Shiller Calls Another Bubble

http://www.bloomberg.com/news/2013-12-02/u-s-ism-manufacturing-index-rose-to-57-3-in-november-from-56-4.html

"I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable," he said, describing the financial and technology sectors as overvalued."

Yup, pretty much.

The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There’s no calling the top, and most of the signals that have been most historically useful for that purpose have been blaring red since late-2011.

http://www.hussmanfunds.com/wmc/wmc131111.htm

I would rather be an idiot before the peak than be an idiot after the peak, so we have sold some stock.

If interest rates were more normal, this would not be happening, I don't think. But thanks to quantitative easing money has no where to go except stocks and real estate, and so this is what we get.

"...But thanks to quantitative easing money has no where to go except stocks and real estate, and so this is what we get..." Riiiiiiiiight....

http://www.forbes.com/sites/afontevecchia/2013/11/13/the-reason-why-francis-bacons-lucian-freud-is-worth-142-million/

http://www.forbes.com/sites/anthonydemarco/2013/11/13/59-6-carat-pink-diamond-sell-for-world-record-83-million/

http://money.cnn.com/2013/08/18/autos/pebble-beach-ferrari/

"...But thanks to quantitative easing money has no where to go except stocks and real estate, and so this is what we get..." Riiiiiiiiight....

http://www.frw.co.uk/content-detail-fine-wine-news-rare-bordeaux-breaks-record-for-most-expensive-bot_offerid-1657-offertypeid-7.aspx

http://www.today.com/id/45507922/ns/today-today_books/t/superman-comic-draws-highest-price-ever-paid-m/

Hugh Hendry just threw in the towel.

http://www.investmentweek.co.uk/investment-week/news/2308814/i-cant-look-at-myself-in-the-mirror-hendry-on-why-hes-turned-bullish

David Tepper on bubbles, and what to be worried about..

"I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about. But I'm not worried, because I am long. But if I'm a Long/short guy who can only go 60% long ... the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20-30% (performance)."

http://www.marketfolly.com/2013/11/david-tepper-says-market-isnt-bubble.html

The boom-bust cycle is caused by the Federal Reserve manipulating the money supply and interest rates, resulting in malinvestment and economic corrections. The lower and middle class often don't fully recover from these recessions, resulting in further income inequality and further demands for government intervention into the economy.

I think it is premature to say that we are in a bubble. We are in a slow-motion recovery. Tarp, stimulus spending, and easy money policies have actually delayed the recovery.

slow motion recovery? I think the economy is in slow motion reverse. The only reason the housing market and stock market is strong is because of low interest rates. Take away that punch bowl and what do you think would happen?

http://youtu.be/mlCiDEXuxxA

http://streeteasy.com/nyc/talk/discussion/34852-somewhereelse-smarterbetter-investor-than-inonada

The part I find fascinating is how any good news (housing starts, jobs numbers), and the market takes a dive. Clearly good news is bad news if it means the Fed might change policy. It certainly goes to show how cheap money is at the heart of this... so, when it ends, yes, going to get awful interesting awful fast.

more interesting is when China stops buying our treasuries. That's when the fun begins.

China stops buying treasuries when the trade deficit goes away. The Chinese are a captive buyer.

I don't think the Fed stops, until the market forces them to. Short term programs have a way of becoming permanent. And we saw the hissy fit the market threw when it thought the Fed might stop Q.E. early. Can't see how the Fed unwinds it's massive holdings.

so your economic theory is....

everything stays the same. forever.

even you must see how stupid that is.

I agree with C0C0.

China will never stop buying our treasuries, not economically feasible for them.

They stop buying the dollar tanks against the Renmimbi. Chinese goods are not competitive in the U.S. Capital flees China, unemployment there goes up. Total disaster.

China buys our treasuries to prop up the yuan. The moment they stop buying our treasuries, the excess dollars (which currently produce massive current account surpluses) will result in an appreciation of the yuan leading to a decline in their balance of trade surplus. They buy our treasuries because their government is a currency manipulator and wants to keep the yuan artificially low.