Given the explosive nature of the allegation that the most iconic names on Wall Street were conspiring with the most iconic stock exchange in the world to rig the markets, one would have expected the hearing to have been packed with top media outlets.
It’s reasonable to ask, “Where does it all end?” – with an equally reasonable answer, “with market dislocation and a crash”. All those Coins in the Fuse Box in 1929 contributed directly to the house collapsing in flames.
The median worker should be making as much as $102,000 annually—if some $2.5 trillion wasn’t being “reverse distributed” every year away from the working class.
With 2020 GDP estimates in the 2.0 to 3.0% range, the divergence between Chinese Credit and economic output is unprecedented. China’s “Terminal Phase” excess – including rapid acceleration of late-cycle loans of deteriorating quality – is unparalleled in terms of both degree and duration.
QE fundamentally changed finance. What commenced at the Federal Reserve with a post-mortgage finance Bubble, $1 TN Treasury buying operation morphed into open-ended purchases of Treasuries, MBS, corporate bonds and even corporate ETFs holding high-yield “junk” bonds. Markets assume it’s only a matter of time before the Federal Reserve adds equities to its buy list.
Why is it reasonable to believe that monetary policy specifically aiming to inflate securities markets will somehow simultaneously ensure a corresponding modest increase in consumer prices? It’s not.
A lot of indicators are doing things they have never done before. And I see this as the result of the central banks flooding the financial markets with liquidity and much of that liquidity ending up in a few companies. Tesla is one of them. It still sits in the TSP S fund which invests in all the non-sp500 companies.
“Consider the internet frenzy 20 years ago. Back then, large speculators, mostly hedge funds, were net short on S&P 500 futures in all but five weeks in 1998 and 1999. Those mostly losing bets were completely squeezed out in 2000. That’s when the crash came.”
1) Buy and holding regardless of market valuations;
2) Heavily exposed to market risk;
3) Underweight global tech;
4) Underweight the effect of US corporate buybacks;
5) Achieve little diversification with highly correlated funds