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Those of us who closely follow the credit cycle should not be surprised by the current slide in equity markets. It was going to happen anyway. The timing had recently become apparent as well, and in early August I was able to write the following:
“The timing for the onset of the credit crisis looks like being any time from during the last quarter of 2018, only a few months away, to no later than mid-2019.” Read More.
Here is a list of infamous stock market crashes, economic bubbles and financial crises that have occurred throughout history. I am continuously writing about additional crises (including Enron, the mid-2000s housing bubble & the Stock Market Crash of 2008), so please keep checking back in the future. Read More.
12/05/18 – CNBC: Sell-offs could be down to machines that control 80% of the US stock market, fund manager says
Eighty percent of the daily moves in U.S. stocks are machine-led, a fund manager told CNBC on Wednesday.
The phenomenon, also called algorithm or algo trading, refers to market transactions that use advanced mathematical models to make high-speed trading decisions. Read More.
One of Wall Street’s most famous proverbs of this bull market is backfiring. “Buy the dip,” or picking up a stock or the whole market when they sell off, isn’t working for the first time in 16 years, according to analysis from Morgan Stanley. The investment bank looked at the average return for the S&P 500 if the previous week was negative and found that this year, there was no rebound. Read More.
Several months ago, I penned an article about the problems with “passive indexing” and specifically the problem of the “algorithms” that are driving roughly 80% of the trading in the markets. To wit:
“When the ‘robot trading algorithms’ begin to reverse (selling rallies rather than buying dips), it will not be a slow and methodical process, but rather a stampede with little regard to price, valuation, or fundamental measures as the exit will become very narrow.” Read More.
In this presentation, Clarity Financial’s economic analyst Jesse Colombo explains why the U.S. stock market is experiencing a dangerous bubble that is going to burst violently and cause serious damage to the underlying economy.
The S&P 500 hit another all-time high today and president Donald Trump tweeted, in his usual fashion, “S&P 500 HITS ALL-TIME HIGH Congratulations USA!” Though I am a conservative myself, president Trump’s stock market cheerleading angers me because he’s fanning the flames of a dangerous asset bubble (see my recent report on Forbes), which is extremely irresponsible. Read More.