Is There Going To Be A Stock Market Crash In The Fall?

Is the stock market going to crash by the end of this year?  Are we on the verge of major financial chaos on a global scale? Well, this is the time of the year when investors start getting nervous.  We all remember what happened during the fall of 1929, the fall of 1987 and the fall of 2008.  However, it is important to keep in mind that we do not see a stock market crash in the fall of every year.  Some years the stock market cruises through the months of September, October, November and December without any problems whatsoever.  But this year conditions certainly seem to be right for a " perfect storm" to develop.  Technical indicators are screaming that a stock market decline is imminent and sources in the financial industry all over the world are warning that a massive crisis is on the way.  What you are about to read should alarm you.  But it is not a guarantee that anything will or will not happen.  When Ben Bernanke gives his speech at the Jackson Hole summit on Friday he could announce to the rest of the world that the Federal Reserve has decided to launch QE3 and that the Fed will be printing up trillions of new dollars.  If that happened global financial markets would leap for joy.  So it is always a dangerous thing when anyone out there tries to tell you that they can " guarantee" what is about to happen in the financial world.  There are just so many moving parts.  But if we do not see major intervention by the governments of the world or by global central banks a major financial crisis could rapidly develop this fall.  The conditions are certainly right for a stock market collapse, and we could easily see a repeat of what happened back in 2008.

The truth is that the second half of 2012 looks a little bit more like the second half of 2008 with each passing day.

Just check out what Bob Janjuah of Nomura Securities  has been saying....

  Based on the reasons set out earlier and also covered in my two prior notes, over the August to November period I am looking for the S& P500 to trade off down from around 1400 to 1100/1000 – in other words, I expect over the next four months to see global equity markets fall by 20% to 25% from current levels and to trade at or below the lows of 2011! US equity markets, along with parts of the EM spectrum, will I think underperform eurozone equity markets, where already very little hope resides.

Others are issuing similar warnings.  For example, the following is what a couple of Bank of America analysts said in a report  the other day....

  Our strategists see an unusually high number of macro catalysts over the next 3-6 months that could take markets lower. We expect economic growth to disappoint in the second half of the year in anticipation of the fiscal cliff. This would exacerbate any slowdown from the deepening recession in Europe and decelerating growth in emerging markets. There is also the ongoing tension in the Middle East, the potential for a US credit downgrade and accelerating downward analyst estimate revisions. To top it off, September is seasonally the weakest month of the year for stock price returns.

There has been an unusual amount of chatter in the financial world about the September to December time frame.

That could mean something or it could mean nothing.

But is is  very  interesting to watch what some top financial insiders are doing with their stocks right now.

Dennis Gartman, the publisher of the Gartman Leter,  has dumped all of his stocks  at this point.

As I have written about  previously, George Soros has dumped all of his stock in banking giants JP Morgan, Citigroup and Goldman Sachs.

Are they just being paranoid?

Or do they know something that we do not?

If you are looking for the next " Lehman Brothers moment" in the United States, you might want to watch Morgan Stanley.  Morgan Stanley was heavily involved in the Facebook IPO disaster, earlier this year their credit rating was downgraded, and now there are persistent rumors that Morgan Stanley is in big trouble and that it will be allowed to fail.  You can check out some of these rumors for yourself  here,  here  and  here.

But of course as I have said all along the center of the coming crisis is going to be in  Europe, and many analysts agree with me.  For example, the following is what the chairman of Casey Research, Doug Casey, had to say  during a recent interview....

Europe is a full cycle ahead of the U.S. Its governments and its banks are both bankrupt. It's a couple of drunks standing on the street corner holding each other up at this point. Europe is in much worse shape than the U.S. It's highly regulated, highly taxed and much more socially unstable.

Europe is going to be the epicenter of the coming storm. Japan is waiting in the wings, as is China. This is going to be a worldwide phenomenon. Of course, the U.S. will be in it, too. We're going to see this all over the world.

Much of southern Europe is already experiencing  depression-like conditions.  Unemployment in both Greece and Spain is well above 20 percent and both economies are steadily shrinking.

Money is flowing out of Spanish banks at an unprecedented rate right now.  Just take a look  at these charts.  The only thing that is going to keep the Spanish banking system from totally collapsing is outside intervention.

But the truth is that all of Europe is in big trouble.  Even German companies are slashing job right now. For example, check out what Siemens  is up to....

  German engineering conglomerate Siemens (SIEGn.DE) is in early internal talks to cut thousands of jobs in response to a weakening economy, particularly in Europe, a German newspaper reported.

Decisions could be made in October or November, according to daily Boersen-Zeitung, which did not specify its sources.

A Siemens spokesman declined to comment.

  We are living in the greatest debt bubble in the history of the world, and at some point that bubble is going to burst in a very messy way.

It is vital that people understand that our system is not even close to sustainable.

Knowing exactly when it will collapse is not nearly as important as understanding that a collapse is absolutely inevitable.

I think what former World Bank economist Richard Duncan  had to say recently  is very helpful....

  “The explosion in credit drove economic growth in the U.S. and around the world, and now that’s the only thing that’s keeping us from collapsing in a debt/deflation spiral,” he said. “[What] I think everybody needs to understand is that the kind of economy that we have now, it’s not capitalism. It has very little in common with capitalism. Capitalism was an economic system in which the government played very little role …. Under capitalism, gold was money and the government had nothing to do with it. Now the central bank creates the money and manipulates its value.”

http://theeconomiccollapseblog.com/archives/is-there-going-to-be-a-stock-market-crash-in-the-fall

Spain suffered the highest level of joblessness in the eurozone in July, as overall unemployment in the region held steady at a record high.

One out of every four citizens in Spain is unemployed, according to the latest statistics from Eurostat. The situation is even worse for young Spaniards. The unemployment rate for those under 25 years old is now approaching 53%.

Spain has been dealing with high unemployment for years. The nation's jobless rate has been above 20% since May 2010, according to data from the European Central Bank. In July, the rate rose to 25.1%.

The Spanish economy slipped back into recession during the first quarter and activity has continued to deteriorate. Spanish gross domestic product declined 0.4% in the second quarter.

Related: Spanish economy shrinks

Spain's woes stem largely from a major property bust a few years ago that left the nation's banks saddled with a mountain of bad debt. Spain has  requested up to €100 billion  in loans from the eurozone bailout fund to recapitalize solvent banks, while insolvent banks will be consolidated in a so-called bad bank.

Meanwhile, the Spanish government has seen its  borrowing costs surge  to unsustainable levels as investors in the international bond markets worry it may need to be bailed out. The yield on Spanish 2-year notes rose above 6% in July before falling back in August.

Spain is also dealing with a growing number of regional governments that need to be rescued. This week,  Catalonia  became the latest region to officially ask for help from the €18 billion fund Madrid set up to aid its 17 autonomous regions.

The troubles in Spain have raised worries that the government could have its credit rating cut to junk status by one of the global credit rating agencies. Moody's said Thursday that its review of Spain's credit rating, which it launched in June, will continue through the end of September.

Of course, Spain is not the only eurozone nation struggling with high unemployment.

Related: Everything you need to know about where things stand

In  Greece, unemployment rose to 23.1% in May, the most recent month for which data were available.  Cyprus  also saw its unemployment rate edge up to 10.9% in July from 10.6% the month before.

Overall, the unemployment rate for the 17-nation eurozone held steady at 11.3% in July, with an estimated 18 million people out of work, according to Eurostat. That's up from 15.9 million in July 2011. 

http://buzz.money.cnn.com/2012/08/31/spain-unemployment/?iid=Lead