#Top Of The Market To 'Ya!
Fake News Bloomberg Forecast Says:
Checking the industry standards of market prosperity, one would think that the global financial winds are blowing at a steady speed, providing headwind to a growing global economy. A quick overlook on general stock market indexes show amazing numbers. In America, the S&P 500 (GSPC) is sitting pretty, so it the DOW Jones (DJI), the NASDAQ is ripe and so are the top stocks by market cap. Everything looks up. Except for the VIX, the S&P 500's volatility index or "fear index", which is holding down at record lows. Yup, all is calm on the home front.
In foreign markets, the South Korean - S&P 500 sister index - KOSPI is in a similar boom by hitting record levels and roaring strong. While the new president, Moon Jae-in is promising to create a staggering 800,000 new government jobs to provide for Korean youngsters. Must be a great sign for the economic outlook of the country. Heck, this glut of new government jobs will rely on a vibrant and rockin' outlook of economic growth. Besides, consumer confidence in the US, Asia and Europe are the strongest on record since the global financial crisis.
Here's the Juicy Bit
Where oh where will this, "big, fat, ugly bubble" burst? That is the 64,000 trillion dollar question.
Donald Trump, we get the point.
Busted Banks, Federal Funds Rate, and the Next Bubble-Burster
Notice the graph. The savior of the last bubble, CDO and housing related, was supposedly the cheap money god and insolvency vacuum, the Federal Reserve, whose rate hike strip-tease has been getting the stock market jetted up harder than Bill Clinton in 1998 (the year Viagra received FDA approval). Might I remind those finally beginning to feel bullish about the market of the same red-cheeked optimism they had in 2007, six years after the .com/bubble? For those bulls, might I also gently remind - as a mother gently rouses her red-eyed child on Easter Sunday - that current Fed Funds (interest) Rate is still lower now than it was at any point, at any time, from any crash, in history. Lowest ever.
This lone indicator of a trash-heap economy - the coming commercial real estate crash - will have even the biggest bull setting tight trading stops. Banks hold 3.8 trillion in Commercial Real Estate (CRE) loans, while there are now 10.3 trillion home loan mortgages outstanding, a 14 trillion dollar debt outstanding all together.
This sea monster of debt is hovering under darkened American water, ready to rip through the cheap-money 1% life raft keeping CRE exposed banks (all of them) and inflated residential property values afloat. That 2007 sub-prime real estate monster was a, "mere" 1.3 trillion dollars and the Federal Reserve had a 5% Fed Funds rate to throw at the liquidity problem back in 2007.
Not including the shaky auto market, problematic bond yields, the litany of Euro-Zone troubles, upcoming college loan defaults, low growth potential...
In this article on fishy-markets, it is a crime not to dive into these negative indications. The largest bubble to bust this time around is anyone's guess, but it all centers on the United States' ability to push short-term loans at cheap rates. All signs point to a macro-circling of the drain, a drain on the value of fiat -- don't get jacked by the up tick. Investors need to come to terms with these unfortunate series either before or after their paper-net-worth is demolished.
References:
http://www.nakedcapitalism.com/2017/03/commercial-feds-rosengren-worried.html
http://www.cbsnews.com/news/stocks-take-record-tumble-down-777-points/
https://www.reit.com/sites/default/files/portals/0/Files/Nareit/htdocs/policy/Credit%20Crisis%20Presentation.pdf
http://nationalinterest.org/feature/5-economic-problems-the-next-us-president-will-face-14452
https://finance.yahoo.com/news/economic-time-bombs-facing-president-000004745.html
https://en.wikipedia.org/wiki/Subprime_mortgage_crisis