COVID-19 Attacks the Stock Market
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It would appear that nothing can pop the stock market bubble, but there is one straightforward “pin” that will do the job – rising interest rates.
Central banks around the world have embraced zero interest rate policy (ZIRP). As long as interest rates remain low, investors are forced to take the risk in stocks, discounted future stock earnings remain high, and debt service remains low. But central banks can’t control long rates, like the yield on 10-year government bonds.
That reality is here.
Recent increases in 10-year government bond yields are trivial relative to what they will become with the inflationary pressures from the trillions of COVID relief money being helicoptered into the economy. COVID failed to pop the bubble last March, but the worst is yet to come. COVID relief will bring serious inflation, increasing interest rates and bursting the stock and bond market bubbles.
In this article, I begin by proving that a stock market bubble exists despite Wall Street gaslighting to the contrary, and I provide 15 reasons that it exists. Then I provide 10 possible pins that could burst the bubble and argue that increasing interest rates is the most probable. Then I conclude with an estimate of when the bubble will burst and how bad it could be. I suggest a few ways that investors can protect themselves. I also provide this video for your viewing and listening pleasure.