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Friday, June 19, 2020
๐U.S. Stock Market The Biggest Bubble in History About to Pop !!
๐U.S. Stock Market The Biggest Bubble in History About to Pop !!
U.S. Stock Market: The Biggest Bubble in History About to Pop !! Most of us seasoned investors agree the market is overpriced. The problem is the Feds are levitating the market at the expense of the dollar. My concern is the cash I’m holding may be devalued through inflation. Wall Street, once the vehicle to invest in great companies that were the bedrock of the American economy, is now a casino. A fantasy land dominated by a few monopolies like companies that don't even employ that many people. And are actually changing American society and politics in some case for the worse. I remember the Internet stock boom in the late 90s - that irrationally exuberant stock run made a lot of people very wealthy. You need to stay humble and not assume it will just keep going up and up. Enjoy the ride while it lasts, but be ready to go to cash when it turns. The market is propped up by the fed and is way overvalued. Time has a way of melting off the fat. This is not retail buying that moves a market. There are 20 billion in customer assets at Robinhood. That is not going to move an S&P or market that is over 30 trillion. It’s more likely to be the federal retirement funds with 6 trillion in assets. This was a fake market since 2008. The market is nothing more than a casino now. Prior to fed intervention, one could weigh value based on profitability. Now we have a double problem. The tech mentality of "profitability is irrelevant to long term value," the federal reserves' notion of "go long, I got your back," coupled with "it's going to be a V-shaped recovery." Make this a "tails you win and heads I lose" market. Based on all of this, the market should never go down and go to the moon! Let's see how long we can defy gravity. We haven't even seen the worst of this Recession/Depression yet, and people are acting like it's over. Just wait until the thousands of bankruptcies and the layoffs from those bankruptcies. A second round of COVID in the fall and things could be worse than any point in this country going back to the Civil War. Imagine how missed up things will be around October/September when panics usually happen. It will represent an accelerated accumulation of wealth by the top 0.01% of the economy, as they use Fed money to buy up everything on the cheap. I get the feeling that this is exactly what is supposed to happen. Sold my stocks for a profit, I don't trust the market at all right now. Not losing money is more important than missing out. The market is in a bubble that will eventually pop. With that being said, I do not short stocks. In the past, I've tried that by shorting,sick and dying companies that were basically on life support. To my amazement, they were able to survive for many years after the short positions. There are many examples of zombie companies outlasting their balance sheets - for example, look at Kmart, it was like a 35-year death. It is impossible to effectively short in a market where bankruptcy signals "BUY." I've taken a little break from this stock market. Saying that the market is in La-la land is actually an understatement; Irrational exuberance and the madness of crowds. So I've cashed in almost all my chips and will be relaxing in the cocktail lounge for a while. At least when everything finally crashes to hell, it'll start to make sense again, and that shouldn't be too far away regardless of what new magic tricks the Fed tries to pull out of its hat. The markets reflect Washington's largess to big business, not the economy, as usual. There were times in the past when political policies coming out of Washington were the complete opposite of what they are today. They encouraged savings in Banks, encouraged investing in CDs fixed guaranteed income FDIC we're generally 4 or 5 % interest was normal. Not everybody has the time or wants to put their money at risk in a Ponzi scheme; even If the Fed is ready and standing on the sidelines with the printing presses warmed up. Political policies and the FED need to do more to offer those baking opportunities of the past. This is a rigged system to benefit the wealthiest, and it just plain needs to stop. This is what people should be marching on Washington over and protesting about around the country. Fair treatment, a living wage, a chance to save for your retirement without risk. It used to be that way, but they've rigged it against the majority of the population. The main street is struggling. We have no leadership in Washington. The virus is still running rampant. Unemployment claims keep rising, and the market is green and happy. Huge disconnect. Something unusual happened yesterday (Thursday). The Fed’s balance sheet DECREASED in size by $74Billion, the first time there has been a decrease since February (Fed’s latest round of COVID QE started in early March), and the LARGEST decrease in many, many months. This situation has to be monitored closely in the upcoming weeks, especially if you are a QE-betting “bull.” The free money might be drying up. Investors and speculators are buying with one belief FED, and the Fed is desperate now. Is the market overvalued? Yes, more than any time in history. Debt is the highest it has ever been. Earning is turning down even before the virus, speculations are rampant, equity issuance is massive, six stocks are now worth 7.2 trillion 25% of market cap and bigger than entire Europe. What can go wrong!. NASDAQ is now bigger than the entire world's market caps. 46 Million unemployed, 200 Million worldwide, 900 Million inmigrant workers around the world. US markets are the most overvalued in the world.!! THE DEBT: the US federal debt is now 26 Trillion, year ends with 29 Trillion, tax collected 3.2 Trillion. 800% of the tax collection 140% of the US GDP. 325% OF CHINA GDP, 1000% of India's GDP. CORPORATE DEBT: 17 TRILLION. Most companies cannot even service the debt and need to borrow to at interest and old debt. Fed's help is useless. Mortgages, credit cards, auto, education loans, etc.: 30 Trillion. When will it be paid? This year along, Companies will issue: 2.4 to 2.5 TRILLION; that's about India's Gdp, the 5th largest GDP. FEDERAL GOVERNMENT: 8 Trillion. About 80% of Chinese GDP. The market is not operating normally. It is supported by the Fed, which leaves multiple questions. When will the fed stop? Can the fed stop? How deep does the disconnect go in all of the asset classes? What happens when the fed does stop, and all the asset classes correct at once? Beyond all of that is an election year and possible future issues with corona-virus. And the fed is supposed to be independent of politics, meaning the election year should not impact fed decisions. Can investors sue the government for market manipulation? All the interesting questions. All have a profound impact on the stock market for the next six months. Must be time for more taxpayers money into the Wall Street Casino. The fed has already thrown away about $4 trillion, trying to keep billionaires from having any losses. It's high time for the fed to let them eat each other. As it is, the taxpayers are eating their losses and getting ZERO from their gains. A pullback from the fed will put the market down to about 6k, and I'm more than good with that since it will be a TRUE market correction. 1. The Fed is the de facto central bank of the world. When its policy targets its own economy without considering the spillover effect, the Fed is “very likely to overdraft the credit of the dollar and the U.S.” 2. The pandemic may persist for a long period of time, and countries keep throwing money at the problem with a diminished impact. “It is recommended that you think twice and reserve some policy space for the future.” 3. There is no free lunch. Watch out for inflation. 4. The Financial markets are disconnected from the real economy, and such distortions are “unprecedented.” It’s going to be “really painful” when the policy withdrawal starts. The debt balloon is going to explode! The fastest solution is to let capitalism work. In 2009 with too big to fail, we just delayed the inevitable and allowed it to get worse. Currently, bailing out companies and individuals is only going to make it worse. We are just kicking the can down the road and not addressing any of the issues. Letting big businesses fail will result in the largest wealth transfer from the 1% to the 99%. It will be painful, but a quick and strong recovery will happen. It is when everyone says that the market can't go down that the trouble starts. There are now two sets of fundamentals, and both are too fluid. You cannot put enough concrete into the wet sand to stabilize anything. Credit is killing us on all levels. Even the printing presses will sink in this quagmire. The medicine is worse than the disease in this case, and that is not addressing the coronavirus. Pay now or later. Later is going to hurt badly. There will be a lot of pains coming. Only time can tell. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. And the bubble just keeps inflating! They simply cannot let it pop without the financial system imploding. The Fed continues to increase its direct holdings of US treasury securities and has now more than doubled its holdings since last summer bringing the current total to $4.169 trillion. This is what happens when the Feds implicitly state they will protect any downside. The stock market now in no way reflects the free market or the state of the economy. It's now a cash-grab funded by the federal government. All stock market losses are now socialized. It's literally impossible to lose money on stocks until the entire federal government collapses. The stock market is going to go up now, no matter what. Yesterday the Fed announced they would start buying individual stocks to prevent a crash. That means it's literally impossible to lose on the stock market now. If your stocks start to go down, the Fed will buy them up at the full price. The money printing frenzy is now a race to the bottom, and whilst China is no 'pin-up model,' the people in the US and other fiat debt-driven economies have been led a sorry dance. We all know it doesn't end well, and when the music stops, the reality will kick in. All Ponzi Schemes eventually collapse, and so will the FEDs! For me, its the increasing frequency and almost desperation of the Fed's moves. Powell made his statement about 0% interest rates till 2023, and gold and silver shot up vertical UNTIL suddenly COMEX gets an injection of more paper silver and gold ounces than were added in all of last year. Then, not a week later, Jerome Powell comes out again and announces the buying of individual bonds, meaning the Fed has to die before zombies like Ford will be allowed to fail. But they did it with the public reason of providing liquidity when there wasn't any (you know, in a world with no reserve requirement AND a 0% Fed interest loans...) Something bad is coming, and I get the feeling that the officers are filling a boat with gold before they leave us to die on a sinking ship. Something gotta give. All inevitable and pre-planned, the dollar bubble can continue forever until it meets a totally unexpected disaster: demand destruction through a Pandemic! The stock market is in disconnection when savers get zero percent interest. The fed knows it too. They are propping the market up. Expect a huge crash when the cocaine fed induced high goes through withdrawal. Precious Metals will moon if stocks crash again, it might take a while after the crash, but they usually are a good investment during a financial crisis. Something's brewing. At least I have the feeling that there is. What exactly, well, that is speculation. My belief is the Illuminati (agents) are about to pull the pin on the world banking system, then quickly institute a digital dollar minus all the debt. Rebase the dollar in other words. In this way, China won't be able to hold dollars and buy into the West. The West will then be locked together into a common digital system with the dollars as the converting/transacting/valuing benchmark currency, Giving other currencies fiscal flexibility. Other games will take place around this momentous event. It's the final human enslavement and human control using full electronic money. Plus, they will tie ownership of everything from auto's to gold, silver, diamonds, property doesn't matter. You will first need to accept the mark of the beast. Don't accept it, and loose all and be reduced to the status of the modern leper. I am feeling worried, as I struggle to envision that perpetual negative interest rates - which are coming - will simply be implemented into our current environment where stocks move up on a rod pointing to the heavens. So far, I thought that the implementation of negative interest rates, which will then become the "new normal," will happen after some sort of calamity. A calamity that is actually being felt by people, so they will see their central banks and what they are doing as their saviors. However, it doesn't have to play out like this or even similar to what I thought it would. What's actually going to stop the interlinked central banks of the world to simply just do it? Pretty much nothing. No president, no authority, no nothing. So why haven't they already? I don't know. Hence I'm waiting for a bang. If and when? Who knows. At this point, they are so many places that can create a massive sell-off. Too many holes created. My view is that it is going to be intervention-program-exhaustion. Two or more major central banks will have to deal with their own balance sheets and will have to come up with a way to cover their dollar allocations. That can be as early as mid-summer. From the consumer disposable income end, once the $600 a week is gone, and there is not renewal, it will take three weeks to start to see results, that is the end of August. That can be another trigger to reduce risk in July. By then, the Fed and Congress will have created another $3.7 trillion in expenditures. At that point, the number-crunching will start. There is no question that something will have to adjust. No cow will be sacred, Medicare, Social Security, etc. Pick any program you will see and cut it in a form or another of at least 4% to 5%. That will allow in 10 years to cover the overprinting during this period. My guess is the moment that the election in the US starts to have a clearer outcome, positions will be adjusted. Until then, what we have is. 1) By the end of July, The Fed will have done global coordination, which amounts to the equivalent of a 1/3 year of global GDP. At that threshold would be a checkpoint to see program exhaustion. 2) Globally pension funds will be looking for an allocation of reduced risk that can trigger another fast reaction. 3) Bankruptcies start to trickle, and they start to affect CDOs. So let's do some brainstorming. Please listen and digest the following Pieces of info. 1. Federal debt to GDP is accelerating an unsustainable pace. Within the last six months, it has risen 30% to 130% ratio. That's a pace that we believe cannot continue, and those debts can only be drawn down through cashflow income, aka money printing. So eventually, we will either have to print more money or collect more money. 2. The price of oil has collapsed in terms of the US Dollar. Historically America has relied on foreign nations needing to buy the primary input to the economy, oil, in US Dollar from abroad. As of late 2017, china now provides Renminbi denominated oil contracts. These contracts currently make up 10.8% of the global oil volume. Something interesting happened when oil went negative in US Dollars, however. Renminbi contracts DIDN'T. They only lost about 50% of their value, dropping to $20 per barrel. This had been a trend ongoing since repo issues started happening in September. However, the US Dollar had slowly been decoupling from Renminbi prices based on the exchange rate. Even more interesting is that they are now back to equal. Within two months, the contracts completely reversed a decoupling trend and are now priced exactly the same. Why is this important? This signifies that globally US Dollar was being spent elsewhere, the supply was contracting, and countries could literally afford less oil. Likely on debts by foreign corporations. Renminbi, however, was more liquid and more available, so companies who had access to it were buying oil in the Renminbi where they could. The fact that it is now equal is maybe even more interesting. It means the fed has managed to get enough dollars out into the global economy fast enough to stop that decoupling effect. 3. The fed is supposedly backing the market. They will buy domestic debts and clear up liquidity issues wherever they feel it is needed. This means shorting the domestic market is essentially off the table until this behavior ends. So, what dots can we connect? ‘My confidence is rising quite rapidly that this is, in fact, becoming the fourth real McCoy bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain, but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.’ That is Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., offering up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century. “This is really the real McCoy, this is crazy stuff,” said Grantham during a Wednesday afternoon interview on CNBC that appeared to knock some of the stuffing out of a market that had been drifting along listlessly on Wednesday. Reality versus Irrational Exuberance. When will the market embrace reality. When a system is failed and broken entirely, most people move along by scratching the old system and implement a new. That's how logic people used to deal with such things before. But now we have a bunch of people who basically all live in total denial, and are both deaf and blind. As long as the mad are running the asylums, anarchy will be part of the new normal, and when a new normal has become normal, nobody will remember how logic and sanity even worked. For anyone who is still bullish at this point, I have an honest question. By almost any indication, current stock prices have pretty much "priced in" an almost perfect recovery, whether it's from a genuine increase in economic activity or just more stimulus from the fed. So if the market is anticipating a best-case scenario, what could possibly drive it any higher in the near and medium-term? If profits magically recover as quickly as the market seems to hope, or if the fed injects more stimulus, the market is pretty much priced for that, being that it's barely off of its all-time highs. So what incentive is there to buy in right now? Are you buying in with the anticipation that the recovery will go well, but then the stock market will rocket even higher in response, and just permanently maintain this disconnect between price and earnings? This doesn't even get into the lunacy of the fact that the Fed is really advocating for a capitalist market that sustains itself just solely by money created out of thin air. And they consider that a rock-solid market and principle that you think is sustainable in the long term and worth investing in. The US corporations are bankrupt from issuing trillions of junk bonds. They are only being kept alive because the Fed is now buying junk bonds. Imagine living in a country where the central bank rewards and encourages incompetence. The fed is hyperinflating the markets. We’re living in a giant scam right now, folks. The banks and the fed are buying companies stocks as collateral and buying the markets entirely. Trillions of dollars being typed into existence in order to buy up every radioactively toxic piece of horse manure stock, loan, and corporate bond the Fed can get its hands on via BlackRock and Vanguard. We are spitting distance from the Federal Reserve buying individual stock shares at this point. Nothing fun or good is going to come of it, and it is going to screw the job market. Nothing good is going to come of the interventions we're seeing. Even if we manage to crab along for a few more years with no crash, it will represent an accelerated accumulation of wealth by the top 0.01% of the economy, as they use Fed money to buy up everything on the cheap. Don’t delude yourself; the market is only up because of the Fed. It's all funny money. The fed began QE again in September 2019, and since 26 March 2020, there is no reserve requirement. We're looking at a game where everybody loses except that some people get to start over with a huge amount of accumulated capital. Some people get to play a new game. Forty-four million Americans are out of work, but The stock market is ON FIRE!. The wealthiest 1% of Americans own 84% off of all stocks in America. It is totally disconnected and just a toy for the elite and government to play with The stock market is not based on anything anymore. If you ain't part of the elite, you're risking more than an arm and a leg right now. When Trump tweets about the stock market during the campaign donation season, he isn't doing it for the farmers in Nebraska. Investing in the market is like going to a casino. If you don't have skin in the game, don't play. The economy is a house of cards right now, and the stock is the only thing keeping Trump's reelection hopes alive. It's going to be fun reading all Trump's tweets once the Freedom of Information Act requests start rolling in. So much wealth may soon be driven to several bubble bursts where losses would be felt in myriads of business affected by COVID-19, where monetary easing may no longer be effective and the US dollar weakening. It is not the right time to invest in areas where the future markets are bleak. So much wealth may be lost along the way! The rich get richer, and the poor get poorer—just another day in the world economy. If the US Fed is effectively the central bank for the whole world, then the demise of the US dollar as the world reserve currency will probably come as a result of worldwide inflation caused by the unlimited printing of US dollars. Because people outside of the USA will not want to hold their savings in a currency that's losing its value relative to the goods and services that they can buy with this money. This hasn't yet happened in a significant way. But the US Fed is now printing money much more than ever before. And at the same time, the world production of goods and services has declined due to various restrictions and closures related to the Covid-19 pandemic. This combination of more money and fewer goods and services might spark worldwide inflation in US dollars and motivate people to stop holding their wealth in US dollars. We need more goods and services created. And the only way to do this is to encourage SAVING. By doing this, businesses can purchase better equipment, machines, more efficient labor, and increase their overall production, thus making everyone wealthier. (Remember how much better the industrial revolution made everything for commoners?). Our current system favors spending, spending in the market to make quick but risky gains, and by increasing inflation. What incentive do you have to save money if it losses it’s value second by second to inflation? This is why people buy stocks. Feds are buying corporation stocks to keep their scam afloat, plus the corporations are taking all the money from the government and firing and laying off everyone they can. It's fully automation now. Bonds, securities, essentially the US government now owns these mortgage-backed securities. Do they own the asset itself? No. Do they own the DEBT INCURRED BY THE ORIGINAL BUYER? Yes. That is precisely what they are buying, faulty loans for assets. So, in reality, it’s even worse than you think. They don’t even own the assets they’re paying for. They simply own the initial loan for the asset, and if they ever try to resell (which newsflash is their plan, they did the EXACT same in 08), they’ll get pennies on the dollar for what they paid for them. Kinda a proof that the stocks market is pure fakery controlled by private interest. When do we audit the bailout? How that's true the same charged to do the bailout are also charged to audit everyone. Merely a coincidence, though. While simultaneously creating inflation by printing more dollars to cover these buys. The bankers get this money first for price inflation hits. They use there newly gotten 0% interest bailout money to manipulate the market in their favor, then pass the inflationary losses over to the purchaser of goods. I.e., you and me. So, an institution that can print money independently from the public will can now also buy corporations up. And this proves that money is worthless. These “bailouts” extend to risky investments made by big banks as well. Investments these banks into foreign companies. Welcome to globohomo clown world. The American people have no idea what is really going on, and the gluttons at the Fed know this. So the charade continues until the last hand is dealt. When that happens is anyone's guess. Market timing is a bad strategy (one loses more than one gains). It's better to ride the ups and downs over a longer period of time than to try to guess and be wrong more than you are right. Tesla shorts re-learned that the painful way. And retards still think the stock market has any correlation to the real economy. Let's wait and see when the unemployment benefits dry up at the end of July, the PPP dries up, and the loan payment deferments end during summer. Hoard your cash people because everything's going on sale soon. There will be no V-shaped recovery. It's the banks buying massively toxic assets and creating money out of thin air, and now the FED just added the corporations to the party. They'll now directly buyback bonds from mega-corporations like they do with banks everyone is invited but you. The recovery is as fake as the whole country now. Enjoy the shit show while it lasts. The index may make all-time highs, but when the US dollar starts tanking, it won't mean much. This is always the sign of the last days of an empire; the first instance was the western Roman empire. This was The Atlantis Report. Please Like. Share. Subscribe. Leave me a comment. And please take some time to subscribe to my back up channels, I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy friends!
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.
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