Stock Market Bubble / Collapse
By Christopher R Rice
So much information has been trickling in I thought it was time to put it all together for you.
1.) It Is Mathematically Impossible To Pay Off All Of Our Debt
It has been projected that “mandatory” federal spending on programs such as Social Security, Medicaid and Medicare plus interest on the national debt will exceed total federal revenue by the year 2025. That is before a single dollar is spent on the U.S. military, homeland security, paying federal workers or building any roads and bridges.
Did you know that if you took every single penny away from everyone in the United States that it still would not be enough to pay off the national debt? Today, the debt of the federal government exceeds $145,000 per household, and it is getting worse with each passing year.
Read more: http://www.zerohedge.com/news/2015-05-22/it-mathematically-impossible-pay-all-our-debt
2.) Fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers
Nobody knows when reality will overtake the rhetoric, lies, phony statistics, wishful thinking, fake prices and tiresome poseurs pretending to be world leaders. The situation is universal, a consequence of incompetent leaders and careless (or ignorant) citizenry. Global problems are continuing to mount, along with the risk that the consequences of years of bad policies and inept leadership compound (as sometimes happens) in a short window of time.
Unemployment figures are also a source of faulty or misleading data. The headline currently reported unemployment rate of 5.9% is deeply misleading. A 35-year low in the workforce participation rate, a policy-driven transition from full-time to part-time jobs, and the transition from high-paying jobs to relatively low-paying service jobs, all combine to make the headline rate a poor measure of employment health. Support for our statement is provided by the data on real wages, which have been stagnant during the entire post-crisis period.
Read more: https://www.neptuneglobal.com/paul-singer-slams-the-fake-world-fake-growth-fake-money-fake-jobs-fake-stability-fake-inflation-numbers/
3.) Economist Harry Dent predicts 'once in a lifetime' market crash, says Dow to plunge 17,000 points
He's a market watcher known for making bold calls spanning decades. Now, Harry Dent is arguing that the Trump rally is setting investors up for an inevitable stock market crash.
"I think this is going to be a stock market peak of a lifetime followed by a crash very similar to the early 1930s. This happens once in a lifetime," Dent Research Founder Harry Dent recently told CNBC's "Futures Now."
"I think the trigger is people seeing sometime early next year that Donald [Trump] will not be able to do everything that he said, and the economy may be slowing by then," he said. "The biggest trigger, kind of like the subprime crisis in 2008, is going to be Italy. Italy is bankrupt. Its bonds are trading at lower rates than ours which is ridiculous."
Not only could Italy send the European markets into a tailspin, Dent is also particularly worried about China.
The world's second largest economy "has the greatest real estate bubble, an overbuilding bubble, in all of modern history. That's going to blow, " warned Dent.
Read more: http://www.cnbc.com/2016/12/10/economist-harry-dent-says-dow-could-plunge-17000-points.html
4.) Guggenheim's Minerd warns of a possible replay of 1987 stock market crash
By Jennifer Ablan, Reuters
Investors should brace for a possible replay of the 1987 stock market crash later this year, given this month's slump came against the backdrop of Federal Reserve interest rate hikes and rising inflation, Scott Minerd, Global Chief Investment Officer at Guggenheim Partners, said on Tuesday.
“Eventually the Fed will acknowledge that three rate hikes will not be enough, but it is going to raise rates four times in 2018, and market speculation will increase that there may be a need for five or six rate hikes. That will be the straw that breaks the camel’s back,” Minerd said in a note to clients.
On Monday Oct. 19, 1987, following large declines on Asian and European markets the previous week, the Dow Jones Industrial (.DJI) Average plunged 508 points, or 22.6 percent, for the biggest-ever single day decline in percentage terms by the blue-chip benchmark.
Despite healthy U.S. corporate earnings and economic growth, inflation fears and rising bond yields, have already resulted in a 1,175 point fall in the Dow Jones Industrial Average on Feb. 5, the biggest ever in point terms, though in percentage terms it was only 4.6 percent.
The U.S. consumer price index for January published last week rose more than expected, with headline CPI inflation up to 2.1 percent, leading investors to expect the Fed to raise interest rates at least three times this year.
U.S. Treasury bond yields have been rising since last autumn, and are starting to raise the cost of borrowing for consumers and companies, with the benchmark 10-year note reaching 2.94 percent last week, up from 2.08 percent in July last year. Home mortgage rates rose to 4.57 percent last week, the highest since 2014. And the U.S. dollar (.DXY) has fallen 15 percent in the past 13 months.
"Today, investors have the same sorts of concerns they had in 1987," Minerd said. By August 1987, equities were at record highs, the Fed was raising rates, the U.S. dollar was under pressure and there were increasing concerns over inflation, Minerd noted.
"The concern was the Fed was behind the curve as it accelerated rate increases," he said. "By October, things were becoming unhinged. Bond yields had risen in the face of an extended bull market in stocks. The market reached a tipping point and began its infamous slide."
As the Fed continues to raise rates this year, valuations of risk assets based upon faith in ultra-low rates and central bank liquidity will come into question, Minerd said. Read more: https://finance.yahoo.com/news/guggenheims-minerd-warns-possible-replay-120334151.html
5.) Bankruptcy guru Edward Altman sees similarities to 2007 in the credit market today
“Back in 2007 prior to the crisis in ’08 and ’09, the fundamentals of credit risk of the companies issuing bonds and taking out loans were quite low,” he said. “And the similarity that I see now between 2007 and 2016 is very similar fundamentals, quite a bit high risk and it doesn’t seem to bother the market because it’s the only game in town in terms of getting yield greater than what you can get for low-risk securities like governments and high-grade corporates.”
In other words, investors aren’t buying junk bonds just because the risk-reward balance is favorable. They’re buying because the rewards of investing in lower risk bonds just aren’t cutting it anymore.
Read more: https://finance.yahoo.com/news/bankruptcy-expert-edward-altman-sees-similarities-2007-credit-market-today-150205955.html
6.) JIM ROGERS: The worst crash in our lifetime is coming
"We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one.
This is the longest or second-longest in recorded history, so it’s coming. And the next time it comes — you know, in 2008, we had a problem because of debt. Henry, the debt now, that debt is nothing compared to what’s happening now.
In 2008, the Chinese had a lot of money saved for a rainy day. It started raining. They started spending the money. Now even the Chinese have debt, and the debt is much higher. The federal reserves, the central bank in America, the balance sheet is up over five times since 2008.
It’s going to be the worst in your lifetime — my lifetime too. Be worried."
Read more: http://www.businessinsider.com/jim-rogers-worst-crash-lifetime-coming-2017-6
7.) Bond market is in an ‘epic bubble of colossal proportions,’ says Boockvar
One of the most crowded trades on Wall Street is about to implode, says one market watcher.
"We're in an epic bubble of colossal proportions," Peter Boockvar, managing director and chief market analyst at The Lindsey Group, said Tuesday on CNBC's "Futures Now" in reference to the fixed income market.
"They'll call it being 'patient.' Their forecasts are now irrelevant, their communication is now meaningless and their tools to handle whatever might come our way are toothless," noted Boockvar when describing the Fed's ability to address a flattening yield curve.
In Europe, concern for Italy's economy continues to rise as that nation struggles to maintain negative interest rates while simultaneously raising capital for its banking system, which is straddled with mounting debt.
Read more: http://www.cnbc.com/2016/07/06/bond-market-is-in-an-epic-bubble-of-colossal-proportions-says-boockvar.html
8.) Wall Street is sending huge warning signs for stocks
To a growing chorus of strategists and investors across Wall Street, the stock market looks like it's headed for a rude awakening.
Their mounting pessimism comes at a time when US equities are looking healthy, at least on the surface. Major indexes are hovering near record highs they reached this past week, while corporate earnings are growing at a blistering pace.
Yet some market experts think this apparent strength is just masking deeper problems brewing under the surface.
Count Marko Kolanovic, JPMorgan's global head of quantitative and derivatives strategy, as one of those stressing caution. In a client note on Thursday, he said that record-low volatility should "give pause to equity managers." Kolanovic even went as far as to compare the strategies that are suppressing price swings to the conditions leading up to the 1987 stock market crash.
Baupost Group, a $30 billion fund, recently highlighted the lack of price swings as a harbinger of pain to come, calling it a possible "accelerant for the next financial crisis." Meanwhile, Highfields Capital Management, which oversees $13 billion, said this past week that low volatility is giving people the false impression that the market is risk-free.
Going beyond the much-maligned low-volatility environment, Bank of America Merrill Lynch has its own reasons for expecting an upcoming rough patch in stocks — one it sees coming sometime this autumn.
Michael Hartnett, the chief investment strategist of BAML Global Research, points to how the S&P 500 has continued climbing to new highs, even as the size of the Federal Reserve's balance sheet has stayed relatively unchanged. He says this divergence is a "classic euphoria signal." Such overexuberance has historically been a sign that investment sentiment is overextended.
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