TRUMP WALL STREET FLUFF EUPHORIA CONTINUES MEANWHILE BUFFETT QUIETLY SELLING BIG
One of the main reasons Buffett has made so much money is he sells Euphoria and buys blood in the streets. Right now the market is in Euphoria. Earnings have been marginal but expectations were so low that suddenly every business is a winner in the special olympics earning season. Quietly while the market has risen to nosebleed proportions, Buffett has been selling and now sits atop a war chest in excess of 100 Billion dollars. TRUMP WALL STREET FLUFF EUPHORIA CONTINUES MEANWHILE BUFFETT QUIETLY SELLING BIG.
Trump lives in an odd world of exaggeration. Buffett is 30 times richer ans lives modestly. Buffett unlike Trump is a voracious reader. Trump reads nothing.
Trump’s fifth grader vocabulary slings together adverb after adverb in a world of VERY VERYs, and Yuges. But the economy is not steaming ahead in spite of the middle school cheerleading. Trump’s government is spending money far in excess of Obama with no budget. At last look Trump has upended the spending to over $4.5 Trillion dollar. Bush shocked the Republican world with his budgets of $3 Trillion. Obama pushed them up to $3.5 Trillion. Trump and the republicans have their eye on the $5 Trillion mark. Debt is just piling up. In just 200 days Trump has piled up $2 trillion on the national debt now in excess of $20 Trillion dollars.
Judge for yourselves the overnight collapse of the economy in 2008. It came without warning.
The telltale signs of course are clear, too much leverage and too much speculation. The derivatives markets called by Buffett to be the Weapons of mass financial destruction are even higher now than 2008.
Babyboomers for all practical purposes were wiped out in the subprime. A few remain and those few have adopted the same crazy mentality as in the real estate bubble years.
But things are not well. People don’t have those lavish pensions unless they worked for government. Lifetime employment is now scarce. Businesses like IBM and GE have become giant welfare organization and they are in trouble. Buffett has been selling both. In fact he sold off his entire position in GE a company he loaned 5 Billion dollar to in 2008. He’s also unloading IBM in large amounts.
American’s personal indebtedness is skyrocketing:
it is now nearly $13 trillion. Mortgage indebtedness is $9 trillion. Unsecured Student loan debt is $1.34 trillion, and rising. Savings is at an all time low. In simple terms most Americans learned nothing from the Subprime. Bank leverage dwarfs these numbers and is on the order of $450 trillion. The US economy sits on a fissure. The debt which is normally deleveraged in a recession essentially was simply funded with borrowed money.
The day when thinks fall apart is never suspected.
Stock market crash predictors are rarely if ever correct. But Buffett displays discipline. He knows value and when he feels that values are too high he sells. Presently Buffett is selling even as markets squeeze higher.
What is the catalyst of the rising markets?
It’s government spending pure and simply. Trump is a Bush Third Term. Trump has made essentially no legislative progress. However just like the Bush Administration, he is spending borrowed money. He is also reducing bank regulation which has traditionally preceded a recession.
The dollar remains high as does the nosebleed Bond Market.
You haven’s lived until you have survived a Bond Market Crash. In 1994 $1.5 trillion in bond value was lost. That was chump change compared to what is up on the table at present and every dime of it leveraged. Most of Apple’s $250 billion war chest is in Bonds. They are not alone. The Mom and Pops of the world sought bonds as a safe haven from the stock market and are still there.
Worse more Americans have voluntarily become passive investors who never escape crashes.
Many of the large investors have called for a Stock Market Correction and expressed caution.
CashMcCall has called for an August correction. While that call looks incorrect at this point with the markets moving parabolic and the Dow approaching 22,000, crashes and hard corrections don’t announce themselves.
David Tepper who famously called the bottom in the 2009 subprime crash, says he does not think markets are overheated. He is using the standard metrics and earnings and international growth. Those however have never been tools that projected crashes.
Liquidity is what causes markets to crash or more expressly the lack therein.
In the Great Depression liquidity dropped by a mere 3% and crippled the Economy from roughly 1930 to 1944. There was plenty of government spending and a war that kept things moving but America deleveraged into poverty.
When borrowing is red hot the only thing that cools it down is when the lenders start getting concerned about loan defaults. At present loan defaults are rising markedly as are credit card defaults. Nobody knows when this will break but they know what the solution will be. Big Banks will be backstopped by the Fed and the citizens will take in on the chin. With the Fed Raising interest rates that directly impacts liquidity.
The slight improvement in commodity sales is directly related to the recent falling dollar which is moving higher again on Trump’s geoglobal missteps. Markets don’t like holding their breath with Trump Tweets.