MICHAEL SNYDER
Do they know something that we do not? All of a sudden, hedge funds are betting billions of dollars that the stock market is going to crash. If they are wrong, they will lose a ton of money, but if they are correct they will make absolutely enormous profits.
So why are they feeling so confident that a stock market collapse is in our future?
Without a doubt, the real economy has been moving in the wrong direction for quite some time, but for years there have been relentless efforts to keep the financial markets propped up. Could it be possible that there is a scenario in which the financial markets will simply be allowed to fail at some point?
What we are witnessing at this moment is truly strange. We are being told that hedge funds are "making a multi-billion-dollar gamble" that there will be a "massive market crash"...
Hedge funds are making a multi-billion-dollar gamble against the US economy, betting Donald Trump's presidency will result in a massive market crash that could devastate 401(k)s, pensions, and household savings across America.
The big hedge funds consistently make money because they are right most of the time.
So the fact that they are anticipating some sort of a crash is extremely alarming.
According to Goldman Sachs, the amount of money being poured into short bets is absolutely staggering...
Data from Goldman Sachs show there has been a surge in "short" bets against US stocks, meaning traders will make money when they fall in value, in a sign of growing concerns about the market.
In January, investors have placed 10 times more bets on US stocks falling than equivalent bets that shares in leading American companies would rise, the investment bank said.
As I noted earlier, if the hedge funds are wrong they stand to lose big.
But if they are right, the are poised to "make hundreds of millions from a stock market collapse"...
And while hedge fund billionaires stand to make hundreds of millions from a stock market collapse, the real victims of this financial gamble could be everyday American investors.
Millions of workers rely on their 401(k)s and pension funds to secure their futures. Yet, as hedge funds place enormous bets on a Wall Street wipeout, these savings accounts could be the next to suffer.
It certainly won't take much to push the financial markets over the edge.
Those that are propping up simply need to stand aside.
Perhaps the goal would be to send a message to President Trump that they don't like the tariffs that he is imposing...
President Trump on Saturday signed an executive order that imposes 25% tariffs on imports from Canada and Mexico, while adding an additional 10% levy on goods from China. Canada responded hours later with retaliatory tariffs of its own, while Mexico said it was also planning to issue tariffs on the U.S. as well.
China's commerce secretary said that China would challenge the tariffs through the World Trade Organization, according to Reuters, claiming that the move "seriously violates" WTO rules.
In an ominous post on Twitter, Harvard Professor Jason Furman suggested that Trump would soon be forced to back off because of what will happen to the financial markets...
Less than 2 weeks in and 25% tariffs our close allies + 10% on China.
Plus a (credible) promise that they will go even higher when there is (inevitable) retaliation.
It's hard to decide if this is worse economic policy or foreign policy.
We'll see if Trump caves to the market.
Does Furman know something?
It is certainly true that these tariffs will be disruptive.
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