Many people have been predicting another stock market “crash”. I have not been in that camp for reasons I will explain below.
Yet, I believe the stock market is at least 50% overvalued, and a 40% to 60% “net” decline is coming.
My view is the decline will be slow and miserably painful for all involved, but there will not be a “crash” defined as a 35% plunge or greater in a single year.
To understand my view, we first need to discuss corporate debt.
It’s the Debt Stupid!
Yesterday, Bloomberg author Sho Chandra wrote Corporate America Has Amassed a Record Amount of Cash.
Corporate America’s cash reached a record of almost $2.3 trillion in Q2, up nearly 60% since mid-2009: Fed data https://www.bloomberg.com/news/articles/2017-09-21/corporate-america-has-amassed-a-record-amount-of-cash …
Corporate America Has Amassed a Record Amount of Cash
Corporate America has never been in better shape to put its cash hoard to use on everything from investment to acquisitions, share buybacks and dividends. Or just hold on to it.
bloomberg.com
The idea that “Corporate America has never been in better shape to put its cash hoard to use on everything from investment to acquisitions, share buybacks and dividends. Or just hold on to it,” is preposterous.
I “politely” replied to Lisa Abramowicz …
Pure bullshit
How much debt is behind that alleged cash? https://twitter.com/lisaabramowicz1/status/910964395743866881 …
I do not know if I inspired her or not, but today she accurately Tweeted …
$2.3 trillion in cash but still deeply in debt https://www.bloomberg.com/gadfly/articles/2017-09-22/corporate-cash-isn-t-doing-much-but-hiding-debt … This one’s for you, @DougKass
The Great Corporate Shell Game
Stockpiles of liquid assets aren’t a safety net.
bloomberg.com
…click on the above link to read the rest of the article…
