In this video, we compiled the assessment of the most experienced stock market experts showing the dangers of the next bubble burst that will drag the US economy and any prospects of a decent rebound along with it
Dr. Steve Sjuggerud has popularized the term “melt-up”, used to describe how stocks just kept hitting new highs no matter what drama was going on in the world – exactly what we have witnessed in the current economic recession.
In simple terms, the policies enacted to ease the burden of the crises unleashed large amounts of “easy money” into the markets, and according to Steve’s thesis the bullish market seen after a deep economic recession is just one stage of the downfall – and it isn’t the end-line.
While the government and policymakers will likely keep prompting the markets to absurd extremes just to maintain the feeling that things are turning to the “right” direction, the unprecedented amount of “helicopter money” has added more fuel to the current asset boom and its unbelievable highs have reached ground-breaking scales never before recorded.
In March, in a 10-day time span, the Fed has created more free “fake money” than it did in the previous 30 years before the financial crisis of 2008 and 2009. At this point, even though there’s more money available on the financial system, interest rates are nearing zero again, the same way they did just after the financial crisis, and the consequences of it can already be seen, because for every “melt-up” there is a “melt-down”.
The massive government-fueled asset bubble has become so extensive that we’re moving towards the end of the “melt-up” stage and being pushed to the brink of a major stock market meltdown – just as a prominent market expert outlines: “The bigger the bubble, the messier the pop.”
The current market momentum is been called an “outright fiscal insanity”, marking a huge disconnect between economic reality and equity prices. We’re in the middle of the most deteriorating economic collapse that sparked a prolonged US Depression, the fact that market valuations are at or near all-time highs pose a threatening signal.
In fact, the major tech stocks that support the entire market are based on speculative valuations that are far away from reality. The five largest stocks in the S&P 500 have a combined market cap equivalent to the ‘smallest’ 389 stocks. Four companies alone have a total market cap of over $6 trillion, which is larger than the GDP of every country in the world, except the US and China.
These conditions make it impossible to invest wisely because markets are dominated by speculative excess, despite market high valuations, the prolonged economic Depression, colossal unemployment rates, combined with reduced business and consumer spending do not back up the stock market rally.
Since the core of the U.S. economy is built around consumption, with 70% of U.S. gross domestic product is reliant on consumer spending. But after unemployment benefits expired, tens of millions of Americans are already facing serious financial hardships that will have a terribly negative impact on consumption. That is to say, the real foundations of the financial markets are in big trouble.
Furthermore, investor icon Bob Rodriguez has outlined why America is in “a rolling depression” with no end in sight. Throughout the years, he has increasingly invested in gold and collectibles, which represents about 50% of his net worth, which is a justifiable move amid the looming dollar collapse.
Rodriguez amongst many other experts also doesn’t believe an economic recovery to previous levels will be seen in the next few years, even the most dovish analysts have been forecasting a roller-coaster ride for investors, which gives further proof the worst is yet to come.
Epic Economist website: https://www.epiceconomist.com