Notable quoteables from Gary Kaltbaum!

Notable quoteables from Gary Kaltbaum from the past couple of days!
Falling asset prices are either telegraphing a recession or will cause the recession.

Asset bubbles live off of margin and leverage. The popping of the bubbles and subsequent drops are caused by that same margin and leverage.

Tuesday’s late selling was not aunt Mary and uncle Bob. It reminded of forced selling as mutual funds have very little cash on hand. There is only one thing you can do when you have very little cash on hand and get redemptions, SELL! That was the big money crowd selling. It is never a good sign when the Dow is up 400 and finishes down 200 and all the selling comes into the close. Of course, they will try to gap it up tomorrow.

For the umpteenth time, this bear phase started in the summer of 2014 when the whole commodity complex topped out. Since, it was a slow moving topping process as one by one, the dominos tipped over. It all started to become more evident when the average stock topped, the average sector topped, when the transports topped in March, when the semiconductors topped in May and when the market was held up by a narrower and narrower list of mega cap stuff. All that was left was for the indices to join in. That happened when the S & P took out 2040 (you were warned) and then all hell broke loose.

So far, the reaction by the crowd has been classic. Don’t worry. Everything is ok. It will come back. It is just China. Blah blah blah. They do the same thing every time the markets drop.

Monday’s open was a flash crash. Hundreds of stocks opened down $20-30 and were back up in a minute or so. Some back up in seconds. There should be an investigation.

At least this could shut up the income inequality yappers as the big money is being carved up.
We have been stating for ages they will never raise rates until the market makes them. Regardless of what you hear, there is zero chance they raise rates now…or at least at this juncture, they had better not. After 10 years of not raising rates, why would they raise rates in the middle of a financial whacking?

You will now hear rumblings of QE4 from many on Wall Street because Wall Street’s saving grace, for years, has been the printing of money from the maniacal central banks. What happens if the markets stop listening to even that? That’s what is going on in China right now. Regardless of anything they do, markets cannot get any traction.

Major indices had better hold the 16-18% drop off the highs. You don’t want to hear everyone calling “bear market” if they drop more than 20%. Is there a chance markets can stop going down? Of course. Remember, the only goal of central banks is to have asset prices go higher. We can guarantee there have been a lot of conference calls between the bubble makers to stanch this bleeding. They will do everything possible. Hey…they have already printed $15-20 trillion. There is nothing off the table that they would not do.

Markets are still the most stretched and extended to the downside they have been since 1987. A vicious and sustainable bounce can happen at any time. After all, the troops are mobilizing with their fake opinions saying everything will be ok. (Think Kevin bacon in animal house!) But it is noteworthy that 3000 Dow points has not yet done the trick. It is noteworthy that Monday’s intraday bounce and Tuesday’s gap to the upside petered out so quickly. It tells you just how weak the market is and simply tells you big money is still selling. Just realize it would be normal for markets to rally up a decent amount here as price always tends to go back towards moving averages.