A winning strategy in recent years has been to bet on the ability and willingness of central banks to repeatedly intervene to repress financial volatility and boost asset prices -- often at levels that are well beyond what is warranted by economic and corporate fundamentals.
Most agree that there is a limit to how far central banks can decouple asset prices from fundamentals. There also is broad agreement that, without some improvement in the political system’s ability to enact comprehensive policies that ease the over-reliance on central banks for growth, it will be hard to validate existing asset prices and push them higher in a sustainable fashion.
But this state of affairs isn't sufficient to ensure that bets against the current valuations of stock markets around the world will be highly profitable. Timing matters -- particularly when it comes to pinpointing events that could be catalysts for a correction.
Earnings: I have watched the slowdown in earnings growth closely. Of all the things that are cause for concern, this is my biggest. On the one hand, the energy industry has seen its profits plummet as the price of crude oil fell. When a sector that once made up 11 percent of the Standard & Poor’s 500 Index has earnings fall almost to zero, it’s going to hurt. But that doesn’t explain the entire slump in earnings, especially in light of the big share-count reduction that has been occurring because of buybacks. If you are looking for something to be worried about, this seems like the one to watch.
3--Brexit vote is about the supremacy of Parliament and nothing else: Why I am voting to leave the EU (Today's "must read")
We are deciding whether to be guided by a Commission with quasi-executive powers that operates more like the priesthood of the 13th Century papacy than a modern civil service; and whether to submit to a European Court of Justice (ECJ) that claims sweeping supremacy, with no right of appeal....
Stripped of distractions, it comes down to an elemental choice: whether to restore the full self-government of this nation, or to continue living under a higher supranational regime, ruled by a European Council that we do not elect in any meaningful sense, and that the British people can never remove, even when it persists in error....
I do not think this is remotely possible, or would be desirable if it were, but it is not on offer anyway. Six years into the eurozone crisis and there is no a flicker of fiscal union: no eurobonds, no Hamiltonian redemption fund, no pooling of debt, and no budget transfers. The banking union belies its name. Germany and the creditor states have dug in their heels....
The EU crossed a fatal line when it smuggled through the Treaty of Lisbon, by executive cabal, after the text had already been rejected by French and Dutch voters in its earlier guise. It is one thing to advance the Project by stealth and the Monnet method, it is another to call a plebiscite and then to override the outcome....
Nobody has ever been held to account for the design faults and hubris of the euro, or for the monetary and fiscal contraction that turned recession into depression, and led to levels of youth unemployment across a large arc of Europe that nobody would have thought possible or tolerable in a modern civilized society. The only people that are ever blamed are the victims.
There has been no truth and reconciliation commission for the greatest economic crime of modern times...
Has there ever been a proper airing of how the elected leaders of Greece and Italy were forced out of power and replaced by EU technocrats, perhaps not by coups d'etat in a strict legal sense but certainly by skulduggery?
On what authority did the European Central Bank write secret letters to the leaders of Spain and Italy in 2011 ordering detailed changes to labour and social law, and fiscal policy, holding a gun to their head on bond purchases?
If membership is so good for us, why has it been accompanied by savage industrial and commercial decline? If the Brussels system of sclerotic, centralised bureaucracy is so good, why doesn’t anyone else in the world adopt it?
5--U.S. student loans are, in very simple term, a ticking time bomb.
The numbers are simply mad: total debt rose from around USD 100 billion ca 2006 to almost USD 1 trillion by the end of 2015
Currently, 43% of student loans are in default, representing an improvement over 2014 default rate of 46%. The Wall Street Journal recently attributed this decline to programs that allow some borrowers to lower their student loan payments by connecting them to a percentage of the borrower's income (also known as income-driven repayment). The number of borrowers taking advantage of the schemes nearly doubled since 2015 to 4.6 million.
U.S. student loans are, in very simple term, a ticking time bomb. The indebted generation is in the younger demographic with limited income prospects and the job markets that are longer-term characterised by greater income volatility and lower income trends. This means that repayment of these loans exerts greater pressure on household savings and investments exactly at the period of the household life-cycle when American workers benefit the greatest from the compounding effects of savings and investments on life-time income. In other words, the opportunity cost of this debt is the greatest.