institutionaladvisors.com
  • Home
  • What's-New
    • Archive_2012
    • Archive_2006-2011
    • Archive_2002-2005
    • Archive_1998-2001
  • Methods
    • Capitulation
    • Gold
    • Real Estate
  • Bonds
    • Credit-Markets
  • Publications
    • Humour
  • Contact
    • Feedback
    • Bob_Hoye >
      • Controversial
      • Musings
    • Ross_Clark
    • Levente_Mady
    • Logos
    • EOE

Bob Hoye Interview

7/10/2015

 
Iron Ore 2010-2015CLICK CHART TO ENLARGE
Talk Digital Network AUDIO INTERVIEW of BOB HOYE

Stock Market Crashes Stoppable? Never have so many owed so much to so few.


Signs of The Times
Snippet from July 8, 2015 Pivotal Events

China's transition from exuberance to gloom has been rapid.

"At a stock trading hall for investors in Shanghai, the mood is glum. The zest for market speculation goes hand-in-hand with the socialist conviction that the government can and should protect them from risk." – Financial Times, July 1.

Formerly the bastion of capitalism, Wall Street has also become overly dependent upon socialist central bankers. 

"Regulators [believe] that margin debt in China's stock market remains managable." – Reuters, June 30.

"China's financial industry joined the nation's securities regulator in moving to shore up the nation's $7.7 trillion stock market." – Bloomberg, June 30.

"China Hunts 'Manipulators' as Stocks Tumble"
"A flurry of policy moves over the past week, including an interest rate cut and a relaxation of lending rules had failed to arrest the sell-off."
 – Yahoo! News, July 3.

"Fund in China Fails To Stabilize Stock Markets" – The New York Times, July 4.

PERSPECTIVE

The above list chronicles the sudden discovery of a highly speculative blow-off gone suddenly bad. Such headlines could have been recorded in New York in early October 1929 or in 1873. Instead it was recorded in China at the conclusion of a truly magnificent financial mania.

On the way up, the action generated many quotations about the wonders of run-a-way speculation that peaked on June 12th. In a couple of steps the SSEC has plunged more than 30 percent. An index of new issues has crashed.

Although quick, there seems enough pattern to conclude that China's great bubble has blown out. As with historically great bubbles outside of New York it climaxed in the May-June window.

In the completing frenzy of the Nikkei Bubble at the end of 1989, there were official attempts to talk the speculation down. After some weeks of serious decline, policymakers talked about easing margin requirements. China's current easing of "lending rules" could be as effective as those offered in Tokyo in early 1990.
The plunge is much faster and steeper than the initial break in 2007. Another case of the "margin calls going out with the confirmations". Using the pattern that got us this far, once the SSEC stabilizes it could churn around into August. This could lead to heavy liquidation in the fall.

Considering the Greek problem, it seems like another test of policymakers and their peculiar theories. At speculative extremes they never have had any control over credit spreads and the action since May has been a warning. Also at such extremes they have been many months behind the changes in market rates of interest.

Ironically, the chronic application of desperate measures created a bubble which consequent 2 contraction will not be prevented by more of the same desperate measures.

This test of policymakers will likely mark their theories and practices as a massive failure.

Even worse, the public will eventually understand the failure as well. More alert politicians will pillory interventionist central bankers upon a cross of gold. 

InstitutionalAdvisors.com FREE TRIAL HERE

GO TO THE MOST RECENT WHAT'S NEW POST

 


Comments are closed.

    Picture
    Follow 
    Brian Ripley on Twitter for updates to this page

    Follow @Brian_Ripley
    or subscribe to the

    RSS Feed

    Publication SCHEDULE
    VIEW OUR WORK 
    Picture
    CLICK CHART TO ENLARGE

    Categories

    All

    Archives

    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013


REQUEST TO VIEW OUR WORK

Original Independent Financial Market Forecasting since 1980
Bob Hoye Editor & Chief Investment Strategist ~ www.InstitutionalAdvisors.com 
HOME | CONTACT | PUBLICATIONS | WHAT'S NEW | Errors, Omissions & Exceptions
Here is a Financial Glossary and an ETF List
​

Follow @Brian_Ripley
OR CONTACT BRIAN TO VIEW OUR WORK
✕