Watch the Insiders

Things Will End In Chaos: We Are Heading For A Financial Apocalypse, Insiders Now Betting On A Market Decline While Investors Keep Cashing Out

Before its News

10 October, 2012

What you need to know about the record-breaking cash hoards of U.S. Corporations

“Are businesses quietly preparing for a financial apocalypse?”

From Dan Steinhart, Casey Research:

U.S. corporations are sitting on more cash than at any point since World War 11.


That’s without including banks. I’m only talking about nonfinancial corporations – the ones that sell goods and services and make the economy go.


Those businesses hold $1.4 trillion. In absolute terms, that’s the most ever. In relative terms, it’s the most since World War II.


As investors, we can infer quite a bit from corporations’ inability (or unwillingness) to deploy their cash.


For one, it indicates that business have assumed a very defensive stance.
Cash, of course, is a buffer against uncertainty – the uncertainty that business may slow for any reason. Management wants a healthy cash reserve with which to pay the bills and remain liquid should anything unexpected happen. I think we can all agree that this is prudent, and a good business practice.


But $1.4 trillion? That tells me that businesses are not just a little jittery about the future. They’re prepared for an apocalypse…

Insiders betting on a market decline

Insiders overwhelmingly choosing sells over buys

Corporate insiders are — by at least some measures — even more bearish now than they were a month ago.


And that should worry the bulls a lot, since — as I wrote in early September — their behavior then was already as bearish as it had been at the stock market’s high in late April. ( Read my Sept. 5 column, “More bad news — this time from insiders” )


To be sure, the stock market didn’t decline in September, notwithstanding the insiders’ selling.


But, since historically the insiders have been more right than wrong, it seems risky to bet that the market will continue to escape the bearish implication of their behavior.


Consider an index of insider behavior calculated by the Vickers Weekly Insider Report, published by Argus Research, which is based on the ratio of shares sold by insiders to shares bought. Last week, according to the latest issue of the Vickers service, this ratio for NYSE-listed issues stood at 5.13-to-1. The comparable ratio in early September was 5.97-to-1.


Resist the temptation to read much into this nominal improvement. Over the same period, the ratio for Nasdaq-listed issues deteriorated from 2.96-to-1 to 6.17-to-1. 

The stock market keeps going up, and investors keep cashing out.

Mutual fund investors pulled $5.1 billion out of U.S. stock mutual funds for the week ended Sept. 26. The prior week, investors removed $4.8 billion from these funds, according to data from the Investment Company Institute.


The exodus from the stock market has picked up speed since the Federal Reserve announced another round of quantitative easing, or QE3.


By buying more bonds, the Federal Reserve is hoping to push investors into riskier investments like stocks. This has succeeded on one front by boosting stock prices, but investors continue to flee the stock market.

Fears over race wars, economic fallout prompt new military battalions

Despite being one of the most stable and economically vibrant countries in the world, primarily as a result of its refusal to join the Euro, Switzerland is preparing for mass civil unrest in central Europe that could spill over its border, by mobilizing troops to deal with potential disorder.

The Swiss military is adding four new military battalions to its army that will be spread around the country for the purposes of dealing with the fallout from any widespread disorder that could arise from the crumbling Eurozone.

“Minister Maurer, accompanied by whispers from the top uniformed leadership in Switzerland, is trying to raise awareness that Europe’s massive fiscal-cum-political crisis could get very unpleasant, writes John R. Schindler, a professor of national security affairs at the U.S. Naval War College. “Swiss military exercises in September, calledSTABILO DUE, were based on EU instability getting out of hand. The Swiss have stayed out of the EU – one more thing the very prosperous Swiss are gloating about these days – and they certainly don’t want EU problems spilling over into their peaceful little country.”

Read more at http://investmentwatchblog.com/things-will-end-in-chaos-we-are-heading-for-a-financial-apocalypse-insiders-now-betting-on-a-market-decline-while-investors-keep-cashing-out/#i6cTfybbQkO4atZ4.99