The Next Big Short

The "Next Big Short" is a collection of looming market risks from The Heisenberg. This 37 page special report will show you the risks in the markets. How to explain The Heisenberg?

Essentially, it's a collective brain trust of skilled traders willing to discuss markets with the freedom of anonymity. You can enjoy Heisenberg's lively market commentary in the TheoDark Report section of their public blog.

Get the "Next Big Short " free special report....Just Click Here

For more backstory, here's Heisenberg in his own words: Heisenberg spent a long time in college. Probably too long. Be that as it may, the experience afforded him extensive cross disciplinary experience. From Aristotle to Kant to Wittgenstein, from Hobbes to Locke to Rousseau, from plain vanilla equities to FX to CDS, Heisenberg is right at home. With degrees in political science and business, as well as extensive post graduate work in political science and public administration, Heisenberg is uniquely positioned to analyze markets from a holistic perspective. He also has a sense of humor, which allows him to fully appreciate how entertaining it is to talk about himself in the third person.

Heisenberg has traded pretty much everything at one time or another and if he hasn’t traded it, he’s studied it enough to drive himself just as crazy as if he had. He doesn’t sleep much because the terminal doesn’t sleep and neither, generally speaking, do currency markets.

Heisenberg once took the law school admission test (LSAT) for fun with no intention of actually going to law school. He then took it again to try and beat his first score. He paid for the second test with profits he made from long calls on a Brazilian water utility ADR that he sold to close from the first iPhone (the 2.5G version that no one remembers) in the middle of a graduate political science class. His score on the verbal section of the graduate management admission test (GMAT) was near perfect. As was his score on the analytical writing portion. Don’t ask about the math section. He got bored after two hours and didn’t care about using the Pythagorean theorem to determine how long Timmy’s shadow was when he was standing next to a 90 degree flag pole.

Professionally, Heisenberg has worked in Manhattan and many other locales and has years of experience generating and monetizing financial web content. He’s continually amused at those who make it seem hard. You provide quality content for users on a consistent basis. Everything else falls into place. Build it, and they will come.

Get the "Next Big Short " free special report....Just Click Here


See you in the markets putting the Next Big Short to work,
The Forex Market Club

High Probability Trades in Today's Volatile Market Conditions

Have you noticed we’re getting a lot of brutally sharp reversals in the markets lately? It’s so frustrating because most traders get caught on the wrong side over and over again. So called safe trend trades get destroyed while betting on bold reversals is working like clockwork.

What’s going on?

For years, it was possible to just buy any dip in stocks and crank out winner after winner. But those days are long gone. If you try that now, you’ll burn through your account in the blink of an eye. These days’ trends reverse on a dime, but at the same time, you can’t just blindly pick tops and bottoms either.

Anyone who was short stocks recently learned that lesson the hard way when the market rocketed to new all time highs. The bottom line is that those outdated strategies no longer work. If you want to generate consistent profits in these volatile conditions, you’ve got to adapt. And that’s why this short video by renowned trader John F. Carter is so exciting

You’ve just got to see the breakthrough strategy that allows him to catch massive price swings without breaking a sweat.

See for yourself >>> Click HERE to Watch <<<

If you haven’t heard of John before, he’s a best selling author and trader with over 25 years’ experience. He’s developed a world wide reputation for catching explosive trends in stocks, options, and even futures, too.

So I hope you attend on September 6th, 2016 at 7:00 PM Central for a special webinar called, “Hunting for Tops and Bottoms - Low Risk Setups for Trading Precise Turning Points in Any Market”.

Here’s just some of what you’ll learn....

  *  A simple 3 step process to identify major market turning points in any market

  *  How to find low risk, high probability trades in today's volatile market conditions

  *  Why it’s finally possible to catch tops and bottoms in real time on almost any chart

  *  Why these ‘Bold and Beautiful’ reversal trades can be safer than ‘comfortable’ trades

  *  How to avoid getting suckered into the costly traps that most traders fall into

  *  How to adapt your trades automatically for choppy conditions and big trends

  *  How to know when a support or resistance level is likely to hold or not

And that’s just the tip of the iceberg.

I’m looking forward to this special event and I expect I’ll be taking a lot of notes, too. There may not be a replay and this event will almost certainly fill to capacity – so register now and be sure to show up a few minutes early. Unless you’ve already mastered trading these volatile swings, this could be the most important training you attend this year.

To claim your spot just Click HERE

See you next Tuesday,
Forex Market Club


P.S.   If you have not downloaded John's free eBook do it asap....Just Click Here

Will The Bubble Pop Regardless if the Fed Never Raises Rates?

The current overall SPX pattern is a broadening top, which is usually a very reliable pattern. The market continues to look as though it wants to go even lower. The momentum shift, which I have been expecting, has been slow to start, however one should be prepared for this occurrence ahead of time. Nevertheless, the large divergences which I have been viewing, in my proprietary oscillators, are most real, and, once the selling starts, the momentum should quickly move to the downside.

The current market is being supported by a lack of sellers more so than aggressive buying. With investors still thinking that there is no other place to store their money, they appear to be content with leaving their money with risk on assets within a market that is pushing to all time highs. This type of mentality usually leads to large losses rather than big gains. There isn’t any real opportunity for growth in the SPX that I can see right now.

Dow Theory: Market Indexes Must Confirm Each Other

The Dow Theory was formulated from a series of Wall Street Journal editorials which were authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs regarding how the stock market behaved and how the market could be used to measure the health of the business environment.

Dow first used his theory to create the Dow Jones Industrial Index and the Dow Jones Rail Index (now Transportation Index), which were originally compiled by Dow for TheWall Street Journal. Dow created these indexes because he felt they were an accurate reflection of the business conditions within the economy, seeing as they covered two major economic segments: industrial and rail (transportation). While these indexes have changed, over the last 100 years, the theory still applies to current market indexes.

Market indexes must confirm one another. In other words, a major reversal from a bull or bear market cannot be signaled unless both indexes (generally the Dow Industrial and Transports Averages) are in agreement. Currently, They are DIVERGING, issuing MAJOR NON-CONFIRMATION HIGH the Dow Jones Industrial average. If one couples this with the volatility index, this is a warning sign and a recipe for disaster.

The FEDs’ monetary policy over the last eight years has led to unproductive and reckless corporate behavior. The chart below shows U.S. non financials’ year on year change in net debt versus operating cash flow as measured by earnings before interest, tax, depreciation, and amortization (EBITA).

The growth in operating cash flow peaked five years ago and has turned negative year over year. Net debt has continued to rise, which is not good for companies.

This has never before occurred in the post World War II period. In the cycle preceding the Great Recession, the peaks had been pretty much coincidental. Even during that cycle, they only diverged for two years, and by the time EBITA turned negative, year over year, as it has today, growth in net debt had been declining for over two years. Again, the current 5 year divergence is unprecedented in financial history. Today, most of that debt is used for financial engineering, as opposed to productive investments. In 2012, buybacks and M&A were $1.25 trillion, while all R&D and office equipment spending were $1.55 trillion. As valuations rose, since that time, R&D and office equipment grew by only $250 billion, but financial engineering grew by $750 billion, or three times this!

You can only live on your seed corn for so long. Despite there being no increase in their interest costs while growing their net borrowing by $1.7 trillion, the profit shares of the corporate sector peaked in 2012. The corporate sector, today, is stuck in a vicious cycle of earnings manipulation management, questionable allocation of capital, low productivity, declining margins and growing debt levels.

Conclusion:

In short, I continue to pound on the table to help keep you and fellow investors aware that something bad, financially, is going to take place – huge events like the tech bubble, the housing collapse a few years back, and now national financial instability. Experts saw all these events coming months and, in some cases, years in advance. Big things typically don’t happen fast, but once the momentum changes direction you better be ready for some life changing events and a change in the financial market place.

Follow my analysis in real time, swing trades, and even my long term investment positions so you can survive from the financial storm The Gold & Oil Guy.com

Chris Vermeulen

The Financial Winter is Nearing

Weathering Out Winter

Nature functions in cycles. Each 24 hour period can be divided into smaller cycles of morning, afternoon, evening, and night. The whole year can be divided into seasonal cycles. Similarly, one’s life can also be divided into cycles. Cycles are abundant in nature – we just have to spot them, understand them, and be prepared for them, because they happen whether we like it or not. Likewise, economic experts have noticed that the world also follows different cycles. An important pioneer in this field was the Russian social economist, Nikolai Kondratiev, also called Nikolai Kondratieff, a relatively unknown genius.

Who Is Kondratiev?
Geniuses have been known to defend their principles and beliefs, even at the cost of losing their lives; they may die but their legacy lives on, as did Kondratiev. He was an economist who laid down his life defending his beliefs. He was the founding director of the Institute of Conjuncture, a famous research institution, which was located in Moscow. He devised a five year plan for the development of agriculture in Russia from 1923-1925.

His book, “The Major Economic Cycles,” was published 1925, in which his policies were in stark contrast to that of Stalin’s. As a result of this, Kondratiev was arrested in 1930 and given a prison sentence. This sentence was reviewed, and, consequently, he was executed in 1938. What a tragic loss of such a genius at only 42 years of age. He was executed because his research proved him right and Stalin wrong! Nonetheless, his legacy lives on and, in 1939 Joseph Schumpeter named the waves Kondratiev Waves, also known as K-Waves.

What Are Kondratiev Waves?
Investopedia defines the Kondratieff Wave as, “A long term cycle present in capitalist economies that represents long term, high growth and low growth economic periods.” The initial study by Kondratiev was based on the European agricultural commodity and copper prices. He noticed this period of evolution and self correction in the economic activity of the capitalist nations and felt it was important to document.


These waves are long cycles, lasting 50-60 years and consisting of various phases that are repetitive in nature. They are divided into four primary cycles:

Spring Inflationary growth phase: The first wave starts after a depressed economic state. With growth comes inflation. This phase sees stable prices, stable interest rates and a rising stock market, which is led by strong corporate profits and technological innovations. This phase generally lasts for 25 years.

Summer Stagflation (Recession): This phase witnesses wars such as the War of 1812, the Civil War, the World Wars and the Vietnam War. War leads to a shortage of resources, which leads to rising prices, rising interest rates and higher debt, and because of these factors, companies’ profits decline.

Autumn Deflationary Growth (Plateau period): After the end of war, people want economic stability. While the economy sees growth in selective sectors, this period also witnesses social and technological innovations. Prices fall and interest rates are low, which leads to higher debt and consumption. At the same time, companies’ profits rise, resulting in a strong stock market. All of these excesses end with a major speculative bubble.

Winter Depression: This is a period of correcting the excesses of the past and preparing the foundation for future growth. Prices fall, profits decline and stock markets correct to the downside. However, this period also refines the technologies of the past with innovation, making it cheaper and more available for the masses. Accuracy Of The Cycle Over The Last 200 Years

The K-Waves have stood the test of time. They have correctly identified various periods of important economic activity within the past 200 years. The chart below outlines its accuracy.

Very few cycles in history are as accurate as the Kondratiev waves.


Criticism Of The Kondratiev Waves
No principle in the world is left unchallenged. Similarly, there are a few critics of the K-Waves who consider it useful only for the pre-WWII era. They believe that the current monetary tools, which are at the disposal of the monetary agencies, can alter the performance of these waves. There is also a difference of opinion regarding the timing of the start of the waves.

The Wave is Being Pushed Ahead But the Mood Confirms a Kondratiev Winter

A closer study reveals that the cycles are being pushed forward temporarily. Any intervention in the natural cycle unleashes the wrath of nature, and the current phase of economic excess will also end in a similar correction. The K-Wave winter cycle that started in 2000 was aligned with the dot-com bubble.

The current stock market rise is fueled by the easy monetary policy of the global central banks. Barring a small period of time from 2005-2007 when the mood of the public was optimistic, the winter had been spent with people in a depressed social mood. The stock market rally from 2009-2015 will be perceived as the most hated rally and the one most laden with fear.

Every dip of a few hundred points in the stock market starts with a comparison to the Great Recession of 2007-2009. The mood exudes fear and disbelief that the efforts of the central banks have not been successful and are unable to thwart off the winter, as predicted by the K-Waves. The winter is here and is reflected in the depressed social mood.

How To Weather Out Brutal Winter
In the last phase of the winter cycle, from 2016-2020, which is likely to test us, the stock market top is in place. Global economic activity has peaked, terrorism further threatens our lives, geopolitical risks have risen, the current levels of debt across the developed world are unmanageable, and a legitimate threat of a currency war occurring will all end with the “The Great Reset.” Gold will be likely to perform better during this winter cycle. Get in love with the yellow metal; it’s the blanket which will help you withstand the winter.

Conclusion
Cycles are generally repetitive forces that give us an insight into the future so we can be prepared to face it and prosper. Without excessive intervention, nature is very forgiving while correcting the excesses. But if one meddles with nature, it can be merciless during the correction. The current economic condition will end with yet another reset in the financial markets. Prices will not rise forever, and a correction will take hold eventually. Until then, we follow and trade accordingly. I will suggest the necessary steps to avoid losses and prosper from market turmoil when it unfolds.

Follow my analysis at:  The Gold & Oil Guy.com

Chris Vermeulen

Warning: This Could Be the Start of a Global Banking Crisis

By Justin Spittler

Europe’s banking system is collapsing. Over the past year, shares of Deutsche Bank (DB), Germany’s biggest bank, have plunged 56%. Swiss banking giant Credit Suisse (CS) is down 62% over the same period. Yesterday, both stocks hit record lows.

Dozens of other European bank stocks have also crashed. The Euro STOXX Banks, which tracks 48 of Europe’s largest banks, is down 48% over the past year. This is a major issue. That's because banks are the cornerstone of the financial system. They keep money flowing through the economy. If they’re struggling, it often means the economy is having major problems. Right now, European banks are flashing bright warning signs. That’s not just bad news for Europe—it’s also a serious threat to the rest of the world.

In today’s Dispatch, we’ll show you why Europe’s banking crisis could turn into a global banking crisis. You’ll also learn how to transform this threat into a chance to make big gains.

European banks are struggling to make money..…
Spanish banking giant BBVA’s (BBVA) profits fell 54% last quarter. First quarter profits at Deutsche Bank were down 58%. Swiss bank UBS’s (UBS) profits plunged 64%. European banks are hurting for a couple reasons. One, Europe is growing at the slowest pace in decades. Banks are making fewer loans as a result.

Two, negative interest rates are eating European banks alive. If you’ve been reading the Dispatch, you know negative rates are the latest radical government policy. They basically flip your bank account upside down. Instead of earning interest for keeping money in the bank, you pay the bank to hold your money.

Negative rates are clearly bad for savers. They’re also hurting Europe's biggest banks. That’s because these huge institutions have to pay their “bank,” the European Central Bank (ECB). Today, European banks pay £4 for every £1,000 they store at the ECB for a year. That might not sound like a lot. But it adds up quick when you manage trillions of euros like these banks do.

Last week, investors got another reason to avoid European banks..…
On Thursday, Great Britain voted to leave the European Union (EU), which it’s been in since 1973.
The “Brexit,” as the media is calling it, blindsided investors. As we explained yesterday, the market was expecting Great Britain to stay in EU. The unexpected outcome triggered a global stock market crash.

U.S. stocks had their worst day since August. Japanese stocks had their worst day in five years. European stocks had their biggest decline since the 2008 financial crisis. Friday’s global selloff erased $2.1 trillion in value from global stocks. It was the global stock market’s worst day in history. The panic didn’t die down much over the weekend. By the end of Monday, another $930 billion had disappeared from the global stock market.

European bank stocks were hit the hardest..…
Deutsche Bank plunged 22% between Friday and Monday. Credit Suisse fell 23%. UBS fell 20%. Barclays (BCS) and Royal Bank of Scotland (RBS) each plunged 37%. Both stocks are down more than 57% over the past year. These are gigantic moves in a matter of days. Remember, we’re not talking about small biotech stocks. These are some of the most important financial institutions on the planet.

Government officials are scrambling to contain the crisis..…
Today, the Bank of England (BoE) injected £3.1 billion into Britain’s banking system. It’s pledged to inject as much as £250 billion to stabilize its financial system. The BoE made its cash injection hours after the Bank of Japan (BOJ) pumped $1.5 billion into its banking system. As we'll show you in a second, we don't believe this will end well. That's because this excessive money printing (sometimes called "quantitative easing") doesn't stimulate the economy like governments intend it to.

Credit Suisse says other central banks could soon print more money too. Bloomberg Business reported on Friday:

“Market liquidity and overall liquidity in the U.K. is drying up as we speak in a very rapid way,” said John Woods, chief investment officer for Asia-Pacific at Credit Suisse Private Banking, told Bloomberg TV in Hong Kong. “It’s highly likely that we see monetary easing in a coordinated response” from central banks across the world, he said.

Great Britain is headed for a recession..…
A recession is when an economy shrinks two quarters in a row. Goldman Sachs (GS) says Britain could be in a recession by early 2017. But here’s the thing. We don’t think the BoE will let this happen. That’s because central bankers will do anything, including using reckless, unproven monetary policies, to avoid a recession these days.

Credit rating agency Standard & Poor’s agrees with us. Reuters reported today:

"Brexit is likely to represent a drag of about 1.2 percent of GDP for the UK in 2017," Jean-Michel Six, S&P's chief economist for Europe, the Middle East and Africa told a conference call for investors on Tuesday. "We have a significant slowdown but growth remains positive although obviously in a much more disappointing way. That is because we anticipate a very strong monetary response on the part of the Bank of England, in the form of additional quantitative easing, in the form of a further cut in interest rates," he added.

Bank of America (BAC) and Deutsche Bank also expect the BoE to fire up the printing press again. Bank of America says it could happen as soon as August.

QE won’t help Great Britain’s economy..…
As we told you above, QE doesn’t work. As regular readers know, the Federal Reserve pumped $3.5 trillion into the U.S financial system after the 2008 financial crisis. This massive money printing effort was supposed to juice the economy. But the U.S. is growing at its slowest pace since World War II. QE also failed to jumpstart Japan’s economy, which hasn’t grown in two decades. There’s no reason to think it will work this time.

If you’re nervous about the global financial system, we encourage you to take action today.…
The first thing you should do is own physical gold. Gold is real money. It’s held its value for thousands of years because it has a unique set of attributes: It’s easy to transport, easily divisible, and durable. You can take a gold coin anywhere in the world and folks will immediately recognize its value.

Unlike paper money, central bankers cannot create gold from nothing. It’s the ultimate antidote to crumbling paper currencies. That’s why the price of gold often soars when governments print money. This year, gold is up 24%. It’s trading at the highest price in two years. But it could go much higher as governments continue to run reckless monetary experiments.

If you want big profits from rising gold prices, own gold stocks..…
Dispatch readers know gold miners are leveraged to the price of gold. A small jump in the price of gold can cause gold stocks to surge. Gold’s 24% jump this year has caused GDX, a fund that tracks large gold stocks, to soar 96%. We believe this gold stock rally is just getting started. During the 2000 and 2003 gold bull market, the average gold stock gained 602%. The best ones soared 1,000% or more.

Nick Giambruno, editor of Crisis Investing, has recommended two gold stocks this year..…
He already closed out one of them for a quick double. It surged 103% in 14 months. Nick’s other gold stock is up 30% since March and is still dirt cheap at today's levels. Nick currently rates this stock a "Buy"…and says it could soon start paying a double digit dividend yield if gold keeps rising.

You can learn more about Nick’s gold stock by taking advantage of our special 60%-off sale for Crisis Investing. If you sign up today, you’ll be enrolled in a trial membership, which gives you 90 days risk-free to decide if the service is for you. But we encourage you to act soon. This special offer ends soon, and we likely won’t open this offer again for a long time.

You can learn more about this incredible offer by watching this video presentation. You’ll also learn about an even bigger threat to your wealth than Europe’s banking crisis. As you’ll see, almost no one is talking about this coming crisis. Yet, it could cause millions of Americans to lose their entire life savings. By the end of this video, you’ll know how to protect yourself. And just as importantly, you’ll know how to profit from this coming crisis. Click here to watch this free video.

Chart of the Day

U.S. bank stocks are also headed lower. Today’s chart shows the performance of the Financial Select Sector SPDR ETF (XLF) over the past year. XLF holds 94 major U.S. financial companies including behemoths JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC). You can see XLF is down 11% since last June. While that's not as severe as the near 50% drop in European banks over the same period, it's still a clear sign to stay away.

U.S. banks have many of the same problems as European banks. Like Europe, the U.S. economy is growing at the slowest pace in decades. And while the U.S. economy doesn’t have negative rates yet, Fed Chair Janet Yellen has said they aren’t “off the table” if the U.S. economy runs into trouble. The arrival of negative rates to the U.S. could tip bank stocks into a crisis, just like they have in Europe.

The article Warning: This Could Be the Start of a Global Banking Crisis was originally published at caseyresearch.com.

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This $1 Trillion Market Is Cracking…Here’s How to Profit From Its Collapse

By Justin Spittler

Americans are falling behind on their credit card debt. As you’re about to see, credit card “defaults” are rising for the first time in six years. This is a serious problem for credit card companies. It’s also a big problem for retailers, car makers, and any other company that depends on consumer credit.

If this keeps up, shares of America’s biggest consumer companies could plunge. You could even lose a lot of money without having a single penny invested in this sector. That’s because consumer spending makes up about 70% of the economy. When the “consumer” hurts, the entire economy feels it. So, if you have any money at all in stocks, please read this Dispatch closely.

Credit card company Synchrony Financial (SYF) issued a serious warning last week..…
Synchrony issues more retail store credit cards than any other company. Its performance can say a lot about the credit card and retail industries. Right now, Synchrony’s customers are struggling to pay their bills. The Wall Street Journal reported last week:

“We expected to see some softening,” Brian Doubles, Synchrony’s chief financial officer, said at an investor conference Tuesday. “We weren’t sure when it was going to come and I think we’re starting to see some of that.” Mr. Doubles added that the ability of card holders to get back on track with payments after falling behind has been “challenged all year.”

The company said it could see a jump in “credit charge-offs”..…
This is basically the default rate for the credit card industry. The company warned that its charge off rate could spike from about 4.4% to as high as 4.8%. For perspective, the industry charge off rate was 3.1% during the first quarter. During the first quarter of 2015, it was 3%. This was the first time since 2010 that the industry charge off rate has increased from the previous year. Many investors are now worried other credit card companies could take big losses in the coming months. Synchrony’s stock plunged 14% after it issued the warning.

Shares of other major credit card companies also tanked on the news..…
Capital One Financial (COF) closed Tuesday down 6.6%. Ally Financial (ALLY) sunk 5.6%. These giant credit card companies are now trading as if there could be much bigger losses on the way. Synchrony’s stock has plunged 22% over the past year. Capital One is down 28%. Ally Financial is down 30%.

Other major credit card companies have also plummeted. American Express (AXP), the nation’s largest credit card company, has fallen 23% over the past year. Discover Financial Services (DFS) is down 10%.
For comparison, the S&P 500 is down 2% since last June.

As of the first quarter, Americans had more than $950 billion in credit card debt..…
That’s 6% higher than the first quarter of 2015. And it’s the highest level since 2009.
Folks have been racking up bigger debt despite falling behind on their payments. The Wall Street Journal reports:

Capital One, the nation’s fourth largest credit card issuer, said credit card sales jumped 14% in the first quarter from a year earlier. At Citigroup Inc., average credit card balances in the first quarter posted the first year over year increase since 2008. Such balances also grew at Discover Financial Services Inc. and J.P. Morgan Chase & Co., the nation’s largest lender.

U.S. credit card balances are on pace to hit $1 trillion by the end of the year. They could even top the all-time high of $1.02 trillion set in July 2008.

The Federal Reserve made it cheap for folks to borrow money..…
As you probably know, the Fed has held its key interest rate near zero since 2008. The Fed dropped rates to the floor to encourage folks to borrow and spend money. In 2007, the average credit card holder paid 13.3% per year in interest. Today, the average annual interest rate is 12.3%. Credit card companies and banks have also loosened their lending standards. The Wall Street Journal reports:

Because many creditworthy consumers are still cautious about spending, lenders are turning more aggressively to subprime borrowers. Lenders issued some 10.6 million general purpose credit cards to subprime borrowers last year, up 25% from 2014 and the highest level since 2007, according to Equifax.

A “subprime” loan is a loan made to someone with poor credit. You may remember that the collapse of the subprime mortgage market sparked the 2008 financial crisis and worst economic downturn since the Great Depression.

The Fed also made it cheaper to buy a car..….  
Last quarter, the amount of U.S. auto loans topped $1 trillion for the first time in history. This is a sign of a very unhealthy economy. That’s because many folks buying cars these days could never afford them in “normal” times.

The Wall Street Journal explains:

Lenders gave out $109.4 billion in subprime auto loans last year, up 11% from 2014 and nearly three times the low of $38.3 billion in 2009, according to credit reporting firm Equifax. Subprime auto loans account for a growing share of new auto loans, making up nearly 19% of auto loan balances given out last year, up from 13% in 2009.

It’s only going to become more difficult for folks to pay their credit card bills and car loans…
That’s because the economy is barely growing. As regular readers know, it’s growing at the slowest pace since World War II. And it’s only getting worse.  

Companies are hiring at the slowest pace in six years. Corporate earnings are drying up. And major retailers are warning of big sales declines for this year.

Meanwhile, debt is growing at the fastest pace in years. This can’t go on forever. As the economy weakens, more Americans will fall behind on their debts. Credit card companies, banks, and other lenders will see huge losses. Many retailers will also see sales plummet.

E.B. Tucker, editor of The Casey Report, just shorted a company that depends heavily on cheap credit..…
Shorting is betting that a stock will fall. If it does, you make money. Nearly 62% of this company’s customers pay with credit. A “spend now, pay later” business like this can work when the economy is growing. It doesn’t work well when the economy is shrinking. Folks buy less stuff once they realize they can’t really afford it. Some customers don’t pay back their loans.

E.B. says this is already happening at this company. He wrote in this month’s issue of The Casey Report:

From 2014 to fiscal 2016, the company’s annual bad debt expenses rose from $138 million to $190 million. That’s a 30% increase. Over the same period, credit sales grew by only 20%. That means bad debt expenses rose 50% faster than credit sales.

If this continues, the company could end up with huge piles of unsold inventory. To pay the bills, it may have to sell merchandise at deep discounts, even if it means losing money on every sale. In less than two weeks, this short has made Casey Report readers 5%. But that could just be the start. According to E.B, there’s “more pain to come as credit financing dries up…sales continue to drop…and more loans go unpaid.”

You can learn more about this trade by signing up for The Casey Report. If you sign up today, you’ll get 50% off the regular price. You can learn how by watching this short presentation. You will also learn why today’s “credit crunch” is the No. 1 early warning of the next big financial crisis. More importantly, you’ll learn how to turn the coming crisis into a moneymaking opportunity.

Click here to watch this free video.

Chart of the Day

Airline stocks are breaking down. Airline stocks have been one of the hottest investments since the end of the 2008 financial crisis. The Dow Jones U.S. Airlines Index, which tracks major airline stocks, surged an incredible 861% from March 2009 through December 2014. It’s since fallen 26%. You can see in today’s chart that airline stocks are in a sharp downtrend. And if the economy gets as bad as we think it will, the sector could plunge.

In the February issue of The Casey Report, E.B. Tucker wrote that the good times were ending for the airline industry. He put his money behind this call by shorting one of America’s most vulnerable airlines. This short has returned 20% in four months. And that’s just one of six holdings in E.B.’s portfolio that’s up 20% or more right now. To learn more about E.B.’s investing approach, watch this short video.

Regards,
Justin Spittler

The article This $1 Trillion Market Is Cracking…Here’s How to Profit From Its Collapse was originally published at caseyresearch.com.

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New Video - Dynamic Options Traders Blueprint

Watch John's new free video and get a reserved seat for this weeks free webinar....
​
Join John Carter and Chris Belcher of Simpler Options as these two highly respected traders (with more than 50 years of combined experience) reveal low-risk option strategies designed to catch quick explosive moves in volatile stocks. Get ready to take notes because we’re going to review results from actual live trades executed in real time during current market conditions.

Watch the video NOW!

Then mark your calendar right now.....
​Date: Tuesday, June 7th, 2016
Time: 7:00 PM CDT

Visit Here to Watch and Register

See you in the markets!
Ray C. Parrish
Forex Market Club


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