With the Dow falling 240 points today, one of the greats in the business sent King World News a fantastic piece discussing the wild trading in global markets, plus a bonus Q&A that includes questions on gold and why this collapse will be different than 2008.
By Bill Fleckenstein President Of Fleckenstein Capital
September 9 (King World News) – The overnight stock market revelry continued, led by Japan, which gained a “modest” 7.7%. Other Asian markets were also quite strong. Europe joined the party as well, gaining a couple of percent, and preopening the S&P futures were sporting a gain of better than 1%. However, as soon as the stock market actually opened, the indices sold back almost to unchanged before flopping sideways and then sinking slightly by midday…
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Continue reading the Bill Fleckenstein piece below…
In terms of yesterday’s hottest stocks, many of which were in the chip sector, this morning both chip supplier Fairchild Semiconductor and equipment company Kulicke and Soffa lowered guidance due to weak demand. I expect there will be plenty of disappointment from this industry going forward.
Bummer Crop?
I’m sure a lot of speculators were breathlessly waiting for Apple’s early afternoon new product rollout, which looked to me like a nonevent that could easily disappoint all the rabid stock bulls counting on it to launch Apple, its suppliers, and the market itself. In the wake of the complete lack of sizzle, Apple slowly started to leak, as did the entire tape, and by day’s end the market was 1.5% lower and closed on the lows, erasing most of yesterday’s gains.
Away from stocks, green paper was flat, oil lost 3%, fixed income was higher, and the metals lost about 1%-plus apiece.
Included below are three questions and answers from today’s Q&A with Bill Fleckenstein. The questions are from his subscribers and they get to read Fleckenstein’s answers every day.
Bonus Q&A
Question: Fleck, concerning gold/silver: they have dug in somewhat on the market down days but have not responded on the rallies (especially the miners). is it too soon to extrapolate much out of this or are you somewhat concerned? thanks.
Answer from Fleck: “I’m not going to draw too many conclusions now until after the FOMC meeting.“
Question: Bill, do you think there is any reasonable chance at this point that, whether the Fed announces a one time hike or not in September, the market “corrects” but settles, without “crashing” in the high 1700s/low 1800s or so, and there is enough buying interest at those levels to keep the market around that level for a while, even in the absence of QE? Or do you think that the market basically must fall harder than that in the absence of another QE program? Thanks very much.
Answer from Fleck: “I think that ex. QE, the market should tank. But will it? Let’s see what happens.“
Why This Collapse Will Be Different Than 2008
Question: Bill, you wrote “This leg down will not be like 2008 at all, IMO.” Can you expand on this? I think you talked about this earlier but I was not very good at searching for it. BTW, what I would pay to be a fly on the wall for chats b/w Fleck and Mr.S! Oh…. wow!… I know…. I would pay a pittance per month for a regular stream of such gems. What a service you provide to this small timer who counts every penny. Thank you.
Answer from Fleck: “That “conversation” is generally not as interesting as you imagine, and I post about 90% of his emails. 2008 was, in essence, the implosion of the financial system because they had used leverage to buy a lot of bad (sliced up) mortgage paper. This time the stock market and the economy will be the main problems, but the real trouble will be when the bond market stops funding massive government debts at silly low rates, IMO.“ ***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.
***ALSO JUST RELEASED: A Remarkable View Of The War In Gold And The Dollar CLICK HERE.
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