Why are corporate insiders
dumping huge numbers of shares in their own companies right
now? Why are some very large investors suddenly making
gigantic bets that the stock market will crash at some point
in the next 60 days? Do Wall Street insiders expect
something really BIG to happen very soon? Do they know
something that we do not know? What you are about to read
below is startling.
Every time that the market has
fallen in recent years, insiders have been able to get out
ahead of time. David Coleman of the Vickers Weekly
Insider report
recently noted that Wall Street insiders have shown "a
remarkable ability of late to identify both market peaks and
troughs". That is why it is so alarming that corporate
insiders are selling nine times as many shares as they are
buying right now.
In addition, some
extraordinarily large bets have just been made that will
only pay off if the financial markets in the U.S. crash by
the end of April. So what does all of this mean? Well,
it could mean absolutely nothing or it could mean that there
are people out there that actually have insider knowledge
that a market crash is coming. Evaluate the evidence
below and decide for yourself...
For some reason, corporate
insiders have chosen this moment to unload huge amounts of
stock. According to a
CNN article, corporate insiders are now selling nine
times more of their own shares than they are buying...
Corporate insiders have one
word for investors: sell.
Insiders were nine times
more likely to sell shares of their companies than buy
new ones last week, according to the Vickers Weekly
Insider report by Argus Research.
What makes this so alarming is
that corporate insiders have been exceedingly good at
"timing the market" in recent years. The following comes
from a recent CNBC article entitled "Sucker
Alert? Insider Selling Surges After Dow 14,000"...
"In almost perfect
coordination with an equity market that was rushing
toward new all-time highs, insider sentiment has
weakened sharply — falling to its lowest level since
late March 2012," wrote David Coleman of the Vickers
Weekly Insider report, one of the longest researchers of
executive buying and selling on Wall Street. "Insiders
are waving the cautionary flag in an increasingly
aggressive manner."
There have been more than
nine insider sales for every one buy over the past week
among NYSE stocks, according to Vickers. The last time
executives sold their company's stock this aggressively
was in early 2012, just before the S&P 500 went on to
correct by 10 percent to its low for the year.
"Insiders know more than the
vast majority of market participants," said Enis Taner,
global macro editor for RiskReversal.com. "And they're
usually right over a long period of time."
There are other indications that the
stock market may be headed for a significant tumble in the
months ahead. For example, as a
Zero Hedge article recently pointed out, the last time that
the financial markets in the U.S. were as "euphoric" as they are
now was right before the financial crisis of 2008.
And as I mentioned above, some
people out there have recently made some absolutely jaw-dropping
bets against stocks which will only pay off if there is a
financial crash at some point in the next few months.
According to
Business Insider, the recent purchase of 100,000 put options
by a mystery investor has a lot of people on Wall Street
talking...
According to Barron's columnist
Steven Sears,
someone made a big bet against the financials ETF
yesterday (ticker symbol XLF), and it has everybody buzzing.
The trader bought 100,000 put
options on the ETF (a put option increases in value when the
price of the underlying asset, in this case, the ETF, goes
down).
To put that number in
perspective, Sears writes, "Few investors ever trade more
than 500 contracts, so a 100,000 order tends to stop traffic
and prompt all sorts of speculation about what's motivating
the trade." According to Sears, the trade "has sparked
conversations across the market."
Reportedly, those put options expire
in April.
And as Art
Cashin of UBS has noted, there was also another extremely
large bet that was placed recently that is banking on a
financial crash within the next two months...
A Very Big Bet In A Somewhat
Unlikely Instrument – My friend, Jim Brown, the ever-alert
consummate professional over at Option Investor pointed us
to a rather unusual trade. Here's what he wrote in last
night's edition of his valuable newsletter:
In past years I have reported on
trades that were so large it appeared someone had inside
knowledge of a pending event. Sometimes those were massive
put positions on the S&P. A new trade just appeared that
suggests there will be a market event in the near future.
Last week somebody put on a call spread on the VIX using the
April 20 and 25 puts. They bought 150,000 contracts for a
net of $75 per contract. That is an $11,250,000 bet that the
VIX will move over 20 over the next 60 days. You would have
to be VERY confident in your outlook to risk $11 million on
a directional position with the VIX at five year lows and
the markets trying to break out to new highs.
So does all of this guarantee that
the stock market is going to move a certain way?
Of course not.
But when you step back and look at
the bigger picture, it does appear that Wall Street insiders are
preparing for something.
Meanwhile, the government continues
to assure us that happy days are here again for the U.S. economy
and that we don't have anything to worry about.
The Congressional Budget Office has
just released a report that contains their outlook for the next
decade. The report is entitled
"The Budget and Economic Outlook: Fiscal Years 2013 to 2023",
and if you want a good laugh you should read it.
Here are some of the things that the
CBO believes will happen...
-The CBO believes that government
revenues will more than double by 2023.
-The CBO believes that government
revenue as a percentage of GDP will rise from 15.8 percent today
to 19.1 percent in 2023.
-The CBO believes that the
unemployment rate will continually fall over the next decade.
-The CBO believes that the federal
budget deficit will fall to just 2.4% of GDP in fiscal year
2015.
-The CBO believes that the federal
budget deficit will only be $430 billion in 2015.
-The CBO believes that we will not
have a single recession over the next decade.
-The CBO believes that inflation
will stay at about 2 percent for the next decade.
-The CBO believes that U.S. GDP will
grow by a total of 67 percent by 2023.
Wow, all of that sounds great until
you go back and take a look at how CBO projections have fared in
the past.
In fact, Bruce
Krasting has gone back and looked at the numbers from the
Congressional Budget Office’s Budget and Economic Outlook 2003.
I think that you will find the differences between the CBO
projections and what really happened to be very humorous...
Estimated 10-year budget surplus = $5.6T.
Reality = $6.6T deficit. A 200+% miss.
Estimate for 2012 Debt Held by Public = $1.2T (5% of GDP).
Reality = Debt Held by Public = $11.6T. A 1000% miss.
Estimated fiscal 2012 GDP = $17.4T.
Reality = $15.8T. A $1.6T (10%) miss.
So should we trust
what the CBO is telling us now? Of course not. Instead, perhaps
we should listen to some of the men that successfully warned us
about the last financial crisis...
-"Dr. Doom" Marc Faber recently
stated that he "loves
the high odds of a ‘big-time’ market crash".
-Economist Nouriel Roubini says that
we should "prepare
for a perfect storm".
-Pimco's Bill Gross says that we are
heading for a "credit
supernova".
-Nomura's Bob Janjuah believes that
the financial markets will experience one more huge spike before
collapsing
by up to 50%...
I continue to believe that the
S&P500 can trade up towards the 1575/1550 area, where we
have, so far, a grand double top. I would not be surprised
to see the S&P trade marginally through the 2007 all-time
nominal high (the real high was of course seen over a decade
ago – so much for equities as a long-term vehicle for wealth
creation!).
A weekly close at a new all-time
high would I think lead to the final parabolic spike up
which creates the kind of positioning extreme and leverage
extreme needed to create the conditions for a 25% to 50%
collapse in equities over the rest of 2013 and 2014, driven
by real economy reality hitting home, and by policymaker
failure/loss of faith in "their system".
The truth is that no matter how much
money printing the Federal Reserve does, it is only a matter
of time before the financial markets catch up with economic
reality.
The U.S. economy
has been in decline for a very long time, and things just
continue to get even worse. Here are just a few numbers...
-The percentage of the civilian
labor force that is employed has fallen every single year
since 2006.
-According to John Williams of
shadowstats.com, truly accurate numbers would show that U.S.
GDP growth has actually been continuously negative
all the way back to 2005.
-U.S. families that have a head
of household that is under the age of 30 have a poverty rate
of 37 percent.
-One recent survey found that
nearly half of all Americans are
living on the edge of financial ruin.
-According to the U.S. Census
Bureau, there are
more than 146 million Americans that are considered to
be either "poor" or "low income" at this point.
For many more statistics that
demonstrate that the U.S. economy has continued to decline in
recent years, please see this article: "37
Statistics Which Show How Four Years Of Obama Have Wrecked The
U.S. Economy".
So where is all of this headed?
Well, after the next major financial crisis in America things
are going to get very tough.
We can get a hint for how things are
going to be by taking a look at what is going on over in Europe
right now. Can you imagine people trampling each other for
food? That is what is happening in Greece. Just check out this
excerpt from a
Reuters article...
Hundreds of people jostled for
free vegetables handed out by farmers in a symbolic protest
earlier on Wednesday, trampling one man and prompting an
outcry over the growing desperation created by economic
crisis.
Images of people struggling to
seize bags of tomatoes and leeks thrown from a truck
dominated television, triggering a bout of soul-searching
over the new depths of poverty in the debt-laden country.
The suffering that the Greeks are
experiencing right now will come to this country soon enough.
So enjoy this false bubble of
debt-fueled prosperity while you can. It is going to end way
too soon, and after that there will be a whole lot of pain.
