market bubble – Page 2

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance.

It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those a heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.

Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.

And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.

Wrong again!

During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it—-as the index bottomed 60% lower at 340. This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return.

…click on the above link to read the rest of the article…

The Greatest Bubble Ever: Why You Better Believe It, Part 1

December 29, 2017

The Greatest Bubble Ever: Why You Better Believe It, Part 1

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance forever.

It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.

Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.

And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.

Wrong again!

During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it—-as the index bottomed 60% lower at 340. This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return.

…click on the above link to read the rest of the article…

The ghost of Gann: Another crash is coming

December 27, 2017

The ghost of Gann: Another crash is coming

The original wizard of Wall Street, W.D Gann was a finance trader and wealthy speculator that spent decades investigating cyclical trends in equity market patterns and found that prices could be predicted long in advance. He successfully predicted the crashes in the 1929 and Dot-Com stock market bubbles. And according to his analysis, the US stock market is due for another crash in 2020.

Every movement in the market is the result of a natural law and of a Cause which exists long before the Effect takes place and can be determined years in advance. The future is but a repetition of the past, as the Bible plainly states…

After suffering through the worst economic and financial crisis since the 1930s depression when the real estate and stock markets crashed in 2007, the United States’ bubble economy is back into full swing. Residential and commercial real estate prices are growing strongly, along with equities.

The US stock market, as defined by the S&P500 index, has boomed after collapsing to a trough in 2009. The market ‘recovered’ more quickly than anyone thought it would, and has continued surging from thereon in.

This has led to a lot of commentary and media coverage that the S&P500 is in the thrall of yet another bubble that will burst. Despite the many predictions of collapse, the bubble has powered on unhindered.

Like all asset bubbles, the primary cause is speculators taking on debt to bid up prices to ever-higher levels, generating a stream of greater fools willing to purchase at inflated valuations. In the case of equities, the type of debt used is margin debt.

The trends in the S&P500 index and margin debt are obvious. The name of the game is capital gains; income is increasingly sidelined as yields become compressed to record lows.

…click on the above link to read the rest of the article…

5 Charts that Prove this Market Bubble is Not Slowing Down

August 16, 2017

5 Charts that Prove this Market Bubble is Not Slowing Down

The stock market continues to show volatile signs of a market bubble. Here’s five charts that show that a very real bubble is on the horizon.

1. Economic Bubbles and The Breadwinner Economy

Former Congressman and Reagan’s budget director, David Stockmanhighlights that, “Another month has passed in which the number of Breadwinner jobs remain below where it was when Bill Clinton was in the White House. Since then two presidents have come and gone, and now possibly a third. Yet there are still 300,000 fewer jobs in the productive center of the U.S. economy than there were in early 2001.”

Stockman levels, “This suggests something isn’t right, and that point is further driven home by the pancaking of the industrial economy over the last decade. Specifically, industrial production in June was still lower than at the pre-crisis peak”

What all of this equates to is a crisis of economic stagnation. It bolsters national debt and puts forward a threat to fiscal governance. Stockman summarizes that, “You can’t justify a healthy economy purely on the claim that jobs grew by 209,000 in July or that GDP is up at a minimal 1.9% rate in the first half of the year.”

2. Of Market Bubbles and Bank Loans

Financial market analyst, Lee Adler highlighted in mid-June that we have entered a period of calm before the storm. He argues that the storm is due to begin when the Federal Reserve starts to shrink its massive balance sheet.

Bank Loans

Adler writes, “Some of the increase in debt that had driven the economy and the asset bubbles has bled off. With the Fed announcing that it will reduce its balance sheet, that’s likely to deter speculative borrowing even more.”

…click on the above link to read the rest of the article…

Like sheep to slaughter: You still aren’t grasping the systemic risk in the stock market (or else you would have sold everything already)

January 21, 2016

Like sheep to slaughter: You still aren’t grasping the systemic risk in the stock market (or else you would have sold everything already)

(NaturalNews) If you still own stocks and mutual fund shares, you still aren’t grasping the systemic risk in the stock market. No matter what you claim to BELIEVE, it is your ACTIONS that actually determine your true grasp of reality. Failing to sell all your stock holdings right now could result in massive losses as the world’s bubble markets continue with an implosion that could wipe out 50% of current valuations for many stocks.

The massive market bubble currently in place has been propped up by a steady stream of fiat money being printed by the Federal Reserve and handed out to banksters who have ties to Washington. This, combined with near-zero interest rates, is the only thing propping up the bubble market (and creating the illusion of economic prosperity).

High-tech companies are back into bubble territory with unrealistic valuations based on hype and vapor. Meanwhile, the corrupt mainstream media continues to lie to the gullible public, telling them the market can only go UP… even as it careens on the verge of systemic collapse.

The coming market collapse will be the largest in human history
The systemic nature of the global banking system and its insane derivatives debt means the next collapse will be a SYSTEMIC firestorm that’s unstoppable and absolutely devastating. Pensions, bank accounts, investment funds, bonds and much more will be nearly wiped out, and the corrupt, criminal government regime will make sure everyday Americans are the ultimate losers when the dust settles.

The pathetically stupid and dishonest financial media is desperately running stories right now to maintain false faith in the markets, even while their own people are behind the scenes selling like mad.

…click on the above link to read the rest of the article…

China’s Central Bank Chief Admits “The Bubble Has Burst”

September 5, 2015

China’s Central Bank Chief Admits “The Bubble Has Burst”

In a stunningly honest admission from a member of the elite, Zhou Xiaochuan, governor of China’s central bank, exclaimed multiple times this week to his G-20 colleagues that a bubble in his country had “burst.”While this will come as no surprise to any rational-minded onlooker, the fact that, as Bloomberg reports, Japanese officials also confirmed Zhou’s admissions, noting that “many people [at the G-20] expressed concerns about the Chinese market,” and added that “discussions [at the G-20 meeting] hadn’t been constructive”suggests all is not well in the new normal uncooperative G-0 reality in which we live.

Surprise – The Bubble Has Burst!!

But, as Bloomberg reports, the admission that it was a bubble and it has now burst is a notablke narrative change for the world’s central bankers…

Zhou Xiaochuan, governor of China’s central bank, couldn’t stop repeating to a G-20 gathering that a bubble in his country had “burst.”

It came up about three times in his explanation Friday of what is going on with China’s stock market, according to a Japanese finance ministry official. When asked by a reporter if Zhou was talking about a bubble, Japanese Finance Minister Taro Aso was unequivocal: “What else bursts?”

A dissection of the slowdown of the world’s second-largest economy and talk about the equity rout which erased $5 trillion of value was a focal point at the meeting of global policy makers in Ankara.That wasn’t enough for Aso, who said that the discussions hadn’t been constructive.

…

It was China, rather than the timing of an interest-rate increase by the Federal Reserve, that dominated the discussion, according to the Japanese official, with many people commenting that China’s sluggish economic performance is a risk to the global economy and especially to emerging-market nations.

…click on the above link to read the rest of the article…

Bubbles Don’t Correct, They BURST!

August 26, 2015

Bubbles Don’t Correct, They BURST!

I’m practically drowning in interviews. I had half a dozen yesterday and even more today. But it’s time to put the word out that the second greatest bull march in history is finally coming to an end. It’s done.

Wall Street thinks this is a correction – a 10% drop, maybe 20% at worst, followed by more gains. They think we’re just six years into a 10 if not 20 year bull market. This is just a healthy breather.

Of course they think that! It’s the same “bubble-head” logic you find at the top of any extreme market in history!

Every single time – without exception – we delude ourselves into believing there is no bubble. We think: “Life’s good, why should we argue with it?”

And every time, we’re shocked when it’s over. Only in retrospect do we realize, yes, that was clearly a bubble, and oh, how stupid we were for not seeing it.

Bubbles don’t correct. They burst. They always do. And if anyone is still doubting whether this is a bubble, they need to get with the program – now!

Like I said on Fox yesterday, I wasn’t always a bear. I was one of the most bullish forecasters since the late ‘80s because I discovered how you can predict the spending of consumers through demographics.

With one simple indicator I predicted the Japan crash in the ‘90s when everyone was saying they’d overcome the U.S.

I predicted the greatest boom in U.S. history thanks to the spending of the Baby Boomer generation. All from demographic research, driven by my top cycle, the Spending Wave.

And from that, we knew the Boomers would peak in 2007 followed by a slowing economy.

…click on the above link to read the rest of the article…

We Need a Crash to Sort the Wheat from the Chaff

July 20, 2015

We Need a Crash to Sort the Wheat from the Chaff

Once the phantom collateral vanishes, there’s no foundation to support additional debt and leverage.

When a speculator bought a new particle-board-and-paint McMansion in the middle of nowhere in 2007 with nothing down and a $500,000 mortgage, the lender and the buyer both considered the house as $500,000 of collateral. The lender counted the house as a $500,000 asset, and the speculator considered it his lottery ticket in the housing bubble sweepstakes: when (not if) the house leaped to $600,000, the speculator could sell, pay the commission and closing costs and skim the balance as low-risk profit.

But was the house really worth $500,000? That’s the trouble with assets bubbles inflated by central-bank/central-state intervention: when inefficient companies and inflated assets are never allowed to fall/fail, it’s impossible to tell the difference between real collateral and phantom collateral.

The implosion of the housing bubble led to an initial spike of price discovery. The speculator jingle-mailed the ownership of the poorly constructed McMansion to the lender, who ended up selling the home to another speculator who reckoned a 50% discount made the house cheap for $250,000.

But what was the enterprise value of the property, that is, how much revenue, cash flow and net income could the property generate in the open market as a rental? Comparables are worthless in terms of assessing collateral, because assets are mostly phantom collateral at bubble tops.

Let’s assume the enterprise value based on market rents was $150,000. The speculator who bought the house for $250,000 sold for a loss, and at the bottom of the cycle the house finally sold for its true value of $150,000.

Leveraged 20-to-1, the lender’s loss of $250,000 in collateral/capital unhinged $5 million of the lender’s portfolio as the capital supporting those loans vanished.

The first speculator who put nothing down suffered a loss of creditworthiness, and the second speculator lost $100,000 plus commissions when he dumped the property for a loss.

…click on the above link to read the rest of the article…

China Is Just Another Front in the Zombie War

July 11, 2015

China Is Just Another Front in the Zombie War

LONDON – This morning, a desperate message from our analyst in Beijing puts us in a lighthearted mood:

I’m sure you must have heard about the recent disaster in the Chinese stock market.

It’s my first time experiencing something like this. And it shocked me. It’s like the world is suddenly turning upside-down. Everyone is running for themselves.

People here feel hopeless, as they see so many government bailout plans fail.

There are so many rumors I can’t tell what’s true and what’s not. Some even said that it was U.S. capital shorting Chinese index futures.

Opportunities Everywhere!

At the Diary, we always look on the bright side: We see opportunity everywhere.

Investors in U.S. stocks seemed to wake up yesterday with a start. They didn’t panic. But they were at least beginning to worry. The Dow dropped 261 points – wiping 1.5% off its value. There is probably a lot more where that came – an opportunity on the downside.

To recap: Greece’s creditors have given Athens until midnight to come up with an acceptable reform plan. Nobody knows what will happen.

But Greeks are pulling as much cash out of ATMs as they can. There have been lines at gas stations and food stores. And Greek stocks are selling with as much as 20% dividend yield and just over two times earnings. This could be a (highly speculative) opportunity on the upside.

Meanwhile in China, investors have seen roughly $3.5 trillion in paper wealth evaporate over the last two months as stock prices there plunged. The Chinese are not sophisticated stock market investors. They have only been at it for a few decades. So, they tend to get over-excited in both directions.

It was only a few weeks ago that Chinese brokers were opening new accounts in record numbers. From farmers to hairdressers, everyone was itching to get a piece of the action, as the stock market soared.

…click on the above link to read the rest of the article…

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