Biggest Bubble Ever? 2017 Recapped In 15 Bullet Points

Tyler Durden's picture

Yesterday we presented readers with one of the most pessimistic, if not outright apocalyptic, 2018 year previews, courtesy of BofA's chief investment, Michael Hartnett who warned that in addition to the bursting of the bond bubble in the first half of the year, the stock market could see a 1987-like flash crash, potentially followed by a sharp spike in (violent) social conflict. However, in addition to his forecast, Hartnett also had one of the more informative, and descriptive, reviews of the year that was, or as he put it: 2017 was the perfect encapsulation of an 8-year QE-led bull market.

Here are his 15 bullet points that show why in 2017 we may have seen the biggest bubble ever (and why we can't wait to see what 2018 reveals).

  1. Da Vinci’s “Salvator Mundi” sold for staggering record $450mn
  2. Bitcoin soared 677% from $952 to $7890
  3. BoJ and ECB were bull catalysts, buying $2.0tn of financial assets
  4. Number of global interest rate cuts since Lehman hit: 702
  5. Global debt rose to a record $226tn, record 324% of global GDP
  6. US corporates issued record $1.75tn of bonds
  7. Yield of European HY bonds fell below yield of US Treasuries
  8. Argentina (8 debt defaults in past 200 years) issued 100-year bond
  9. Global stock market cap jumped1 $15.5tn to $85.6tn, record 113% of GDP
  10. S&P500 volatility sank to 50-year low; US Treasury volatility to 30-year low
  11. Market cap of FAANG+BAT grew $1.5tn, more than entire German market cap
  12. 7855 ETFs accounted for 70% of global daily equity volume
  13. The first AI/robot-managed ETF was launched (it’s underperforming)
  14. Big performance winners: ACWI, EM equities, China, Tech, European HY, euro
  15. Big performance losers: US$, Russia, Telecoms, UST 2-year, Turkish lira

As Hartnett summarizes, "2017 was a perfect encapsulation of an 8-year QE-led bull market"

  • Positioning was too bearish for either a bear market or a correction in risk assets.
  • Profits were higher than expected (global EPS jumped 13.4%) this time thanks to a synchronized global PMI recovery.
  • Policy was aggressively easy, as the ECB and BoJ bought a massive $2.0tn of financial assets; fiscal policy also easy (e.g., US federal deficit up $81bn to $666bn).
  • Returns were abnormally high in 2017 (Table 3); corporate bonds and equities soared, but the biggest surprise was stubbornly low government bond yields: thematic leadership of scarce “growth” (e.g. tech stocks), “yield” (e.g., HY, EM and peripheral EU bonds) and “volatility” once again remained the core of the bull.

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. . . _ _ _ . . .'s picture

"US federal deficit up ... to $666bn"


Short that XIV.

mcbond's picture

Bitcoin: this is only the beginning! 

Must put Bitcoin in correlation to world money supply which is at 150 Trillions - so:

Bitcoin Price Target: 1 or 2 Million?

Forecast: Continued acceptance is driving demand for Bitcoin. From recent price moves, Bitcoin is being compared to the Tulip Bulb Mania. True or not?

Escrava Isaura's picture

Exactly, because Bitcoin is not related to the real economy.

But, when the oil goes to $150 dollars a barrel, Bitcoin goes to zero and the economy crashes.

Oil matters. Bitcoin doesn’t.



Biggest Bubble Ever? 2017 Recapped

Biggest Bubble Ever? 2018 Recapped

Biggest Bubble Ever? 2023 Recapped


Biggest Bubble Ever? 2027/2032 Oops.


yogibear's picture

Remember Chaney's statement? Deficits don't matter?

It's why they will continue to double every 7 years.

Infinite debt in a finite world.

Rents doubling, food,etc while the government hides it. The central banksters cannot allow price discovery and real inflation because their sham will implode.

S Spade's picture

until they drop the tax rates for companies big AND small, expect more of the same deficits.  no point in taxing companies anyway (it's another form of double taxation, also hiding taxes).  people pay taxes not companies (which are entities made up of people).  if you truly want to be fair, the same rate should apply to everyone.

ted41776's picture

DOW 100K here we come! the printing presses don't even need ink or paper, what could possibly go wrong?

yogibear's picture

All the Federal Reserve has left is to print.

Zimbabawe American style. 

Central banks buy each other's debts.

Ivan de beers's picture

The bubble that wont pop. 

. . . _ _ _ . . .'s picture

Like diamonds, de beers.
Just control the supply.

S Spade's picture

These markets aren't about supply, plenty of shares for anyone who wants to buy at current's phoney demand, fake markets created by institutions/funds bouncing a few shares back and forth to bump prices and force shorts to cover at their manufactured prices.  They're divorced from the supply demand intersection.  Soon as they stop playing games the markets they've corrupted drop like a rock..which is why they have to continue playing.

yogibear's picture

They can't let it pop.

Just print and print and print. Fiat will be sacrificed.

They have decided to kill the dollar, in the mean time it's a coordinated effort among central banks to keep each other's currency propped up.

otschelnik's picture

What's changed is the perception, now everybody thinks that if the train goes off the rails the Fed and gubermint will be there to bail us out. 

Nomad Trader's picture

Biggest bubble ever in everything except the Fed's version of inflation.

buzzsaw99's picture

you say all that like it's a bad thing.  lolz

Is-Be's picture

I've a better chance of buying Nigerian bitcoin than Nigerian gold.

BigSimes's picture

We all know it (the global economy etc) is poised, intentional or not, to tip over.

We don't know, almost don't want to know, WHEN.

But, here's two things to know:

1. If the next crash is like the others, we'll just dust ourselves off and accept Monetary Confeti V.2 and party into the next bull market.

2. If the next crash is a once in 80 or 100 year cycle, we're all f###ed, no matter how many bitcoins on a USB are shoved up your arse or ounces of gold buried under your rose bushes.


Easyp's picture

Dang!  How did you know where I hid dat gold!

Easyp's picture

Janet Yellen, the outgoing chair of the Federal Reserve, affirmed to an audience at New York University on Tuesday night that she finds this year’s low US inflation a mystery — but also asserted that she had found it easy to explain the inflation of the previous three years of her tenure.

Her comments on inflation, which came in a public conversation with Mervyn King, the former governor of the Bank of England, allowed her to explain her much-discussed comment in September that this year’s shortfall of inflation from its 2 per cent target was “more of a mystery”. Ms Yellen said she could not say that the Fed clearly understood the causes.

max2205's picture

How many trillions in interest stolen? 

T-NUTZ's picture

How many trillions in subsidies given?

Chris88's picture

#2 is going to make the investment geniuses here really angry.