“It is one thing to mortify curiosity, another to conquer it.”
~ Robert Louis Stevenson, Dr. Jekyll and Mr. Hyde
Written by Bryan Lutz, Editor at Dollarcollapse.com:
Chaos in the markets almost everywhere.
Death and destruction overshadow the America’s favorite volatility index, the VIX.
So much so that a few small changes in this highly debt leveraged market have people frozen in fear.
First…
Japan’s central bank raised their interest rate by 0.25% causing major slide in Japan’s top performing index, the Nikkei 225 suffered it worst one-day slump, ever.
Bloomberg reports:
Japanese Stocks Topple Into Bear Market as Confidence Crumbles
“Japan’s Topix stock index slid 24% from a record high reached last month and the Nikkei 225 Stock Average suffered its worst one-day slump in yen terms as investor confidence evaporated.
The Topix and Nikkei 225 tumbled 12% Monday, with both entering bear markets amid a surge in the yen, tighter monetary policy and the deteriorating economic outlook in the US. On a three-day basis, the Topix had its biggest drop in data stretching back to 1959.”
And then here on home soil, there are even bigger fears.
Changes in the unemployment rate have triggered Sahm’s Rule, a historically accurate indicator of incoming recessions.
Here’s how the indicator works in three steps:
- Find the lowest unemployment rate in the last 12-months.
- Look at the 3-month moving average of the current unemployment rate.
- Then compare the two if there is a different in 0.5 percentage points, there’s a recession starting.
You can see unemployment rising in the bottom right.
Now, the rate of change is fast enough we can be closer to accurate that a recession draws near…
Pumping up the fear gauge further…
Buffett recently ditched a mighty good stock to bring Berkshire Hathaway’s cash holdings up to new record levels.
CNBC reports:
Warren Buffett raises Berkshire cash level to record $277 Billion after slashing stock holdings
“Berkshire Hathaway’s cash pile swelled to a record $276.9 billion last quarter as Warren Buffett sold big chunks in stock holdings including Apple.
The Omaha-based conglomerate’s cash hoard jumped significantly higher from the previous record of $189 billion, set in the first quarter of 2024. The increase came after the Oracle of Omaha sold nearly half of his stake in Tim Cook-led tech giant in the second quarter.
Berkshire has been a seller of stocks for seven quarters straight, but that selling accelerated in the last period with Buffett shedding more than $75 billion in equities in the second quarter. That brings the total of stocks sold in the first half of 2024 to more than $90 billion. The selling by Buffett has continued in the third quarter in some areas with Berkshire trimming its second biggest stake, Bank of America, for 12 consecutive days, filing this week showed.”
Now, the VIX is hitting pandemic, Great Financial Crisis, and dot com bubble level highs.
This might sound funny, but…
You’re seeing low level panic.
Compared to this, there’s lots more panic to come.
It must be some kind of historical mix up in the markets, but…
Gold will always be money.
