CANARIES - Warnings Everywhere!

The Investment Legends Are Preparing For a Crash  Graham Summers, Phoenix Capital

More and more insiders are warning of a potential systemic event. The first sign of real trouble concerned a number of investment legends choosing to close shop and return investors’ capital.

Stanley Druckenmiller

The first real titan to bow out was Stanley Druckenmiller. Druckenmiller maintained average annual gains of nearly 30% for 30 years. He is arguably one of if not the greatest investor of the last three decades.

In 2010, he chose to close shop, foregoing billions in management fees.

Druckenmiller was not alone.

Carl Icahn

In 2011, investment legend Carl Icahn closed his hedge fund to outside investors. Again, here was an investment legend who could lock in billions in investment management fees choosing to close up shop.

He has since stated he is "extremely worried" about stocks.

Seth Klarman

Seth Klarman used to manage the fourth largest hedge fund in the US. A legendary value investor (copies of his book Margin of Safety sells for over $1,500 on Amazon), Klarman returned billions in assets under management to outside investors citing “too few” opportunities in the market (again, a legend stating that the market was overvalued).

Even the perma-bulls are speaking with their actions.

Warren Buffett

Warren Buffett, perhaps the single biggest cheerleader for stocks in the last 100 years, is sitting on a record amount of cash. The reason is obvious: the market is dangerously overpriced.

His partner, Charlie Munger recently commented that he has not bought a single stock in his personal portfolio in over two years. This would once again indicate an investment legend stepped out of the market a year or so ago.

Beyond the legends, institutional investors have been net sellers of stocks in 2014 and on into 2015. The same goes for hedge funds. Do you think they’d be doing this if they thought stocks were offering a lot of opportunities and value today?

Ian Spreadbury - Fidelity

And finally, we get to today, where one of the largest asset managers in the world at Fidelity stated that we are heading for a “systemic event... similar to 2008” and that owning precious metals and physical cash is a good idea.

The punch line?

This was a bond fund manager. One of the class of investors who have poo poo’d Gold and physical cash in the past because those assets pay next to or no dividend.

And even HE is warning that it’s time to take safety and prepare.

Smart investors should take note of this now. It is a MAJOR red flag to be watched closely.

Via The Telegraph:

The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.

Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.

“Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.

The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.

He pointed out that a saver was covered only up to £85,000 per bank under the Financial Services Compensation Scheme – which is effectively unfunded – and that the Government has said it will not rescue banks in future, hence his suggestion that some money should be held in physical cash.

He declined to predict the exact trigger but said it was more likely to happen in the next five years rather than 10. The current woes of Greece, which may crash out of the euro, already has many market watchers concerned..

Mr Spreadbury's views are timely, aside from Greece. A growing number of professional investors and commentators are expressing unease about what happens next..

“The problem is that people are struggling to work out how to diversify if QE programmes stop,” he said.

Mr Spreadbury added: “We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.

“The message is diversification. Think about holding other assets. That could mean precious metals, it could mean physical currencies.”

As The Telegraph notes, this is "an unusual" piece of advice coming from "a mainstream strategist" and it suggests the "serious people" are starting to realize that a certain tin foil hat fringe blog — which can already count LIBOR manipulation and HFT proliferation as examples of conspiracy theories turned world-changing conspiracy facts — may be correct to warn that if the current state of affairs persists for much longer, the "market" may one day be halted and simply never reopen.

CHINA - Yuan Devaluation

China Enters Currency War - Devalues Yuan By Most On Record

As we first warned in March, and as became abundantly clear over the weekend when weaker than expected export data as well as the steepest decline in factory gate prices in six years underscored the extent to which the engine of global growth and trade has officially stalled, Beijing has no choice but to join the global currency wars, as the yuan's dollar peg will ultimately prove to be too painful going forward. And sure enough this evening the PBOC weakens the Yuan fix by the most on record. As the details sink in, the Chinese currency complex is collapsing... 12 month NDFs just hit a new 5 year lows against the USD.

China's Historic Devaluation Sends Equity Futures, Oil, Bond Yields Sliding, Gold Spikes

If yesterday it was the turn of the upside stop hunting algos to crush anyone who was even modestly bearishly positioned in what ended up being the biggest short squeeze of 2015, then today it is the downside trailing stops that are about to be taken out in what remains the most vicious rangebound market in years, in the aftermath of the Chinese currency devaluation which weakened the CNY reference rate against the USD by the most on record, in what some have said was an attempt by China to spark its flailing SDR inclusion chances, but what was really a long overdue reaction by an exporter country having pegged to the strongest currency in the world in the past year.

China "Loses Battle Over Yuan", And Now The Global Currency War Begins

Almost exactly seven months ago, on January 15, the Swiss National Bank shocked the world when it admitted defeat in a long-standing war to keep the Swiss Franc artificially weak, and after a desperate 3 year-long gamble, which included loading up the SNB's balance sheet with enough EUR-denominated garbage to almost equal the Swiss GDP, it finally gave up and on one cold, shocking January morning the EURCHF imploded, crushing countless carry-trade surfers. Fast forward to the morning of August 11 when in a virtually identical stunner, the PBOC itself admitted defeat in the currency battle, only unlike the SNB, the Chinese central bank had struggled to keep the Yuan propped up, at the cost of nearly $1 billion in daily foreign reserve outflows, which as this website noted first months ago, also included the dumping of a record amount of US government treasurys. 

Who Could Have Possibly Foreseen China's Shocking Devaluation?

Well, pretty much anyone who is not an economist or Wall Street "strategist" because a mercantilist, export-dominated nation pegged to a currency that has appreciated by an unprecedented amount in the past year, is grounds for nothing short of disaster, or using the parlance of our times, a "hard-landing." Case in point: this is what we said just two days ago when the news of China's dramatic trade collapse hit in a post titled: "Chinese Trade Crashes, And Why A Yuan Devaluation Is Now Just A Matter Of Time"...

FINANCIAL REPRESSION - UPDATE

The Disappearing Retirement Fund

LINK HERE to the Article

Financial Repression Will Intensify

as Central Bank/Government Policy Options

Become Limited

LINK HERE to the Article

Germany Replacing Bank Cards

and Eliminating Cash Withdrawals:

Financial Repression Gone Mad

LINK HERE to the Article

16 June 2015 Swiss Re Meeting:

"Sounding the Alarm

on Financial Repression"

LINK HERE to the Article & Video