Will the Markets Take a Black Swan Dive in 30 Days?

by David EngstromOctober 14, 2015

Has the truth finally begun to filter into the mainstream media?  Are we really just 30 days away from an event that could bring about financial Armageddon? 

For months now, the alternative media has been warning that such an event is growing very near. It’s a mathematical fact, yet the masses have learned to ignore the warnings.  Just like the boy who cried wolf.  All the villagers knew wolves were a threat to their herd but because the boy cried wolf so many times - and there were no wolves - the real threat seemed to disappear.  Foolish villagers! 

Ironically, it was not the alternative media that first began to warn about the dangers of piling debt on top of debt to solve a debt crisis.  It was the mainstream media who coined the phrase, “kicking the can down the road.”  We heard it for two years.  When no crisis materialized, when the world was saved by printed money, the threat seemed to disappear. 

By the time the alternative media stepped in to remind us all, that the threat had not gone away, it was too late.  Most investors had already been conditioned to ignore the warnings and instead hear the story of recovery and prosperity ahead.  As investors watched the markets climb to nosebleed levels, the threat of wolves grew further and further from their minds.  Now the wolf is back!

No longer are stories of another debt crisis told only by those who knew the threat was growing not disappearing.  Stories are now appearing in the mainstream media and the warnings are more dire than ever.  CNBC just reported that the risk of a Black Swan event has risen to its highest level ever.  

Robert Friedlander, head of Equity trading at Brean Capital wrote, “Players are pricing in the highest chance of an outlying Black Swan event in the next 30 days.”  Essentially, options traders are now betting against the market.  As reported, these options pay off only if the market experiences a significant drop.

A Black Swan event is said to be an unpredictable event.  The 9/11 attack would be a good example.  The world we live in today is an extremely volatile place.  As such, the likelihood of a Black Swan event grows daily.  We are already practically at war with Russia as their actions in Syria appear to be diametrically opposed to U.S. objectives.  Iran has long since crossed the line established by Israel.  That conflict could erupt any time.  As one of my friends put it, absent sanctions, Iran could just buy a nuke instead of having to make one. 

You don’t need any imagination to see all the potential Black Swan threats that currently exist.  How ironic would it be for one to occur at just the same time many experts have predicted the market to swan dive into an abyss?  Which do you think will come first?  A Black Swan event or a market dive? 



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