Aramco Stock Soars Limit Up In Debut After Saudis Force Locals To Buy

Is Jamie Dimon about to get the old bonesaw for leaving $180BN on the table?

Saudi Arabia's oil company Aramco soared 10% limit up on its first day of trading, reaching a valuation of $1.88 trillion, higher than any other publicly traded company in the world. This means that after pricing its IPO at $1.7 trillion, Jamie Dimon left about $180 billion on the table, which will hardly impress the Crown Prince.

The record valuation reflects an oversubscribed book of mostly local investors who bought shares on the Saudi Tadawul stock exchange after they were forced by Riyadh to pump the stock. 

Aramco only sold a tiny 1.5% sliver in the company, meaning that the kingdom and Public Investment Fund of Saudi Arabia (PIF) could easily manipulate the price with such a small fraction of the stock public. Aramco listed on the Tadawul exchange because of other international exchanges and their investors found it hard to value the oil company near the $2 trillion levels. 

"They have had to launch the IPO on their own stock exchange as the valuation was unlikely to be achieved elsewhere," said John Colley, associate dean at Warwick Business School in the U.K, who spoke with Reuters. 

Read the entire article

Futures Fade After Algos Sell Latest Burst Of "Trade Deal Optimism"

Is the oldest trick in the Trump market manipulation book finally coming to an end?

12 hours after futures spiked by 10 points to a a new record high, after algos reacted as if stung to the following China headline:

CHINA, U.S. HELD CALL TODAY; AGREED TO CONTINUE PHASE-1 TALKS
... and which said that China’s Vice Premier Liu He, Robert Lighthizer and Steven Mnuchin held a phone call in which they "reached consensus on properly resolving relevant issues" and agreed to stay in contact on the remaining points for a “phase one” trade deal during a phone, yet which if one thinks about it said absolutely nothing new - the US and China agreed to continue talks to reach a deal which Trump already announced back on October 11? - futures have faded the entire move higher and as in danger of rolling over as it suddenly appears that algos are no longer responding to the daily injections of artificial "trade deal optimism."


China's Global Times tweeted later that topics in the call may have included tariff removal, agricultural purchase and a possible face-to-face meeting citing experts close to trade talks. Furthermore, Global Times later reiterated that China and the US have basically reached broad consensus on a phase one trade deal including the removal of tariffs, although some differences remain over how much tariffs should be rolled back citing experts close to the talks. Yet if that is the case why did the two sides agree to continue the talks, and is this just a charade to keep stocks high, Trump happy, and China free to intervene in HK without angering the US president?

"We take any positive pronouncements on a trade deal with healthy skepticism given how long this has dragged out," Rabobank strategists wrote in a note Tuesday. "It would seem that any major progress on the trade deal front will be hindered by the ongoing unrest in Hong Kong." Perhaps this skepticism is starting to rub off on the algos too?

The following "flow" chart shows the most notable moments and comments in the past year of the US-China trade war, whose end continues to remain "just around the corner":

Read the entire article

"...And You Thought Recession Risk Was A Thing Of The Past..."

Rabbit Season! Duck Season! Rabbit Season! Duck Season!

As the third-quarter earnings season comes to a close with a -2.3% showing on EPS, analysts are more bearish going into the fourth quarter; the weakness looks to spread to six sectors vs. five in the third quarter indicating the industrial slowdown has spread to services

Third quarter revenue growth has slowed to levels not seen since 2016’s third quarter while expectations are that the year’s final three months slow further; as with earnings, the quarter-on-quarter weakness is expected to broaden to health care and consumer discretionary

In the short-run, companies will likely endeavor to cut costs, including labor, to draw a line under earnings as revenues deteriorate; given revenues are a demand proxy, a concurrent slowing in GDP is also foreseeable

Rabbit Fire was a 1951 Looney Tunes cartoon starring Bugs Bunny, Daffy Duck and Elmer Fudd. The Warner Bros. short was the first to feature the classic feud between Bugs and Daffy. In it, Daffy lures Elmer to Bugs’ burrow, calls down to him, then watches as Elmer shoots at the emerged Bugs, parting his ears. As Elmer aims again, Bugs informs him that it’s not rabbit season, but rather duck season. Daffy storms in irate and attempts to convince Elmer that Bugs is lying. Their conversation breaks down into Bugs engaging Daffy in the verbal play illustrated in today’s title. Of course, Daffy fumbles into saying “duck season” and Elmer fires away.


Whether you are a fan of Bugs or Daffy, there’s another season in the financial market world that’s about to come to a close – earnings season.

Ninety-two percent of S&P 500 companies have reported third-quarter earnings results. Last Friday, FactSet reported that earnings per share (EPS) had declined 2.3% versus a year ago. Industry performance was mixed with five sectors – Energy, Materials, Information Technology, Financials and Consumer Discretionary – reporting year-over-year declines and the other six – Utilities, Health Care, Real Estate, Consumer Staples, Industrials and Communication Services – posting year-over-year gains.

Analysts’ fourth-quarter guidance is more bearish for earnings compared to the third quarter. It’s anticipated that six sectors will decline including Energy, Materials, Industrials, Information Technology, Consumer Discretionary and Consumer Staples. This widened breadth carries a broader cyclical narrative beyond the sectors more closely affected by trade war; it bleeds into the entire consumer space. Implicit are hints of contagion from manufacturing to services that introduce broader labor market risks. And you thought recession risk was a thing of the past just because the yield curve un-inverted.

Cue Bugs and Daffy for an encore with a twist: “Earnings season! Revenue season! Earnings season! Revenue season!” The bottom line (earnings) gets all the attention each quarter. But the top line (revenue) should never be overlooked. For cycle chasers and equity strategists alike, revenue growth is the heartbeat of U.S. economic activity. It proxies Gross Domestic Product (GDP).

Read the entire article

Guess Who Is Preparing For A Major Stock Market Crash?

Pessimism is spreading like wildfire on Wall Street, and this is particularly true among one very important group of investors.  And considering how much money they have, it may be wise to listen to what they are telling us.  According to a very alarming survey that was recently conducted by UBS Wealth Management, most wealthy investors now believe that there will be a “significant” stock market decline before the end of next year.  The following comes from Yahoo Finance…

Wealthy people around the globe are hunkering down for a potentially turbulent 2020, according to UBS Global Wealth Management.

A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.

Of course this could ultimately become something of a self-fulfilling prophecy if enough wealthy investors pull their money out of stocks and start increasing their cash reserves instead.  Nobody wants to be the last one out of the barn, and it isn’t going to take too much of a spark to set off a full-blown panic.  Perhaps the most troubling number from the entire survey is the fact that almost 80 percent of the wealthy investors that UBS surveyed believe that “volatility is likely to increase”…

Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.

During volatile times for the market, stocks tend to go down.

And during extremely volatile times, stocks tend to go down very rapidly.

Could it be possible that many of these wealthy investors have gotten wind of some things that the general public doesn’t know about yet?

Of course the truth is that anyone with half a brain can see that stock valuations are ridiculously bloated right now and that a crash is inevitable at some point.

And as I noted yesterday, corporate insiders are currently selling off stocks at the fastest pace in about two decades.

But why is there suddenly so much concern about 2020?

A different survey of business executives that was recently conducted found that 62 percent of them believe that “a recession will happen within the next 18 months”…

A majority of respondents – 62% – believe a recession will happen within the next 18 months. Private companies are particularly worried that a recession lurks in the near term, with 39% anticipating a recession in the next 12 months. This compares with 33% of public company respondents who felt the same way. About one-quarter – 23% – of respondents do not expect a recession within the next two years.



Read the entire article

U.S. Shale Braces For Brutal Earnings Season

The timing comes as the shale sector is facing somewhat of a reckoning. After years of price volatility – with more downs than ups – oil prices have failed to return even remotely close to pre-2014 levels. For several years, shale E&Ps took on debt and issued new equity, promising investors that they would profit both from a rebound in prices and from rapid production growth.

They delivered on gains to output, but not on profits. At some point in the last year, investors really began to lose faith. Oil stocks have been the worst performers in the S&P 500 this year.

The latest release of earnings will probably do little to quell unease from big investors. Oil and natural gas prices have dropped this year, by about 17 percent and 31 percent, respectively. Job cuts have returned and bankruptcies are on the rise again.

The oil majors are pressing forward with their aggressive shale development plans. That may prevent a noticeable decline in production. But their earnings – many of the majors report this week – are expected to be down roughly 40 percent from a year ago, which will raise some tough questions.

Some of the largest banks have slashed their credit lines to smaller shale E&Ps. According to Reuters, JPMorgan Chase, Wells Fargo and the Royal Bank of Canada are among some of the lenders that have reduced the amount of credit they are offering to drillers.

Read the entire article

HSBC Considers Slashing Equity Desks In London, New York, Germany

A mass exodus could be developing among major financial institutions, who seek to divest their equity sales and trading units.

Deutsche Bank and Nomura have already made it clear that they're reviewing their trading cash equities units because of profitability concerns.

Now HSBC might follow suit, sources told Bloomberg, adding that the bank could exit stock trading in Western markets as part of a significant overhaul program.

HSBC could slash trading units in the U.S., U.K., Germany, and France, in the near term, the source said. The bank's Asian equities operations wouldn't be affected by the overhaul.

HSBC will concentrate on the Greater China region, rather than Western markets in the 2020s, another source explained.

HSBC Chairman Mark Tucker has spent the last several years restructuring the bank. He appointed Noel Quinn, the interim chief executive, in August, as a push to continue strengthening the bank through new, innovative cost-cutting measures.

The strategy by HSBC could cut at least 45 traders in New York.

Read the entire article

The Biggest Problem For The Aramco IPO

From almost the very moment in 2016 when Saudi Arabia first announced that it was to float its state-owned oil and gas behemoth, Saudi Aramco, in a dual domestic and international listing, the pool of possibilities for the foreign side of the initial public offering (IPO) has steadily reduced. This has been a result of a simple equation: the more that would-be investors know about Saudi Arabia and Aramco the less appealing the prospect of having anything to do with them becomes. However, because Crown Prince Mohammed bin Salman (Mbs) has staked his personal reputation – and his political future – on the Aramco IPO going ahead in some form, he and his bankers are currently rooting around for at least one international bourse upon which to execute the foreign listing part of the omni-toxic Aramco.

The New York Stock Exchange (NYSE) was one of the original top-two favored candidates, alongside the London Stock Exchange (LSE), as these two bourses are rightly seen as the most liquid, most traded, and most prestigious stock exchanges in the world. Early on, though, a number of major problems began to bubble up for a listing of any Saudi company and particularly Aramco in the U.S. Aside from the usual farrago of lies from Saudi about oil reserves, spare capacity, tax rates, concessions, non-hydrocarbons activities and so on with which investors have now become familiar, a key early sticking point was Saudi Arabia’s perceived links with the ‘9/11’ terrorist attacks.

Of the 19 terrorists who hijacked planes on ‘9/11’, no less than 15 were Saudi nationals. Following the overriding by the U.S. Congress of former President Barack Obama’s veto of the ‘Justice Against Sponsors of Terrorism Act’, making it possible for victims’ families to sue the government of Saudi Arabia, at least seven major lawsuits alleging Saudi government support and funding for the ‘9/11’ terrorist attack have so far landed in federal courts. As one New York-based chief executive officer of a major commodities hedge fund told OilPrice.com:

Read the entire article

Whistleblower Alleges GE Commits Almost $40 Billion In Accounting Fraud

General Electric (GE) shares fell Thursday following Bernard Madoff whistleblower, Harry Markopolos, targeting the company in a report alleging the corporation covered up a massive amount of losses in financial documents, according to the Washington Post.

A forensic accountant, Markopolos posted a 175-page report, which is being circulated on a website called GEFraud.com. The reporting alleges that GE is committing $38 billion in accounting fraud. He calls this a “bigger fraud than Enron,” and declares GE is using similar fraud tactics. After the release of the report, GE stock dropped 4.3% in premarket trading, according to Reuters. 

“[I]t’s the biggest, bigger than Enron and WorldCom combined,” the report goes on to say. “In fact, GE’s $38 Billion in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds.”

Markopolos and his team published the allegations after a year’s worth of research.

“My team has spent the past 7 months analyzing GE’s accounting and we believe the $38 Billion in fraud we’ve come across is merely the tip of the iceberg,” Markopolos stated in the 175-page report.

Read the entire article

We Are Being Warned That The Last Week Of August “Could Be Highly Volatile” For Global Financial Markets

Are things about to break loose in a major way?  At the end of last week, the trade war between the United States and China escalated dramatically, and investors all over the globe really started freaking out.  Unfortunately, developments over the weekend have only made things worse, and that means that this could be a very “interesting” week for global financial markets.  As I write this article, stock prices around the world are plunging, the price of gold is spiking and the Chinese yuan is crashing.  There is clearly a lot of fear out there right now, and at this point even CNBC is warning that the last week of this month “could be highly volatile”…

The final week of August — the bittersweet end of summer for many— could be highly volatile, as markets fret over the economy and the latest developments in trade wars.

Of course things can swing rapidly from moment to moment in this environment.  President Trump could say something in a few hours that temporarily gives investors some hope, and that could cause markets to swing wildly upward for a little while.  Everyone is on edge right now, and every piece of significant news is likely to cause gyrations in the marketplace.

But overall the trend is clearly down.  U.S. stocks have now fallen for four weeks in a row, and many are becoming deeply concerned about what September will bring.

Read the entire article

30% Of The Companies In The Russell Are Unprofitable

Today we have 3 suggestions for portfolio positioning in 2H 2019. First, overweight US equities; ever more negative global interest rates over recent weeks are a warning sign. Second, expect more volatility from late July (post Fed meeting) through October; seasonality and fundamentals align on this point. Lastly, be cautious on US small caps; they are more cyclical than large caps and are levered to financial conditions.

From a fundamental standpoint, nothing much good happened in the first half of 2019. Specifically:

• We didn’t get a US-China trade deal, and based on current press accounts we’re further away now than we were on January 1st. Moreover, bilateral tariffs are higher now than just a few months ago and apply to more goods.
• 
  
• Corporate earnings growth has been slipping. For example, first quarter S&P 500 earnings were slightly negative as compared to last year. Analysts expect the same for Q2, and margins are lower than a year ago for both quarters.
• 
  
• Slowing global growth. The export-driven German economy, long a bright spot in the Eurozone, likely slipped into contraction in Q2. Japan’s economy managed to post +2.2% GDP growth in Q1, but Q2 will almost certainly be slower. China’s economy has benefited from some easing of financial conditions, but trade tensions are clearly taking a toll as we start Q3.

Read the entire article

For The Equity Markets To Keep Rallying, This Has To Happen...

With markets now pricing in at least three rate-cuts and expectations for a July cut surging to over 80%, belief in a pre-emptive "insurance" cut is now consensus - and The Fed had better not disappoint.

However, as Bloomberg's Ye Xie warns, while, historically, preemptive Fed rate cuts have tended to boost the stock market, this time may be different.

Any student of stock market history would tell you that the Fed’s "insurance" cuts in 1995-1996 and 1998 did extend the bull market and economic expansion.

What’s different this time is that the front-end of the yield curve is much more deeply inverted than in the 1990s. In other words, markets have more aggressively discounted policy easing. With Fed fund futures pricing in about 70 basis points of cuts by year-end, the FOMC has a high bar to keep equity investors happy without fomenting recession fears

Read the entire article

Multi Billion Fund Blocks Redemptions

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market's most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), "hedge fund redemption requests re-emerge."

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the UK's equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, "inflicting a serious blow to the reputation of the UK’s highest-profile fund manager."

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that "this is one of the bigger events for the UK asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence."

Read the entire article

The Dow Made A Miraculous 400 Point Recovery, But Now Renewed Trade Fears Are Sending Markets Plunging Once Again

If your head is spinning from the wild fluctuations that have shaken global financial markets, you are definitely not alone.  On Sunday, President Trump angrily threatened to hit China with enormous new tariffs, and it looked like hopes for a trade deal between the United States and China had collapsed.  Overnight, Chinese stocks had their worst session in three years, and many expected U.S. stocks to experience a similar plunge.  But then on Monday we learned that the Chinese had decided to move forward with trade talks this week anyway, and global financial markets started rebounding in a major way.  In fact, the Dow Jones Industrial Average rebounded more than 400 points…

The Dow closed just 66 points lower on Monday, recovering from a plunge of as much as 471 points. The S&P 500 and Nasdaq also erased their sharp losses, ending just 0.5% lower.

The comeback signals investors don’t believe President Donald Trump’s surprise threat to impose higher tariffs on China will spark a painful deepening of the trade war. Optimists are even hoping an historic trade deal will still be reached.

Read the entire article

Chinese Drugmaker Discloses $4.4 Billion Accounting Fraud

It looks like China's unstoppable default tsunami is about to claim its latest corporate victim...and thanks to lax oversight that allowed the company to get away with what appears to be a staggering accounting fraud, thousands of unsuspecting investors might be left holding the bag.

According to Bloomberg, Kangmei Pharmaceutical Co., one of China’s largest listed drugmakers, revealed on Tuesday that it had overstated its cash holdings by $4.4 billion. Unsurprisingly, the revelation, which immediately exposed the company to be teetering on the brink of insolvency, sent its shares and bonds tumbling. Its shares, which are a constituent of MSCI's global index, plunged by the 10% daily limit. Its 2.4 billion yuan ($356 million) notes due in 2022 dropped by as much as 60 yuan (about $9).

It's just the latest example of why investors must be wary of Chinese companies due to lax regulations, even as its equity and bond markets are becoming increasingly internationalized. The company's revelation came four months after it revealed that Chinese authorities had launched an investigation into the company.

One of BBG's sources said the restatement is 'unprecedented' in the history of Chinese security markets.

Read the entire article

European Equities May Benefit As $1 Trillion In U.S. Buybacks Vanish Into Thin Air

European equities may start to finally see some love, as they are now positioned to take advantage of one significant coming tailwind from the U.S., according to Bloomberg. Over the next 12 months, US stocks are going to lose a significant amount of support that they have received from buybacks, as the nearly $1 trillion buyback bonanza that has fueled stock purchases in the United States starts to come to an end, according to Sanford C. Bernstein strategists.

This could be an area where European stocks, due to their low dependence on buybacks, could see help as a result.

Bernstein strategists led by Inigo Fraser-Jenkins said:

 “This would remove one advantage of U.S. equities over Europe. As the buyback support is reduced it will make a stronger relative case for Europe.”

And the decision of the U.S. central bank to hold off on rate increases may have temporarily reduced concerns about debt hurting equities, but the topic is still on the table and credit spreads are expected to keep widening over the next year.

Read the entire article

Wall Street Seems To Believe That Endless Gridlock And Political Turmoil Will Be Good For America

It is difficult not to admire the relentless optimism on Wall Street.  A divided Congress is going to guarantee two years of gridlock and political turmoil in Washington, but many in the financial community are choosing to interpret the election results as a positive sign.  They remember the “gridlock” during the Obama years, and they are hopeful that the next couple of years will be at least somewhat similar.  The Dow Jones Industrial Average shot up 545 points on Wednesday, and that was the largest post-midterm rally that we have seen in 36 years.  Stock prices normally go up the day after midterm elections, but Wednesday’s rally was definitely unusual…

Wednesday’s post-midterms rally was larger than the average gain that follows the contests. Goldman Sachs noted the S&P 500 has averaged a gain of 0.7 percent from the day before the elections to the day after midterms. Wednesday marked the biggest post-midterms gain for both the Dow and S&P 500 since the day after the 1982 contests, when the indexes surged 4.3 percent and 3.9 percent, respectively.

To a certain extent, it is likely that investors were greatly relieved that the worst case scenario did not play out.  As I noted on Monday, a blue wave that would have resulted in Democrats taking control of both houses of Congress would have meant big trouble for Wall Street, and many are very thankful that we were able to avoid that outcome…

Investors also avoided the most-feared Wall Street outcome, a so-called “blue wave,” or Democratic sweep of both chambers of Congress. That could have put the president’s economic policies under assault and boosted the odds of a Democratic House pushing for Trump’s impeachment.

Read the entire article

The One Election Scenario That Would Be A “Disaster” For The Financial Markets

On Tuesday night all of the speculation about the midterm elections will mercifully be over, and there is one potential outcome that is being called a “disaster” for the financial markets.  Over the past couple of years, stock prices have soared to unprecedented levels, and Wall Street has seemed to greatly appreciate the pro-business environment that President Trump has attempted to cultivate.  Regulations have been rolled back, corporate taxes have been reduced significantly, and many corporate executives no longer fear that the federal government is out to get them.  But after Tuesday, everything could be different.

The most likely outcome appears to be that the Democrats will take control of the House of Representatives and the Republicans will remain in control of the Senate.  For what it is worth, Nate Silver is currently projecting that the Democrats have an 88 percent chance of winning the House and only a 19 percent chance of winning the Senate.

But of course he was also projecting a huge landslide victory for Hillary Clinton in 2016.

In any event, a divided Congress would create gridlock in Washington, and according to Wedbush Securities managing director Steve Massocca that would produce “some negative fallout” for the financial markets…

Read the entire article

In Desperation Move, IBM Buys Red Hat For $34 Billion In Largest Ever Acquisition

In what can only be described as a desperation move, IBM announced that it would acquire Linux distributor Red Hat for a whopping $34 billion, its biggest purchase ever, as the company scrambles to catch up to the competition and boost its flagging cloud sales. Still hurting from its Q3 earnings, which sent its stock tumbling to the lowest level since 2010 after Wall Street was disappointed by yet another quarter of declining revenue...

... IBM will pay $190 for the Raleigh, NC-based Red Hat, a 63% premium to the company's stock price, which closed at $116.68 on Friday, and down 3% on the year.

In the statement, IBM CEO Ginni Rometty said that "the acquisition of Red Hat is a game-changer. It changes everything about the cloud market," but what the acquisition really means is that the company has thrown in the towel on organic growth (or lack thereof) and years of accounting gimmicks and attempts to paint lipstick on a pig with the help of ever lower tax rates and pro forma addbacks, and instead will now "kitchen sink" its endless income statement troubles and non-GAAP adjustments in the form of massive purchase accounting tricks for the next several years.

While Rometty has been pushing hard to transition the 107-year-old company into modern business such as the cloud, AI and security software, the company's recent improvements had been largely from IBM’s legacy mainframe business, rather than its so-called strategic imperatives. Meanwhile, revenues have continued the shrink and after a brief rebound, sales dipped once again this quarter, after an unprecedented period of 22 consecutive declines starting in 2012, when Rometty took over as CEO.

Read the entire article

Fed's Mester Says Stocks "Far From" Level That Could Hurt US Economy

Earlier today we noted that a pressing question that has emerged among Wall Street traders following the recent market drop is at what level in the S&P would the "Powell put" be triggered and when could the Fed end its tightening cycle in support of equities  (with Goldman recently calculating that the drop in the S&P from its recent September highs is the equivalent of a little over one Fed rate hike).

Well, if Cleveland Fed President Loretta Mester is speaking for the broader FOMC - and the Fed Chair - don't hold your breath.

In a prepared speech delivered on Thursday evening in New York titled "The Economic Outlook, Monetary Policy, and Normal Policymaking Now and in the Future" she said that while she acknowledged that "longer-term interest rates moved up, and over the past couple of weeks, volatility in equity markets has increased", financial markets are "far from a scenario" in which falling equity prices would "dash confidence and lead to a significant pullback in risk-taking and spending" that could hurt the U.S. economy, and added that "the S&P 500 index remains higher than it was a year ago. Similar to the swings in the market we saw earlier this year, the movements of late do not seem to be signaling that investors are becoming overly pessimistic."

"While the market volatility poses a risk to the forecast and bears monitoring, it has not led me to change my modal medium- run outlook" she said, suggesting that the market has a long way to fall before at least this hawk pays attention.

Despite market gyrations, Mester said that she expects "growth to come in a tad above 3 percent this year and to be in the 2-3/4 to 3 percent range next year, well above my 2 percent estimate of the economy’s trend growth rate."

Read the entire article

Stock Market Crash! The Dow Has Now Plunged 2,368 Points From The Peak Of The Market Share

The level of panic that we witnessed on Wall Street on Wednesday was breathtaking.  After a promising start to the day, the Dow Jones Industrial Average started plunging, and at the close it was down another 608 points.  Since peaking at 26,951.81 on October 3rd, the Dow has now fallen 2,368 points, and all of the gains for 2018 have been completely wiped out.  But things are even worse when we look at the Nasdaq.  The percentage decline for the Nasdaq almost doubled the Dow’s stunning plunge on Wednesday, and it has now officially entered correction territory.  To say that it was a “bloodbath” for tech stocks on Wednesday would be a major understatement.  Several big name tech stocks were in free fall mode as panic swept through the marketplace like wildfire.  As I noted the other day, October 2018 looks a whole lot like October 2008, and many believe that the worst is yet to come.

But in the short-term we should see some sort of bounce once the current wave of panic selling is exhausted.  During every major stock market crash in our history there have been days when the stock market has absolutely soared, and this crash will not be any exception.

If we do see a bounce on either Thursday or Friday, please don’t assume that the crash is over.  Most key technical levels have already been breached, and even a small piece of bad news can send stocks plunging once again.

On Wednesday there really wasn’t anything too unusual that happened, but stocks cratered anyway.  Here is a summary of the carnage…

Read the entire article