening credit policies in response to competitive pressures. Further, bankers are speaking out increasingly regarding their concern with competitive pressures.

Here are important charts and information from the report:

Dvolatility Research Blog Is Back Up

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Someone Is Loading up on $VIX Upside Calls, Market Is Exhausted (June 16, 2014)

Someone saw the move in the sunspot cycle and decided to buy VIX upside calls in size! But seriously, based on my research and indicators, I think the market is extremely exhausted and could easily correct on more Fed action or talk, a spike in oil prices because of the instability in Iraq, or if negative news starts to spread in the credit market (read this Bloomberg article on subprime auto loan default rates).

According to Jamie Tyrrell of Group1 Trading, a total of 200,000 July 17 calls were bought during the last three trading sessions. The video below is courtesy of the optionMonster Volatility Sonar Report. The volume could be part of huge option spreads, but the activity is still interesting.

NASA Sees Sunspots Plunging in June, Cycle May Have Peaked

The sunspot cycle is expected to crash in June, according to Hathaway/NASA/MSFC.

Video: Putin Speaking with Obama after D-Day 70 Lunch (Elysee's Vine)

The Vacant, Damaged Pontiac Silverdome is Being Liquidated (Video)

The Pontiac Silverdome, the old home of the Detroit Lions and Detroit Pistons which was bought in 2009 for $583,000 (1% of the $55 million cost to build the place in 1973-1975), is being liquidated after its roof got severely damaged by winter storms. The place now looks like a mess, watch the videos. You can buy a seat for $100. See what it looked like in 2009.

Dvolatility Research: Technical Update on SPY, QQQ, DIA, IYT, MDY and IWM with Volatility Indexes, NH-NL%, PPO and RSI (4/28/2014)

Via Dvolatility Research (originally released on 4/28/2014)

Welcome to Dvolatility Research. It's time to have fun with some charts. This market and economic research blog is for risk managers, traders, investors, fund managers, market observers, economists, macro tourists, financial information and news addicts, and for educational purposes.

I want to chart out the major index ETFs and look at technical, breadth and sentiment trends and divergences in my first official DVR post. I think the market is in the process of pricing in the end of QE, but this time around the Fed is cutting its purchases slowly rather than abruptly, which could change the dynamic of the next move. The market corrected (or crashed) after QE1 and QE2 ended in March 2010 and June 2011 (combined with the negative debt ceiling catalyst), respectively. Here's a chart of the S&P 500 versus the U.S. Federal Reserve's total assets since 2009. It's clear what's been driving the market since the financial crisis and great recession ended.

ECB Watch (April 2014 Links and Videos)

  • The ECB betting on "creditless" recovery (4/29, Sober Look)
  • German Inflation Misses Estimates as ECB Pressure Mounts (4/29, Bloomberg)
  • Warning signals flash for ECB ahead of May meeting (4/29, Reuters)
  • ECB fails to fully offset bond buys again as money markets tighten (4/29, Reuters)