06 January 2015

What 2000, 2008 and 2015 May Have In Common

'As a dog returns to its vomit, so the fool repeats their folly.'

Proverbs 26:11
And they do it about every seven or eight years, it seems, in the modern economic discipline of bubblenometry.
What hath the Fed wrought, and the crony accomplices to Wall Street in the Administration and Congress?

Back to the brink, again.  Crouching dangers, hidden risks.
Margin Debt as a percent of GDP is flashing a warning sign as shown in the first chart from Cross-Currents.net.

And the second chart shows that a second indicator could be seen in the stock market performance for the first three days of trading in January, in a chart from Kimblechartingsolutions.com.
As the upper left corner of the second chart reminds us, these 'predictions' are forecasts, with a nod to life's school of probability. 
I will like to see what happens for the full month of January for a confirmation, before we start warming up the bear train for a trip downtown.   And let's not forget the bubble-making propensities of the keepers of the world's reserve currency, in the age of weaponized finance.   Triumphant exceptionalism does not wear a pauper's rags well, although it is perfectly acceptable dress for the trickle down underclass.
This will likely end badly, but timing is always problematic since these breakdowns most often involve a trigger event, or a black swan.  But the system is hardly robust, and so the risks are high.
But all in all, as George Takei would say, Oh my.