The Dow plunged 800 points today and the price of gold surged. Here is why…
“Stocks Plunge on Fears of Slowing Economic Growth”
By Bill Fleckenstein President Of Fleckenstein Capital
December 4 (King World News) – The market opened a bit weaker, then sold off, led lower by the Nasdaq, which fell 0.75% in the first hour. The initial proximate cause for that weakness was Cirrus Logic, which pre announced last night that results for this quarter were going to be worse than expected…
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Somebody Dropped Their Phone
As Fred Hickey noted in a tweet after that news hit, the combination of business eroding as fast as it has and the fact that the CEO was speaking at a conference today forced Cirrus to announce that fourth-quarter revenue was going to be 16% lower due to “recent weakness in the smartphone market.” But as Fred pointed out, given that the company put out a press release about the conference two weeks ago, the “recent” weakness must have been really recent — and potent, too.
Cirrus itself was weaker today, and it has been falling for some time, but the news was enough to take a couple of percent off of Apple and a few of its suppliers as well, which helped weaken the Nasdaq. Then about mid-morning the decline began to accelerate, possibly due to a Trump trade tweet that sounded negative, but that soon morphed into concern about economic weakness, and that became the focus (precipitated by the inverted yield curve).
This Just In From the Loony Bin
I say that because I checked in to see what the Bubblevision had to say about today’s meltdown, which is where I saw today’s Rap headline. (I occasionally do that on wild down days just to take the pulse of the “bubbleonians.”) Thus, the market storyline has now morphed from “It’s just a few rates hikes that are hurting the stock market, but all is well” and, “It’s just a temporary trade skirmish,” to now, “The economy is slowing down meaningfully.”
That is a big deal, because it places the spotlight squarely on the failed Fed policies. (On a side note, the insane “algo-inspired” thesis that banks would benefit from higher rates is finally blowing up in the faces of folks foolish enough to believe that. Meanwhile, other such oft-repeated non-sequiturs will also experience a similar outcome.)
Turning back to the action, by midday the market had fallen almost 3%. In the afternoon, it bounced a little, but was not far off the lows with an hour to go, when I had to leave. Please check the box score to see if something wild happened in my absence. Away from stocks, green paper was mixed, fixed income was higher-as stock market weakness finally mattered, and the metals bounced again, with silver gaining 1% to gold’s 0.75%. The miners were higher as well.
Major U.S. financial markets will be closed tomorrow in honor of former President George H.W. Bush, so there will be no Rap.
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ALSO RELEASED: Dow Plunges 600: Art Cashin Warns This Could Be A Huge Problem, Plus A Note On Gold & Silver CLICK HERE TO READ.
Bill Fleckenstein discusses the big move that is coming in the gold market and much more CLICK HERE OR ON THE IMAGE BELOW.
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