The world’s three largest economies, the US, China and Japan are already in recession. These countries represent nearly a third (29%) of global GDP. A stock market crash is coming.
The S&P 500 has completely disconnected from most risk assets, driven by the usual manipulation during options expiration week, performance gaming by hedge funds before end of the month results are posted, and short covering.
The fact of the matter is that despite public opinion, there are problems that are so big that the Central Banks cannot fix them. We’ve seen this in Switzerland and China and now in Europe. It will be spreading to other countries in the near future.
The Fed has conditioned investors to ignore fundamentals, valuations, and the business cycle. As a result, we are in another bubble that will burst as all bubbles do.
One weekend. The process was not gradual. It was sudden and it was total: once it began in earnest, the banks were closed and you couldn’t get your money out (more on this in a moment).
Breaking a critical trendline (particularly one that has been in place for several decades) is one thing. Breaking it and then failing to reclaim it during the following bounce is indicative of BEAR MARKET.
The market drop in August triggered by China devaluing the Yuan (another victim of the US Dollar bull market) was just the start. Once the US Dollar rally really begins picking up steam, we could very well see a crash.