Economic Overviews

The market is now officially in the largest bubble relative to the economy in history according to the stock market capitalization to GDP ratio, which, incidentally, is Warren Buffett's favorite means of valuing stock.

It is almost certain that we will get some kind of financial crash in 2018, maybe two or even three of them. However, the resilience of the real sector of the U.S. economy should prove sufficient to overcome them, at least in the short term. [Let me explain.]

The U.S. and global economies will contract to a level we have never experienced before. We are most certainly in unchartered territory. The GRAND FACADE will come crashing down to the shock and surprise of the masses. Here is my analysis and the reasons we are heading towards a cliff. Words: 1171

The ‘shit’ may hit the fan later in 2018 as events turn ‘south’ and as new leadership arrives with new ideas. This is what I sense as I watch global events unfold. Another huge crisis is emerging and new decision-makers must soon deal with this coming major crisis.

As you can see from the image below, 11 of the 19 bear market signposts have been triggered already. Here they are:

By definition it is impossible to predict black swan events but one can predict what their cousin, the grey swan, is up to. These are the unlikely events that lie outside the usual base case and risk scenarios of the analyst community and Nomura’s Bilal Hafeez has come up with 10 potential grey-swan events for 2018. Here they are!

Today, we’re seeing the greatest political polarization since the Civil War, a debt and financial asset bubble that makes the Roaring 20s look like child’s play, and income inequality greater than that experienced in 1929 and the discovery of a rare convergence of three-long term cycles points to a revolution - a true revolution.

There has been nothing that has been normal about this economic recovery, and I don’t think there’s going to be anything that’s normal on how this all ends. For now, enjoy the melt-up, because this too will come to an end.

Today everything must be dumbed down to the lowest common denominator of readers or viewers... Any news must be superficial and short. Most content must have an entertainment or gossip value. All serious matters are either left out or covered very briefly. We are now in the age of instant gratification. Viewers’ interest can only be kept by short superficial language, lots of big images and constant change of focus. No one is really interested in the truth but, nevertheless, here it is!

The media is full of stories claiming that lower tax rates will cause a huge and damaging increase in the federal deficit and will fail to stimulate the economy. Here are 10 charts which show that those claims are not backed by historical experience.