On the heels of China's stock market crashing another 8.5 percent overnight, today one of the greats in the business sent King World News a fantastic piece discussing the implications of the crash, QE4, what the central planners are up to, plus a remarkable bonus Q&A that covers gold and much more.
July 27 (King World News) – Last night there were some pretty ugly fireworks in China, as that market declined about 8.5%, which is essentially one of the biggest breaks that country has ever seen, this after all kinds of support measures were put in place. Thus, the Chinese authorities have shot off a bunch of bullets and they haven't really worked….
Continue reading the Bill Fleckenstein piece below…
The 2008 Financial Crisis
It's a bit like when the government here was changing all kinds of rules and putting program after program in place to try and undo the 2008 financial crisis, which only worked after stocks got low enough and the Fed printed enough money. Perhaps the Chinese authorities can push the market up after it cracks further and they have to throw even more props at it, but they have to be quite concerned about this latest hit.
Europe was weaker by a couple of percent, most likely as a consequence of what happened in China, and the early going here saw the indices drop about 0.75% to 1%. Then the dip buyers showed up, however, and went after scattered and sundry tech stocks, along with a couple of the big recent winners like Google and Amazon, which cut the losses to about 0.5%. From there the market leaked again, and by day's end was back to the day's lows.
Away from stocks, green paper was weaker, oil fell 2%, while the metals were lower, as gold was 0.5% to silver's 1%.
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.
Question: Bill – not a question, but an observation.
Difficult and trying times for those long gold.
I think one needs only to look at the Gold/HUI ratio to see how absurd this bear market has gotten – historic lows, does anyone really think we're going to $300 an ounce (the ratio suggests this) – could be a historic buying opportunity.
I'm probably worse than most at this stuff, but I think the broad markets behavior into this Fed meeting and reaction after could be telling (if not this meeting, the next two). They are in the proverbial box; weak economy (just look at commodities, transports, industrials, etc.) a weakening equity market and their need to raise rates so they have some measure of "cushion" when things "turn down".
Their inability to "thread the eye of this needle" over the next 2 quarters could be the beginning of a change in psychology you so often reference and IMO, the inevitable demystification of the all knowing Fed. We'll see.
Answer from Fleck: "The Fed was supposed to start hiking in March, yet they couldn't. Still, they have yet to lose any credibility. But one of these days, when they again don't hike, it will start."
Amazon Vs All Gold Stocks
Question: Amazon gained $50 billion of market capitalization after hours on July 23. This is more than the combined market capitalization of Newmont, Barrick, Agnico Eagle, AngloGold, Goldcorp, Newcrest, Eldorado, Yamana, Hecla, IamGold and Coeur Mining.
Answer from Fleck: "Yeah, well they love AMZN and hate miners."
China's Stock Market Crash And QE4
Question: Hi Bill,
Do you think what is happening in China is a precursor to what will happen here "the next time" the Fed tries to institute QE4?
Let me be more clear it appears to me the game is over based on massive intervention by China and the market responses to them recently…Not that very long ago, any stimulus from any central bank would be greeted with massive speculative buying frenzies, we now have the polar opposite…Seeing what is happening in China makes me think the next round of QE might break the dam (global financial Ponzi scheme), if its not already broken before then?
Answer from Fleck: "Agreed about what is happening, but we are not exactly where you suggest we are, IMO. I suspect QE4 would work initially, but how long is the big question.
We aren't there yet, as folks think that what the Fed has done will work. They are NOT thinking that the Fed will be printing again, they think they will tighten." ***To subscribe to Bill Fleckenstein's fascinating Daily Thoughts CLICK HERE.
***KWN has now released the extraordinary audio interview with legendary Rob Arnott, where the he discusses the unprecedented chaos, turmoil and instability in the global financial system, what investors should be doing with their money to protect themselves from the coming plunge in Western stock markets and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Eric Sprott's remarkable audio interview has also now been released and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW. The written interview only contains a tiny portion of what Sprott had to say in his outstanding audio interview. Sprott discusses the greatest danger facing the world today, the coming financial carnage, what he is doing with his own money right now, the gold and silver markets, what surprises to expect this year and much more.
ALSO JUST RELEASED: Absolutely Shocking Information About The Brutal War That Is Raging In The Gold Market! CLICK HERE.
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The audio interviews with Robert Arnott, Eric Sprott, John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Gerald Celente, Andrew Maguire, Michael Pento, Dr. Paul Craig Roberts, Rick Rule, Bill Fleckenstein, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.