Get Ready: The World Is In For A Massive Shock Not Seen Since 1929!! The Next Financial Crisis Is Going To Be Disastrous!!

No Volume, No Problem

Margin debt and the next stock market crash

The latest fear on Wall Street is that record levels of margin debt may end up toppling the stock market rally. NYSE margin debt recently reached its highest level since 2007 before the last major stock market peak and credit crash. Stephen Suttmeier, technical research analyst at Bank of America, noted that margin debt, rose 28% in March from a year ago to $380 billion. That figure is slightly below the July 2007 peak of $381 billion, although analysts speculate that April’s margin debt totals(which haven’t yet been released) have already surpassed this mark.

The Percentage Of Self-Employed Americans Is At A Record Low

“The Only Thing We Have To Fear Is The Lack Of Fear Itself”

With NYSE margin debt at extremes once again, complacency at all-time highs, valuations (across equity and credit) frothy, and the cacophony of bullish consensus momentum chasers, it seems the anti-thesis of FDR’s speech appears quite appropriate…

Extreme Sentiment – check!

Extreme Leverage - check!

Extreme Complacency - check!

Extreme Valuations - check!

(h/t @Not_Jim_Cramer)

All Of The Signs Suggest The College Bubble Has Finally Burst

This week, the Wall Street Journal’s Ruth Simon reported private colleges are now offering record financial assistance to keep classrooms full.

Some schools are now seeing just 20% of the students they accepted actually enrolling, versus the usual rate of 33%.

So they have increased the “tuition discount rate”— the price after grants and scholarships  —  to an all-time high of 45%.

Meanwhile, the median sticker price increased just 3.9% last fall, the smallest gains in 12 years. And at public schools, the sticker price climbed just 4.8%, also a 12-year low.

For the Washington Examiner’s Michael Barone, this makes it official: the college bubble has finally burst:

Applicants are negotiating bigger discounts than they used to. Market competition has kicked in.

What has happened is that in a recessionary and sluggish economy potential customers have been figuring out that a college diploma may not be a good investment — particularly if it entails six-figure college loan debt that cannot be discharged in bankruptcy.

The Millennial Generation that voted so heavily for Barack Obama — 66 to 32 percent in 2008, 60 to 37 percent in 2012 — has had a hard time finding jobs, even with diplomas in hand. Especially if their degrees are in gender studies or similar fields beloved of academics….

• Student loan default rates rise
• More Than Half Of Student Loans Are Now In Deferral Or Delinquent

Macro Collapse Pushes S&P 500 To New All-Time Nominal High And Close

“Horrible” PMI, no problem; just add it to the list of macro data that has missed significantly in recent weeks. Bloomberg’s US Macro index has utterly collapse in recent weeks – now at its worst level in 7 months but apparently if good is good, bad is better, and totally shitty is absolutely awesome. It would appear the world of nominal equity index chasers is now fully cognizant that the reality of their lemming like herding is based on one simple thing (no matter how much they kick and scream and proclaim wisdom about earnings cycles, growth, margins, transformative energy, or new AAPL products) – and that is… Central Bank promises.

And just to timestamp this, both the closing print, or right around it, and the all time nominal intraday high, coincide.

If the Fed needed any ammo for tomorrow to hint that there is a time frame longer than infinite and that there is a size of imprudence larger than infinity, then they have it… of course, there is, once gain, very weak volume on this uptick (but like everything else, that doesn’t matter either.)

Here’s The Great Disconnect That Has People Saying The Market Is Rigged By The Fed

Chinese Consumers Rapidly Shift From Luxury To Thrift

It was a decent run but all good things come to an end. We know China’s growth is fading (even by their own official data) but below the surface data suggests things are a lot worse. Between this drop in growth and the rise in anti-corruption practices (that we discussed here) the imports of Swiss-made luxury watches has tubmled 24% in Q1 for the third quarter in a row of declines. “The corruption crackdown campaign is having a big effect on luxury watch sales, high-end watches are very common gifts and they are items that are quite conspicuous and associated as a sign of corruption.” This follows the firing of Communist Party official Yang “Brother Watch” Dacai who posted images of himself wearing 11 luxury watches at different times. Two major luxury watch retailers are significantly underperforming while Swatch is improving as Hong Kong (the world’s biggest importer of watches) slows dramatically. But have no fear, we are sure it will be a smooth transition.

Read more at http://investmentwatchblog.com