{"id":26000,"date":"2017-09-22T15:34:05","date_gmt":"2017-09-22T20:34:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=26000"},"modified":"2017-09-22T15:34:05","modified_gmt":"2017-09-22T20:34:05","slug":"stock-market-crash-unlikely-its-the-debt-stupid","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=26000","title":{"rendered":"Stock Market \u201cCrash\u201d Unlikely: It\u2019s the Debt,\u00a0Stupid"},"content":{"rendered":"
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Stock Market \u201cCrash\u201d Unlikely: It\u2019s the Debt,\u00a0Stupid<\/a><\/h3>\n<\/header>\n
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Many people have been predicting another stock market \u201ccrash\u201d. I have not been in that camp for reasons I will explain below.<\/p>\n

Yet, I believe the stock market is at least 50% overvalued, and a 40% to 60% \u201cnet\u201d decline is coming.<\/p>\n

My view is the decline will be slow and miserably painful for all involved, but there will not be a \u201ccrash\u201d defined as a 35% plunge or greater in a single year.<\/p>\n

To understand my view, we first need to discuss corporate debt.
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It\u2019s the Debt Stupid!<\/strong><\/p>\n

Yesterday, Bloomberg author Sho Chandra wrote Corporate America Has Amassed a Record Amount of Cash<\/a>.<\/p>\n

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\"\"<\/span>Lisa Abramowicz<\/span> <\/a><\/p>\n
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\u2714<\/b><\/span>@lisaabramowicz1<\/span><\/a><\/div>\n<\/div>\n

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Corporate America’s cash reached a record of almost $2.3 trillion in Q2, up nearly 60% since mid-2009: Fed data https:\/\/www.<\/span>bloomberg.com\/news\/articles\/2017-09-21\/corporate-america-has-amassed-a-record-amount-of-cash\u00a0<\/span>\u2026<\/a><\/p>\n

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\"Photo<\/div>\n<\/div>\n<\/div>\n
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Corporate America Has Amassed a Record Amount of Cash<\/strong><\/p>\n

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.<\/p>\n

bloomberg.com<\/span><\/div>\n<\/div>\n

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The idea that \u201cCorporate 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,\u201d is preposterous.<\/p>\n

I \u201cpolitely\u201d replied to Lisa Abramowicz\u200f \u2026<\/p>\n

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\"\"<\/span>Mike Mish Shedlock<\/span> @MishGEA<\/span><\/a><\/div>\n<\/div>\n
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Pure bullshit
\nHow much debt is behind that alleged cash? https:\/\/<\/span>twitter.com\/lisaabramowicz1\/status\/910964395743866881\u00a0<\/span>\u2026<\/a><\/p>\n

2:11 AM – Sep 22, 2017<\/a><\/time><\/div>\n<\/div>\n
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I do not know if I inspired her or not, but today she accurately Tweeted \u2026<\/p><\/div>\n

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\"\"<\/span>Lisa Abramowicz<\/span> <\/a><\/p>\n
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\u2714<\/b><\/span>@lisaabramowicz1<\/span><\/a><\/div>\n<\/div>\n

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$2.3 trillion in cash but still deeply in debt https:\/\/www.<\/span>bloomberg.com\/gadfly\/articles\/2017-09-22\/corporate-cash-isn-t-doing-much-but-hiding-debt\u00a0<\/span>\u2026<\/a> This one’s for you, @<\/span>DougKass<\/span><\/a><\/p>\n