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Please Don’t Pop My Bubble!
Please Don’t Pop My Bubble!
So ride your bubble of choice up–stocks, bonds, housing, bat guano, take your pick–but it’s best to keep your thumb on the sell button.
One person’s bubble is another person’s “fair market value.” What is clearly an outrageously overvalued asset perched at nosebleed levels of central-bank fueled speculative euphoria is to the owner an asset at “fair market value.”
But beneath the euphoric confidence that valuations can only drift higher forever and ever is the latent fear that something could stick a pin in “my bubble”— that is, whatever bubblicious asset we happen to own and treasure as a source of our financial wealth could be popped, destroying not just our financial bubble but our psychological bubble of faith in permanent manias.
Consider housing prices, which are clearly in an echo-bubble of the Great Housing Bubble of 2000-2007. (Chart courtesy of Market Daily Briefing.)
The psychological underpinning of all bubbles and echo bubbles is on display here. In the first bubble, those benefiting from the stupendous price increases are not just euphoric at the surge in unearned wealth–they believe the hype with all their hearts and minds that the bubble is not a bubble at all, it’s all just “fair market value” at work.
In other words, the massive increase in unearned personal wealth is not just temporary good fortune–it is permanent, rational and deserved.
Alas, all bubbles, no matter how euphoric or long-lasting, eventually pop. All the certainties that seemed so obviously true and timeless to the believers melt into air, and their touching faith that the bubble valuations were permanent, rational and deserved dissipates in a wrenchingly painful reconciliation with reality.
The agonized cries of those watching their bubble-wealth vanish do not fall on deaf ears.
…click on the above link to read the rest of the article…
Market Analyst: “Nothing Is Real… All Of This is Being Played To Keep People Believing The System Is Working”
Market Analyst: “Nothing Is Real… All Of This is Being Played To Keep People Believing The System Is Working”
The stock market may be hovering near all-time highs, but according to Greg Mannarino of Traders Choice that doesn’t mean the valuations are actually real:
We exist, beyond any shadow of any doubt, in an environment of absolute fakery where nothing is real… from the prices of assets to what’s occurring here with regard to the big Wall Street banks, the Federal Reserve, interest rates and everything in between.
…All of this is being played in a way to keep people believing, once again, that the system is working and will continue to work.
Full Interview with USA Watchdog:
President Obama has suggested that people like Greg Mannarino who are exposing the fraud for what it is are just peddling fiction. And just this week the President argued that he saved the world from a great depression and that the closing credits of the 2008 crash movie “The Big Short” were inaccurate when they claimed that nothing has been done to fundamentally curb the fraud and fix the system under his administration. But as Mannarino notes, the President and his central bank cohorts are making these statements because the system is so fragile that if the public senses even the smallest problem it could derail the entire thing:
Let’s just look at the stock market… there’s no possible way at this time that these multiples can be justified with regard to what’s occurring here with the price action of the overall market… meanwhile, the market continues to rise.
…
Nothing is real. I can’t stress this enough… and we’re going to continue to see more fakery… and manipulation and twisting of this entire system… We now exist in an environment where the financial system as a whole has been flipped upside down just to make it function… and that’s very scary.
…click on the above link to read the rest of the article…
The Worse Things Get For You, The Better They Get For Wall Street
The Worse Things Get For You, The Better They Get For Wall Street
On October 2 the BLS reported absolutely atrocious employment data, with virtually no job growth other than the phantom jobs added by the fantastically wrong Birth/Death adjustment for all those new businesses springing up around the country. The MSM couldn’t even spin it in a positive manner, as the previous two months of lies were adjusted significantly downward. What a shocker. At the beginning of that day the Dow stood at 16,250 and had been in a downward trend for a couple months as the global economy has been clearly weakening. The immediate rational reaction to the horrible news was a 250 point plunge down to the 16,000 level. But by the end of the day the market had finished up over 200 points, as this terrible news was immediately interpreted as good news for the market, because the Federal Reserve will never ever increase interest rates again.
Over the next three weeks, the economic data has continued to deteriorate, corporate earnings have been crashing, and both Europe and China are experiencing continuing and deepening economic declines. The big swinging dicks on Wall Street have programmed their HFT computers to buy, buy, buy. The worse the data, the bigger the gains. The market has soared by 1,600 points since the low on October 2. A 10% surge based upon lousy economic info, as the economy is either in recession or headed into recession, is irrational, ridiculous, and warped, just like our financial system. This is what happens when crony capitalism takes root like a foul weed and is bankrolled by a central bank that cares only for Wall Street, while throwing Main Street under the bus.
…click on the above link to read the rest of the article…
It’s Just a Question of Whose Capital Will Be Destroyed
It’s Just a Question of Whose Capital Will Be Destroyed
The amount of money investors have plowed into startups has reached record highs. In 2014, investors of all kinds, from angels and VCs to big asset managers, invested $48.35 billion in startups, “only” the third highest year on record, but the highest since the crazy bubble years 1999 and 2000 when investors blew $55 billion and $105 billion respectively, even as the dot-com bubble was already imploding. Investors at the time were just a little slow in giving up hope.
But the “valuations” are getting crazy. The price at which new investors buy into a startup during a round of funding determines the “valuation.” As investors have become more eager with other people’s money, and as hedge funds and big asset managers have jumped into the fray in late-stage rounds, they have sent valuations on vertigo-inducing trajectories.
Slack, one of the innumerable startups that over the years have claimed to have found the successor to corporate email, just inked a new deal with investors for $160 million in funding that jacks up its valuation to $2.76 billion. The round is expected to close over the next few weeks. “People familiar with the matter” purposefully leaked this to the Wall Street Journal as part of the mega-hype that the startup scene needs in order to attract ever more money.
Slack launched its app only about a year ago. At the time, it wasn’t even in the Billion Dollar Startup Club, that ever growing group of startups with valuations over $1 billion. But in October, it raised some money at a valuation of $1.12 billion. And five months later, its valuation jumped 146%.
…click on the above link to read the rest of the article…
DANGER WILL ROBINSON
DANGER WILL ROBINSON
It’s funny how the truth sometimes leaks out from the government. I’m guessing that Mr. Ted Berg will not be working for the Office of Financial Research much longer. This new agency was created by the Dodd Frank Law and is supposed to protect consumers from the evil Wall Street banks. But we all know the evil Wall Street banks wrote the bill, have gutted the major provisions, have captured all the regulatory agencies, own the Federal Reserve, and control all the politicians in Washington D.C. So, when an honest government analyst writes an honest truthful report that unequivocally proves the stock market is grossly overvalued and headed for a crash, the Wall Street banking cabal will surely call the top government apparatchiks to voice their displeasure. Truth is treason in an empire of lies.
The soon to be fired Mr. Berg’s verbiage is subtle, but pretty clear.
Option-implied volatility is quite low today, but markets can change rapidly and unpredictably, a phenomenon described here as “quicksilver markets.” The volatility spikes in late 2014 and early 2015 may foreshadow more turbulent times ahead. Although no one can predict the timing of market shocks, we can identify periods when asset prices appear abnormally high, and we can address the potential implications for financial stability.
Markets can change rapidly and unpredictably. When these changes occur they are sharpest and most damaging when asset valuations are at extreme highs. High valuations have important implications for expected investment returns and, potentially, for financial stability.
However, quicksilver markets can turn from tranquil to turbulent in short order. It is worth noting that in 2006 volatility was low and companies were generating record profit margins, until the business cycle came to an abrupt halt due to events that many people had not anticipated.
…click on the above link to read the rest of the article…
