The Last Bubble

Broadly speaking, as markets recovered from mid 2009 (amid extreme monetary policy experimentation around the world), economic growth and asset prices were in sync around the world. When markets faltered after the end of QE2 in 2011 and the Fed folded on moderation, investors around the world piled into US equity and credit markets chasing the 'easiest' money in the world. Then as China unleashed its own QE-Lite and the Fed confirmed the end of QE, tidal waves of fresh speculative capital flooded a small, illiquid market on the other side of the planet... and hey presto, The Last Bubble market was created.

 

Chinese stocks took over the mantle of "hot-money-speculative-mania-must-buy-now" asset class mid 2014...

 

This is the last bubble... as already, the cracks are showing as both speculative excess is clearly evident in new account openings...

 

and a significant deterioration in credit markets is occurring...

 

Keep dancing while the music is playing? Or observe the carnage from the bar?

 

Charts: Bloomberg