Chickens coming home to roost...economic death spiral ahead?

AIRWOLF

I don't want to be alarmist, but it appears that a variety of chickens are coming home to roost once again in the global economy. This shouldn't be construed as investment advice, but with the S&P 500 really only a few percent off of an ALL TIME HIGH, it might be a good time to consider how much exposure you want to have.

Key Reading:

http://www.bloomberg.com/news/articles/2016-02-05/citi-we-should-all-fear-oilmageddon?bcomANews=true

http://ftalphaville.ft.com/2016/01/25/2151037/petrodollars-are-eurodollars-and-eurodollar-base-money-is-shrinking/

http://www.zerohedge.com/news/2016-02-09/deutsche-bank-terrified-here-what-needs-be-done-its-own-words

A couple items from a few months back that are still very relevant:

http://www.businessinsider.com/china-is-in-the-midst-of-a-triple-bubble-2015-7

http://www.economist.com/news/leaders/21678220-first-america-then-europe-now-debt-crisis-has-reached-emerging-markets-never-ending?zid=295&ah=0bca374e65f2354d553956ea65f756e0

2001400ex

I'm confused. Because the other media is saying unemployment dropped again, labor participation rates are going up, and the wage market is getting stronger.

Crazy how there's two drastically different sides to the story. As usual.

AIRWOLF

2001400ex said:

I'm confused. Because the other media is saying unemployment dropped again, labor participation rates are going up, and the wage market is getting stronger.

Crazy how there's two drastically different sides to the story. As usual.

A few things:

1. The mainstream media is the worst at communicating anything of value related to financial news or economics. So disregard everything they say.

2. Most of the financial media is only slightly better. They may get most facts correct, but they are very myopic and totally disconnected from what is really going on, particularly in periods of stress or crisis.

3. This isn't about the US economy. This is about the global economy and the stresses it will put on financial markets globally. If things go bad, the US will certainly head into recession, but it will be a symptom (and probably a lagging indicator), not a cause.

Swaye

I'm investing in ammunition and long life food stores.

I also got a new rug for my bunker.

dnc

AIRWOLF said:

I don't want to be alarmist, but it appears that a variety of chickens are coming home to roost once again in the global economy. This shouldn't be construed as investment advice, but with the S&P 500 really only a few percent off of an ALL TIME HIGH, it might be a good time to consider how much exposure you want to have.

Key Reading:

http://www.bloomberg.com/news/articles/2016-02-05/citi-we-should-all-fear-oilmageddon?bcomANews=true

http://ftalphaville.ft.com/2016/01/25/2151037/petrodollars-are-eurodollars-and-eurodollar-base-money-is-shrinking/

http://www.zerohedge.com/news/2016-02-09/deutsche-bank-terrified-here-what-needs-be-done-its-own-words

A couple items from a few months back that are still very relevant:

http://www.businessinsider.com/china-is-in-the-midst-of-a-triple-bubble-2015-7

http://www.economist.com/news/leaders/21678220-first-america-then-europe-now-debt-crisis-has-reached-emerging-markets-never-ending?zid=295&ah=0bca374e65f2354d553956ea65f756e0

HeretoBeatmyChest

The S&P 500 is not a few percent off its high. Its 13% while the broad NYSE is about 18% off its high. Foreign markets are much worse.

The economy is in okay shape but the real problem is the capital markets meaning stocks and corporate bonds are extremely and artificially overvalued. Most metrics a year or two ago showed the stock market trading at the highest valuations ever ex 99-01. The market was trading at 21x earnings which is absurd. Earnings are already declining and factor in a 13x PE and thats a 50% decline. Junk bonds which normally yield 8-12% were yielding 5% which is fucking absurd.

This isn't another 2008 but its more like 1937-1938.

Kaepsknee

2001400ex said:

I'm confused. Because the other media is saying unemployment dropped again, labor participation rates are going up, and the wage market is getting stronger.

Crazy how there's two drastically different sides to the story. As usual.

Nevermind all that Hondo.

Thanks to Obamanomics, the US and world economy have never been better and there is nothing to fear at all.

Kaepsknee

Swaye said:

I'm investing in ammunition and long life food stores.

I also got a new rug for my bunker.

Damn... You should have let me know. A friend of mine that trades in Old Europe items had some great deals on rugs and yes.... Blankets.

AIRWOLF

HeretoBeatmyChest said:

The S&P 500 is not a few percent off its high. Its 13%

If things get really nasty, 13% will certainly qualify as "a few".

And I agree that the base case is for a garden variety bear market, for the exact reasons you cited, but there is a meaningful probability of a systematic event that would be orders of magnitudes worse. The question is, what is that probability? <5%, 10%, more?