This article was originally published by Michael Snyder at The Economic Collapse Blog
If everything is going to be “just fine”, why are so many big names in the financial community warning about an imminent meltdown? I don’t think that I have seen so many simultaneous warnings about a market crash since just before the great financial crisis of 2008. And at this point, you would have to be quite blind not to see that stocks are absurdly overvalued and that a correction is going to happen at some point. And when stocks do start crashing, lots of fingers are going to start pointing at President Trump, but it won’t be his fault. The Federal Reserve and other central banks are primarily responsible for creating this bubble, and they should definitely get the blame for what is about to happen to global financial markets.
My regular readers are quite familiar with my thoughts on where the market is headed, so today let me share some thoughts from five highly respected financial experts…
#1 When Altair Asset Management’s chief investment officer Philip Parker was asked if a market crash was coming to Australia, he said that he has “never been more certain of anything in my life”. In fact, he is so sure that the investments that his hedge fund is managing are going to crash that a decision was made to liquidate the fund “and return ‘hundreds of millions’ of dollars to its clients”…
While hardly a novel claim – in the past many have warned that Australia’s housing and stock market are massive asset bubbles (which local banks have been forced to deny as their fates are closely intertwined with asset prices even as the RBA is increasingly worried) – so far few if any have gone the distance of putting their money where their mouth was. That changed, when Australian asset manager Altair Asset Management made the extraordinary decision to liquidate its Australian shares funds and return “hundreds of millions” of dollars to its clients according to the Sydney Morning Herald, citing an impending property market “calamity” and the “overvalued and dangerous time in this cycle”.
“Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s assets is what all fund managers should put before their own interests,” Philip Parker, who serves as Altair’s chairman and chief investment officer, said in a statement on Monday quoted by the SMH.
#2 Seth Klarman leads one of the biggest hedge funds in the United States, and he believes that U.S. investors are greatly underestimating the amount of risk in the market right now…
“When share prices are low, as they were in the fall of 2008 into early 2009, actual risk is usually quite muted while perception of risk is very high,” Klarman wrote. “By contrast, when securities prices are high, as they are today, the perception of risk is muted, but the risks to investors are quite elevated.”
Klarman oversees one of the US’s largest hedge fund firms, with some $30 billion under management. He has a huge following on Wall Street — investors named his book, “Margin of Safety,” their favorite investment book in a recent SumZero survey.
#3 Bill Blain is a strategist at Mint Partners, and he is actually specifically pointing to October 12th as the date when things will start to get “horribly interesting”…
But…. Catch a falling knife, why don’t you… I shall spend the summer wondering just how long the Stock Market games continue. When, not if.
At the moment, my prediction is October 12th. Around that day its going to get horribly interesting..
Why that particular day?
Gut feel and knowing how the Bowl of Petunias felt in Hitchhikers. (“Not again.”)
There are just too many contradictory currents out there. The unsustainability of burgeoning consumer debt, unfeasibly tight credit spreads, the sandcastle foundations of student loans, autos, housing and the CLO market, China, Trump, politics.. worries about what follows Brazil in the EM market, and whatever… The risks of a massive consumer sentiment dump..
#4 David Stockman has also been warning about what may happen this fall. According to Stockman, this current stock market bubble “is the greatest sucker’s rally we have ever seen”…
“The market is insanely valued right now. They were trying to tag, the robo machines and day traders, they were trying to tag 2,400 on the S&P 500. They ended up at 2,399, I think, but the point is that represents about 25 times trailing earnings for 2016. We are at a point in the so-called recovery that has already lasted 96 months. It’s almost the longest one in history. What the market is saying is we have reached the point of full employment forever. There will never be another recession or any kind of economic surprise or upset or dislocation. The market is pricing itself for perfection for all of eternity. This is crazy. . . . I think the market could easily drop to 1,600 or 1,300. It could drop by 40% or even more once the fantasy ends. When the government shows its true colors, that it’s headed for a fiscal bloodbath when this crazy notion that there is going to be some Trump fiscal stimulus is put to rest once and for all. I mean it’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporated $10 trillion or $15 trillion in debt over the next decade. It’s just not going to pass Congress. . . . I think this is the greatest sucker’s rally we have ever seen.“
#5 Last but certainly not least, David Kranzler seems quite certain “that the stock market bubble is getting ready to pop”…
Anyone happen to notice that several market commentators have argued that Bitcoin is a bubble but the same stock “experts” look the other way as the U.S. stock market becomes more overvalued by the day vs. the deteriorating underlying fundamentals? Bitcoin going “parabolic” triggers alarm bells but it’s okay if the stock price of Amazon.com Inc (NASDAQ:AMZN) is hurtling toward parity with the price of one ounce of gold. Tesla (NASDAQ:TSLA) burns a billion per year in cash. It sold 76,000 cars last year vs. 10 million worldwide for General Motors (NYSE:GM). Yet Tesla’s market cap is $51.7 billion vs. $48.8 billion for GM.
This insanity is the surest sign that the stock market bubble is getting ready to pop. If you read between the lines of the the comments from certain Wall Street analysts, the only justification for current valuations is “Central Bank liquidity” and “Fed support of asset values.” This is the most dangerous stage of a market top because it draws in retail “mom & pop” investors who can’t stop themselves from missing out on the next “sure thing.” There will be millions of people who are permanently damaged financially when the Fed loses control of this market. Or, as legendary “vulture” investor Asher Edelman stated on CNBC, “I don’t want to be in the market because I don’t know when the plug is going to be pulled.”
Could all of these top experts be wrong?
It’s possible, but I wouldn’t bet on it.
Every stock market bubble of this magnitude in U.S. history has ended in a spectacular crash, and this one will not be any different. We can certainly have some good arguments about the exact timing of the next crash, but what everyone should be able to agree on is that a crash is coming.
You only make money in the stock market if you get out at the right time. Many of those that timed things well have made a tremendous amount of money, but most investors will be entirely caught off guard by the market implosion that is rapidly approaching.
As I have explained to my readers repeatedly, markets tend to go down a whole lot faster than they go up, and in the not too distant future we are going to see trillions of dollars of investor wealth wiped out very, very quickly.
Let’s hope that the coming crisis will not be as bad as 2008, but I have a feeling that it is going to be much worse.
We didn’t learn our lessons the last time around, and so now we are going to pay a very high price for our stubbornness.
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.
Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
If you want to know what is coming and what you can do to prepare, read his latest book [amazon text=Get Prepared Now!: Why A Great Crisis Is Coming & How You Can Survive It&asin=150522599X].
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The time has come to ask ourselves why we have the privately owned central bank called the Federal Reserve. Repeal all unconstitutional laws starting with the Federal Reserve Act of 1913. An Act indeed. There is another way, there always has been.
Article 1, Section 10, Clause 1 has never been amended. The use of paper money is not congruent with the Constitution. I agree that the Fed Act should be repealed. For a greater understanding of this issue please see “The Purse and The Sword” by Dr Edwin Vieira Jr.
YEP! Heard this before. Even if it falls 40% it is still by far the biggest and strongest market on the planet!!!!!
Sgt.
Forty times zero is still zero sarge. I believe that a free market creates a realistic size. It creates its own true strength and value. Not pumped up QE strength never to be repaid. Why we pursue limitless ideals while living in a finite planet is beyond me, maybe for control purposes, but I believe markets should be free at least free from government manipulation. That banker losses are now back stopped by the taxpayer shows the extent of their control over most of us. Just wait until stock prices again reflect their earnings ratio. The Dot goes boom,boom.
Hey Grandpa, there’s a new gold backed cryptocurrency that’s backed by gold on a 1:1 ratio, called “One Gram”. One gram coin equals one gram of gold. It’s out of Dubai and it’s Sharia compliant. Let’s see how long the manipulation will last when people buy this!
Heh Sgt., This market is a delusion for the common guy. If your pension is in the market, don’t count on it at expected levels because if the market corrects that much the derivative market goes down the tube also.
I guess it is pretty good that I don’t have money because I can not lose what I don’t have.
The key is to simplify life as much as possible and pray the peeps don’t get too restless.
Former deputy here and you know what I mean. God Bless, James
Oh Sgt Dale’s Pension is safe, he was a public employee in Illinois. bwhhahahahahahahaaaaa Some never learn and are dilusional.
Meanwhile I’m safe and snug at my Remote BOL hidden in the swamps of Florida, its pretty peaceful here today, the birds are chirping, turkeys are coming in to feed, stacked deep in Physical Silver, and Zero assets tied to the Stock Market, Everything is paid off and carrying no debt.
Looks like there is a nice solar oven coming on the market about August. I may get this one. Looks like it will do it all. Boil water in 10 minutes, which can be good for water purification, and gets hotter and cooks 5 times faster than a charcoal grill. Check this out. Only fuel needed is the sun. Will work like a champ with my Lodge Cast Iron cookware. Functions like a parabolic focused cooker.
ht tp://www.nextbigfuture.com/2017/05/advanced-solar-cooker-that-heats-and-cooks-five-times-faster-than-a-charcoal-cooker.html
Got to stay ahead of the grid down curve folks for sustained living. Or starve to death, its your choice.
Hi YPDB,
When you have got all the time in the world, why do you need something that cooks 5X faster than anything else in the world? Thanks for the heads up.
Louisiana Cockroach
GTL. You sure are a smug SOB. Thanks for all of your unsolicited advice. Hope you don’t
end up being alligator food in your swampy hideaway.
GTM,
Pricey. Short on details.
I wonder how it stands up
in a saltwater environment?
Unless it is soaked in CLP
everything(except gold
or 18-8 stainless)
corrodes here.
GrandpaSpeaks. Thanks for the great common sense. I agree with Mr. Snyder’s article and with your solution. Get rid of the FEDERAL RESERVE, which is neither. Then establish a USA currency and Treasury department. The first American Secretary of the Treasury, Alexander Hamilton, cautioned the citizens to never allow an outside-the-government entity to coin America’s money. Look into the meeting at Jeckyl Island (about 1913) to get more details.
Constitutional restraints burn the creatures from Jeckyl Island. As they were designed to do. Our problem is how they extinguished the fire.
Okie Dokie.
Tired of hearing about this crash but never seeing it. I have no doubt in my mind that we will emerge much better on the other side of this. It will be rough for millions, but those who have prepped will prevail.
May 29, 2017 How Debt-Asset Bubbles Implode: The Supernova Model of Financial Collapse
Gravity eventually overpowers financial fakery. As I noted yesterday in Will the Crazy Global Debt Bubble Ever End?, I’ve used the Supernova analogy for years, but didn’t properly explain why it illuminates the dynamics of financial bubbles imploding.
http://wallstreetexaminer.com/2017/05/debt-asset-bubbles-implode-supernova-model-financial-collapse/
There are always corrections. The size of the correction could determine if it’s called a crash. But what about those “faster than the speed of light” algorithms? Will they move things so fast that no crash is possible? Or just the opposite? Hmmmm.
Did you ever wonder why the crash of 2008 happened on a weekend? They should ban all algos as unfair trade practices. It would be like breaking up a shark feeding frenzy but it has to be done. And I am sure someone can explain how the Plunge Protection Team is constitutional. It is how we kneel before our masters that amazes me.
Back to where we were 9-10 years ago but bigger and more exposed and will be way, way more painful, as in no parachute, no backstop this time around folks…
The economy sucks !!! ?
Beans beans the musical fruit
The more you eat
The more you toot.
The more you toot
The better you feel;
So, eat some beans
At every meal.
Pre-soak beans in water in the refrigerator overnight. Or soak for two hours, rinse & cook for 45 minutes, drain, rinse, let cool refill water and put back in refrigerator for 4 hours, or overnight.
Rinse again and cook for 2&1/2 hours or longer. Salt prevents beans from cooking.
Beans pass thru your digestive system. They help promote beneficial gut flora.
__
don’t forget to tell them about the ham!
That’s why I always buy the shank hams when they go on sale. They have more bone and make a(flavorable) better bean soup. I vacuum seal the remainder and freeze it(ham) after its been knawed on. I swear I believe I could eat soup of some kind every day, year ’round.
Matter of fact, tonight when the missus gets off work she’ll probably won’t want to fool with fixing supper, so I’ll hit the freezer and grab me a a container of her homemade chicken/noodle, bean or vegetable beef soup.
easy peasy!
and we so RICHLY deserve it.
Cant happen soon enough to end the nonstop nausea….
Michael Snyder AGAIN? Oh well, back to sleep.
Oct. 12, the end of the financial world! Check.
I’ll notch that one on my calendar too.
Reminds me of my grandpa’s old .22, he’d notch that .22 every time he blew away another woodchuck raiding the garden. By the time I inherited that .22, all that was left was a couple bullets, a bag of sawdust and some scratched up metal fragments….. Grandad was a really good shot!
So people selling alternative investment products are telling you another investment is no good. And to be safe , you should invest with them? And this is news? It is a sales pitch
Hudson and Roberts say a slow erratic decline into a Charles Dickens feudal state.
Difficult for me to discount these 2….
Yea,so what?My dad said the same thing for last 20 years of his life,in his obit,he was called the “godfather” of bond investing/on forbes and stuff before the net.He also got out of the business,calling a ponzi scheme with no hope long ter,I remember as a kid him talking about hoping the finance industry would head back towards sound money/honesty,unfortunetly didn’t happen which is why he finally bailed.
Hell,many folks like Ron Paul have also been saying the same thing,one day bailouts/kicking can down road ect. will no longer cut it.A first grader with basic math skills could tell you that!
Exactly when it happens and done purposefully or just a shockwave panic,time will tell.
It will all happen as some of the outlier events coalesce. And there are many outlier events already in place. The massive debt is the catalyst as well as the massively over valued markets. I agree nobody can determine any date , but it is going to happen. All the factors are aligned and in place and it all works until the day it doesn’t !
Like every other issue before us today, I would prefer to get it all over with and start over with a new paradigm.
While I too beliee a crash is coming-these predictions that “nail down” a time frame have repeatedly been just plain WRONG
It’s been crashing for years…
How many years have these articles about another bloodbath on Wall street been running? Every year they have been wrong and the market continues to outperform the PM’s that preppers hoard. I left the bunker after it was full and thankfully have found ways to make my money earn for me. Someday they will be right, but I prefer the articles that bring to light real world conflicts. No need for regurgitated market speculation in my opinion, and probably a majority of the hunkered audience with their #10 cans full of paper depreciating fiat.
FEBRUARY 23, 2016 The World’s Debt Is Alarmingly High, But Is It Contagious?
One of the loudest creaking sounds coming from the markets right now is the global economy straining under a record pile of debt. The world has continued to borrow hand over fist since the financial crisis, adding nearly $60 trillion since 2007 in the process of pushing the worldwide debt load to $200 trillion, or nearly three times the size of the entire global economy. And that figure takes us only to 2014; we don’t yet have fresh debt tallies from last year.
http://www.bloomberg.com/news/articles/2016-02-22/the-world-s-debt-is-alarmingly-high-but-is-it-contagious
May 29, 2017 How Debt-Asset Bubbles Implode: The Supernova Model of Financial Collapse
Gravity eventually overpowers financial fakery. As I noted yesterday in Will the Crazy Global Debt Bubble Ever End?, I’ve used the Supernova analogy for years, but didn’t properly explain why it illuminates the dynamics of financial bubbles imploding.
http://wallstreetexaminer.com/2017/05/debt-asset-bubbles-implode-supernova-model-financial-collapse/