The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
Two Congressional chairs have authorized a review of target-date funds (TDFs). The last such review was in 2009, and all that changed was that risk increased. It would be a shame if this initiative failed to produce results.
Who isn’t baffled by the continuing run-up in stock prices? Behavioral scientists. They explain that we have a host of biases that make us irrational. Here are the reasons that we have a stock market bubble, presented in two tables.
The government’s COVID relief programs have cost $5.2 trillion, more than World War II, which cost $4.7 trillion. Those mountains of money will cause inflation, raise interest rates and reduce in stock prices.
Interest rates have never been lower, but that’s beginning to change and it’s causing a fuss. You’d think investors would be relieved by a return to a more normal situation. But be careful.
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.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
There are two incorrect assumptions in most stock return forecasts.
Rescues by the Federal Reserve and aggressive monetary policies have helped stock and bond investors, but the degree of money printing will be paid for by future generations.
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
Below is the 95-year history of stock and bond returns shown in four illustrations.
Forecasts of 2021 security returns are gaslighting investors into believing the future is bright. But market corrections are highly likely next year.
When Jeffrey Gundlach says that the federal deficit is on a suicide mission he is understating the problem.