THE WOLF STREET REPORT: Is the Everything Bubble Ripe Yet?

Suddenly – I mean the signs had been everywhere for a long time and “suddenly” doesn’t really apply – the whole house of cards came tumbling down.

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  205 comments for “THE WOLF STREET REPORT: Is the Everything Bubble Ripe Yet?

  1. Cyclops
    Aug 4, 2019 at 8:48 pm

    Good Golly!
    We’re eternally doomed this time!

    • nick kelly
      Aug 5, 2019 at 1:05 pm

      Dow down 700 Monday but ZH says this is all part of Trump’s master plan to force the Fed to lower rates. Like, if I shoot myself in the foot the clinic will give me some morphine. Gee, if I chopped off my hand maybe they’ll give me some heroin (negative rates)

      • intosh
        Aug 5, 2019 at 3:38 pm

        The markets have been moving up and down like a yo-yo. Great way for stock market big sharks (who benefit from privileged signals of the upcoming movement) to buy low and sell high. Trump created a once-in-a-life-time environment for them to make a killing. Small fish “investors” can also enjoy the ride but obviously not the sure-bet and the humongous payout the big sharks have been enjoying.

        Trump will get a second term in return.

      • NBay
        Aug 5, 2019 at 7:15 pm

        Ole’ Doc Copper says “$2.54”, but I have no idea how much of it is recycled, stashed at current time. A lot more, I guess.

  2. William Smith
    Aug 4, 2019 at 8:56 pm

    “When when everybody’s getting into the market and even the shoeshine boy is giving stock tips, then it’s time to sell” — 1929 Joseph P. Kennedy …. history always repeats. So, the $64,000 question: can you give us a crash date ;-)

    • Unamused
      Aug 4, 2019 at 11:27 pm

      What’s it worth to you? The answer is reasonably priced really, and you could put 64k down. Unfortunately, given the state of things, it seems unlikely you could ever make the payments.

      I’m obviously not going to give it away, so it looks like this could be one those times when capitalism really, really sucks. Try the socialists.

      • hieronimo
        Aug 5, 2019 at 8:26 pm

        >>”I’m obviously not going to give it away, so it looks like this could be one those times when capitalism really, really sucks. Try the socialists.”

        This comment wins the Internet today!

        Thank you for the dry and sour cheer :)

    • RD Blakeslee
      Aug 5, 2019 at 7:22 am

      Find a shoeshine boy …

    • Mark
      Aug 5, 2019 at 7:33 am

      Boy last time I checked in here it was ” a permanently high plateau”.

      What happened ?

    • robt
      Aug 5, 2019 at 9:06 am

      When the cynical FDR appointed Kennedy to head the newly-created SEC in 1934, his private comment was ‘ … set a crook to catch a crook’.
      Kennedy was actually very effective in his role.

    • Aug 5, 2019 at 9:17 am

      Today its recent high school grads on their youtube channel telling you what stocks to buy and how the stock market can only go higher forever. This is worldwide not just American youtube channels. Their entire youtube channels are only about stocks. Great source just like asking your next-door neighbour about the current housing market.

    • sierra7
      Aug 5, 2019 at 12:20 pm

      William Smith:
      Ha-Ha! So are u (and most others) ready for another “shoe-shine”?…..couldn’t resist!!
      And, Wolf R.: One of your best!

      • NBay
        Aug 6, 2019 at 5:10 pm

        2nd that! Sounded a bit more ticked off than usual about the game.

  3. dan barrett
    Aug 4, 2019 at 9:00 pm

    You can still have F U money if you have been prudent, live within your means,debt free and humble….

    • van_down_by_river
      Aug 4, 2019 at 9:50 pm

      except now the FU fund has been debased and basically worthless. It sure aint gonna pay for a three year, 100 country, whirlwind tour of the world. The times they are a changing.

      • polecat
        Aug 5, 2019 at 10:42 am

        Travel is highly over-rated in polecat’s book ! It just adds to the environmental waste stream …

    • Unamused
      Aug 4, 2019 at 11:34 pm

      Humility doesn’t get you F U money. For that you need to cop some serious attitude. Given the possibility of inflation, you also need to keep the F U money in a seriously nondepreciating liquid asset.

      Those are already way overpriced. Sorry.

      • nicko2
        Aug 4, 2019 at 11:44 pm

        Numbered offshore bank accounts in USD still look pretty,

        • NBay
          Aug 6, 2019 at 1:54 pm

          Only if you have enough F U money that they won’t blow you off like, say, BAC, does to $50 checking/savings account level “members”.

  4. Jake Bodhi
    Aug 4, 2019 at 9:14 pm

    The everything bubble includes comic books. I can’t buy a single issue from the bronze and silver age because the prices are ridiculous. I am looking at some more recent quality books that aren’t inflated.

    • JOHN MOYER
      Aug 4, 2019 at 10:26 pm

      As a comic dealer I can vouch for that. Look at a chart if you can find one of the exponential rise in key books. Most under reported collectible story of the last 20 years.

    • Ididsa
      Aug 4, 2019 at 11:19 pm

      @JakeB

      I hear you. People don’t realize the collectibles markets are vastly overinflated along with everything else. Early key golden age comics are bringing in multiple 7 figures now. No joke.

      • B. Kold
        Aug 5, 2019 at 2:06 am

        I can’t believe how much my copy of FF 48 is worth now – 20x what I paid for it 10 years ago. And things like Dazzler 1, which was essentially worthless for 30 years, now going for $200. I bought a copy of Strange Tales 110 about 7 years ago, a 6.5, for about $400. Damn I should have ponied up and bought the 9.2 for $2000. And of course AF 15, which I never bought, was relatively cheap at 6 – now going for 10s of thousands. Oh well…

      • Erle
        Aug 5, 2019 at 8:03 am

        Yeah but, you can still get the Federal Reserve comic books for next to nothing. I have a box of them that I want to take to a comic book dealer just to see them roll their eyes out of the back of they haids.

      • polecat
        Aug 5, 2019 at 10:44 am

        To the MOON, Alice .. in wonderland !

  5. Sandy Toes
    Aug 4, 2019 at 9:18 pm

    Wolf sounded the bell about stock markets across the world and provided historical context.
    So, how do we put this information to good use?
    Bonds- what kind; Real estate- where & what type; Stock- which & from where; other- ?

    • Andy Katz
      Aug 4, 2019 at 9:38 pm

      If it’s to be a deflationary depression, best be in cash. That includes a shoebox full of the stuff. Remember Cyprus?

      If you have income yielding property, pay down the mortgage. For that matter, make sure you’re completely out of debt.

      Be wary of shortages. Keep stores of non-perishable food, etc. I’m trying so hard not to sound like a doomsayer, haha. Read Chris Martinsen’s site.

      • Em
        Aug 5, 2019 at 2:42 pm

        are you referring to Chris Martenson’s Crash Course?
        (spelling ?)

    • 2banana
      Aug 4, 2019 at 9:51 pm

      Bonds. Only the safest companies with great cash flow. Only the most fiscally responsible city/county/states for munis.

      Real Estate – Only if a real positive cash flow without any expectation of appreciation – and NOT in a city that is heading towards bankruptcy.

      Stocks – Boring, stable companies with little debt, great cash flow and a decent dividend.

      Gold.

      And investing in yourself. And being able to keep the job you have.

      • Old Codger
        Aug 5, 2019 at 10:57 am

        Not interested in any bit of paper that has “I promise” written on it!

        Only interested in the numbers “99.99% pure”.

    • polecat
      Aug 5, 2019 at 10:52 am

      Put together a sizeable food larder !

      What was that I read yesterday .. oh, yes .. corn may soon become, at least for this year, the new ‘unobtainium’.
      Be it Nature, or Man’s jit-tery procurement systems, our supply chains can break with little resistance.

      just sayin ..

      • Old Codger
        Aug 5, 2019 at 11:01 am

        Yep,

        “Hope for the best, but prepare for the worst”.

    • NBay
      Aug 6, 2019 at 11:53 am

      PE companies, in you have the dough. Carlyle would be good bet.

  6. Andy Katz
    Aug 4, 2019 at 9:32 pm

    Thanks Wolf, it brought back memories. I don’t think your average civilian has a clue as to what could/will happen, and is ill-prepared.

  7. Old Engineer
    Aug 4, 2019 at 9:35 pm

    Wolf, although you may get a lot of negative comments about this post, you present a well supported argument. And the “tells” that things are not going well have been visible for some time to those objective enough to see them. The increasing spread in hepatitis A caused primarily by an increase in the homeless, the increase in the number of people living in apartments because they can’t afford the deposit to have the electricity turned on. 9 months after the hurricane in north Florida 50% of all the apartments in Panama City (FL) are still uninhabitable. The trucking bust, the fact that Fed interest rate reductions are the only thing keeping the air in the stock market. Amazon was robbed of $30 million or more of goods over 6 years and never detected it. What does that tell you about the competence of the management of the company. And then, of course, the exponential growth in the prices of all assets. Exponential growth in anything is always a sign of trouble. And the everything bubble is not capital based but debt based. Debt out the wazoo, and debt growing exponentially. Clearly the end is getting closer.
    So, you did an excellent well supported blog I just think it is too late.

    • Morty Mc Mort
      Aug 5, 2019 at 9:57 am

      Amazon loses 30 Million of stolen goods… sounds like a big number until you consider it, as a percentage of total goods sold per year!!! Every Retailer has a percentage of loss. I suspect Amazon loses less than most store based retailers!!

      • NBay
        Aug 5, 2019 at 8:54 pm

        As Production Mgr at upscale widget mfg start-up (8-250 in under five years, Lasercraft) I was told to refer to that as “evaporation” to deter “everyone else is doing it attitude” among the industrial s-workers. Still was told a year later to physically count $10 wholesale, twice or more retail Parker Classic desk set pens as night shift supervisor.
        Heard some noise years ago about Amazon workers having to wait in search lines at end of shift, on own time. Forgot how that worked out with NLRB and courts.

        • NBay
          Aug 5, 2019 at 9:10 pm

          Also was told to quit using term s-workers as it “sent wrong message”. I didn’t, most everyone used it, even Project Engr. Think it originally came from someone in our then wise-ass Art Dept. Still have great “Industrial S-workers Union” t-shirt the art folks designed had made. 1977.

  8. van_down_by_river
    Aug 4, 2019 at 9:42 pm

    Given that central banks are willing to create an infinite sum of currency to purchase assets, including outright purchase of stocks, to prevent any correction and keep the party going, how can you believe there will ever be a correction in US large caps (a favorite of central banks). I just don’t see it happening. EM might crater but US large caps will inflate to infinity and beyond (in nominal currency terms)

    But you say: the Fed is not allowed to buy stocks. To that I say the Fed is not allowed, as part of its charter and mandate, to buy mortgages. The Fed will do whatever it wants whenever it wants.

    Powell will head off any correction with the help is his fellow super-bankers. Avengers Assemble!!!!!!!!!!!!!!!!!!!!

    • Ds
      Aug 4, 2019 at 10:02 pm

      Agreed – for good or bad our economy is addicted to cheap money and stocks are on the bleeding edge of this trend. The fed will do everything in its power to keep stocks up since, more than ever, they are the bellwether of our overall economic health. First it was Japan, now its Europe, and the US is soon to follow – negative rates on government debt and extremely low yields on even the most risky of securities. What other alternative do central banks have?

    • Aug 4, 2019 at 11:00 pm

      “Given that central banks are willing to create an infinite sum of currency to purchase assets, including outright purchase of stocks, to prevent any correction and keep the party going,…”

      That’s why I added all the stock markets of these countries where central banks have done “whatever it takes,” and those markets are still down from, respectively, 1989, 2000, and 2008. It just hasn’t worked, except in the US. So don’t rely on it continuing to work in the US.

      The Bank of Japan has been buying stocks for years, and look how it went.

      • sunny129
        Aug 5, 2019 at 9:18 pm

        I think there is a distinct change in the investor sentiment looking at the perfect storm erupting all of sudden in the last 24 hrs.

        Been in the Mkt since ’82. There is NOTHING seriously value left there in equities! This is global storm affecting every one. I am sheltered a small fraction in extended duration treasuries, quality corp bonds, gold and gold miners. I cancelled all my pending buys on limit, this evening. Thank goodness I always kept 5-10% position against the Mkt in inversion ETFs and Bear MFunds for a quite a while. I am 60-65% cash (since I am retired). Do nibble in options in a small select portfolio. Got a big bang today but went too early to the other side, late afternoon. Need to by some hedges in the pre-mkt hours. Will be expensive but worth the hedge. Most difficult environment even for long time traders like me!

        But thank goodness, the most SURREAL bull mkt of my life time is finally heading towards ‘reversion’ to the mean! Hurrah!

    • MC01
      Aug 5, 2019 at 5:33 am

      The FTSE-MIB (Italian stock exchange) is over 40% companies owned by the Italian government one way of the other: these are not merely companies that “cannot go burst” but also companies with government-sanctioned monopolies like SNAM (natural gas pipelines) which effectively live in their own reality. These companies have also been at the receiving end of the ECB largesse in form of the corporate asset purchase program, not to mention the general stock market euphoria which benefits even veritable zombies like Delivery Hero, whose superpower is apparently to lose money at an alarming pace (€190 million in FY2018, up from just €104 million in 2017; it has never been remotely profitable since the IPO) yet be somehow worth €42.5/share at last check, and that’s after losing a whooping 4.4% since opening today.
      In spite of all this the FTSE-MIB has never again come even close to the glory days of 2007, and that’s not for lack of trying.

      US equities, and megacaps in particular, benefit from being so easy to access from all over the world. Whether you are in Brazil, India or South Africa Apple and Microsoft are just a few mouse clicks away, and often all you need is a credit card.
      Have you ever tried to buy Hong Kong stocks from France or Japanese stocks from Italy? No? Consider yourself lucky. Let’s just say you should read the fine print before gambling away your money with those trading platforms “authorized by the Cyprus Securities and Exchange Commission”. ;-)

    • Aug 5, 2019 at 9:23 am

      Just like Japan when they own everything then your country is in a never ending depression since there’s no one for them to ever sell to. Zero buyers at any price.

      • Juanita de Talmas
        Aug 9, 2019 at 1:46 pm

        Have you ever been to Japan? They live pretty well for being in a “never-ending depression”.

    • Thor's Hammer
      Aug 5, 2019 at 10:16 am

      Wolf
      Excellent analysis of the Everything bubble on the gaming table of wealth.

      Nature doesn’t care that the .001% “needs” a 400′ yacht to replace the 300′ one, or a private island where the norms of civilized behavior are suspended by the “need” for pedophilia. Nature doesn’t care if the flood of fuck you money comes to a halt or is merely denied to the 1% and diverted the few thousand at the very top of the pyramid who really matter.

      Meanwhile in the real world:

      A area of tioga and permafrost in Siberia the size of many small countries is aflame as we speak, covering the Arctic with black soot, accelerating the historically high rate of snow melt.

      The surface of the Greenland Icecap is flooded by rivers of meltwater never before seen in human history.

      The displacement of the jet stream by unprecedented Arctic heating has drowned the American corn belt with flooding, reducing crop yields by half and foreshadowing starvation in places like Mexico where the traditional crops have been displaced by imports.

      The shallow seas off the coast of Siberia overlays methane hydrate deposits so vast that if released in a short time frame they could double the green house effect in the atmosphere and tip the planet over into an uninhabitable state.

      The pace of Arctic warming has advanced to the point where an ice free Northern ocean is not merely probable but highly likely in the near future.

      • weinerdog43
        Aug 5, 2019 at 3:28 pm

        Oh pshaw!…

        Jim Inhofe brought a snowball to the floor of the Senate which proved, proved I tell you, that there is no such thing as Global Warming. Plus, it was really cold for a couple of days this winter. You pointdexters always using science and stuff. Why, the next thing you’ll be telling me that the Earth is round or something. Pshaw and balderdash I say!

        • NBay
          Aug 6, 2019 at 2:06 pm

          I’m almost certain I walked a road in south Norman, OK named Inhofe, very nice homes, mostly OU profs then I imagine, on “hill” part, anyway, and looked like it had been there a long time, as it was fairly long. Old big oil money? Were still grasshoppers not too far away, some still pumping, in 80-90s.

      • Aug 5, 2019 at 6:43 pm

        + one zillion. This is the real news. Reality will hit hard at some point, and almost everybody will be clueless.

        I gave a jump to a woman last week. She didn’t know where her hood latch was, what the battery looked like, anything. People are so, so helpless. I can’t imagine these sorts of people faring well, and they are the vast majority.

        • NBay
          Aug 6, 2019 at 1:35 pm

          Not just women, most men, too. Few car tools in the garage anymore, now “man caves” with E- gadgets are the male bonding hangout, or alone talking with Alexa. Increasingly most all are working in some obscure “dept” in the belly of some corporate or PE monster outfit, and very expert at that job, or are servicing the masters and faux-masters needs, but not much else.

          The car mfg’ers insist on making driving as comfortable as relaxing in your living room, (it’s what “we want”) and just as “safe”, so you won’t have to give any thought at all to the massive amount of kinetic energy you are still responsible for. And (I guess) we still kill 40-50K a year or so on the roads? and maim many more.

          We may yet be the first species that actually “decided” to become extinct, and whether that’s “pondered” by future life forms or not, nobody knows, but with maybe another 3-4 B to go, (we are only midway in all this Earthly life stuff), my bet is on the insects. They also have the same appx 3B year multi and eukaryotic cell head start we have, which is a VERY VERY BIG one, and just need to evolve some more specialized organs, shapes, etc, for the new conditions, if needed, which they have been doing since multi cell began. Also can’t forget some sea dwellers chances.

      • NBay
        Aug 6, 2019 at 3:22 pm

        If it makes ya feel any better, as I’m sure you know, followers of Thor descendants eventually trashed descendants of Jupiter and Zeus followers and whatever else was around, both in battle and in brains, during European history. Proud to have Dupryten’s (SP?) Syndrome pretty bad, although not as bad as brother and grandmother, not that that matters at all either, but good for chiding long time pal who claims direct Viking heritage. He even bought set of horns for GARAGE beer party male bonding rituals.
        Anyway, as I more or less posted, you are sadly 100% correct, as was Nietzsche and (thx to amused) Bernays.

  9. David Hall
    Aug 4, 2019 at 9:52 pm

    The Indian BSE Sensex measured in dollars is near an all time high.

    The S&P 500 reached an all time high recently.

    The Canadian TSX measured in dollars reached an all time high in 2019.

    I suppose the central banks have supported real estate investors as there have been rumors of some spectacular housing bubbles in some locations.

    • David Hall
      Aug 4, 2019 at 9:59 pm

      The Canadian TSX in US dollars may have peaked years ago, but you did not add in dividends paid out for total return.

      • Aug 5, 2019 at 9:25 am

        He also forgot the inflation rate the last 10 to 11 years. The TSX is still negative the last decade.

  10. 2banana
    Aug 4, 2019 at 9:54 pm

    I posted this awhile ago. Nothing much has changed.

    ####

    When the multitudes of the massive bubbles burst – the pain and sorrow will be Biblical for the common man and family.

    I have come up with a partial solution to what is coming.

    1. Take care of your health. Exercise. Eat healthy.

    2. Stay out of debt. Live beneath your means.

    3. Keep learning. Learn new skills. Learn how to fix and build things yourself. Invest in yourself.

    4. Realize that government (at all levels) will lie to you. Government will not take care of you. Government will take everything you have if it means they get to stay in power one day longer.

    5. Save. Buy a little gold and silver. Bitcoin if you must. But realize that this is just a little insurance and not much else.

    6. Stay far away from bubbles. Hard to do when friends and relatives are getting “rich” and think you the fool

    7. Relationships are worth far more than “stuff.” Families are worth way more than “stuff.” Good friends are worth more than stuff.

    8. Enjoy life. It doesn’t take lots of money.

    9. Learn how to shoot safely and have at least one gun. Even if you think you will never touch it again.

    10. Be part of “something” bigger than yourself such as a Church or a volunteer organization that actually helps people. All the issues we see today are the same issues seen over the last 2000 years.

    • JOHN MOYER
      Aug 4, 2019 at 10:27 pm

      Great stuff.

    • Lu
      Aug 4, 2019 at 10:49 pm

      Very good advice.

    • JZ
      Aug 4, 2019 at 11:34 pm

      I recommend you to rethink. I take on debt but with cash can cover 50% of the debt. When FED expand balance sheet, I expand my balance sheet. When FED is showering money and you stay out of it, your relative position comparing to your everyday competitors become bad. When they get laid, you don’t. I get what you are saying in “absolute” sense but you have to understand that you are playing a game against other humans and your move has to take into account how they move.
      I know we are in dangerous times, but bunker down may NOT be the best strategy. For myself, I don’t bet on what will happen. So I hedge. Inflation happens, my debt will be inflated away. Deflation happens, Inhave cash to buy stuff.

      • 2banana
        Aug 5, 2019 at 6:37 am

        I see people play the “debt game” all the time.

        Most lose at it. Eventually.

        As you allude to in your post – it takes discipline, knowledge and work.

      • Gandalf
        Aug 5, 2019 at 7:54 pm

        JZ,

        This has become my strategy too. Manageable debt + careful investing + cash

        As for #9, whatever the your political beliefs are on that one, the truth is that throughout the 300,000 years of the existence of homo sapiens, unilateral disarmament has never worked as a means for self-preservation. It only works if you want to become a martyr or victim.

    • nicko2
      Aug 4, 2019 at 11:50 pm

      #5, #9 …. Geez, we can tell you’re a midwestern/southrern American. Most people live in developed countries (and/or one of the coasts) with functioning social systems.

      • alex in San Jose AKA Digital Detroit
        Aug 5, 2019 at 3:21 am

        nicko2 – I’m on one of the coasts and see zero problems with #’s 5 and 9.

      • Tim
        Aug 5, 2019 at 5:55 am

        I was enjoying this conversation, don’t be arrogant.

      • GirlInOC
        Aug 5, 2019 at 11:40 am

        Ha, #9 was the tell. No one I know advocates for preparing for shootouts à la the Wild West. Certainly, in light of recent events, everyone seems to be shirking from that.

        • Tim
          Aug 5, 2019 at 12:07 pm

          Who’s advocating for shootouts?

          I live in a wealthy neighborhood and the neighbors awoke at 2am this weekend to somebody breaking into their house. The criminal was actually in the house!

          I have two young girls and a wife. No shootouts for me. I’ll be damned if someone gets into my house and puts my family in danger.

          #9 is covered where I am. Maybe you coastal types can sweat talk intruders to leave your house and person alone in the middle of the night. Good luck with that. You can look down at us Midwesterners and Southerners all you want, but we are not naive or victims of ill conceived ideals.

    • Paulo
      Aug 5, 2019 at 5:41 am

      Excellent advice. I have one difference to add. Instead of buying gold and silver I have bought tools, stores, and materials. It all goes with land and community.

      The big thing is no debt and having some readies, (as the Brits might say). It all starts with controlling debt, imho.

      What did Alfred E Newman always say? “What, me worry”?

      Anyway, back to bed after a hot chocolate and stretch. I just checked the futures and see all is down, Dow almost 300 with 3 hours until opening. China devalued and stopped buying ALL US agriculture products. hmmmmm.

      This could be a very interesting Monday. They’ll call it Orange Monday. It might be the new Halloween.

      • Paulo
        Aug 5, 2019 at 5:45 am

        In ten minutes another 30 pts. Summer waterslide park territory.

        • alex in San Jose AKA Digital Detroit
          Aug 5, 2019 at 2:15 pm

          Hahaha! The economy’s going Orange! You’re a genius, Paulo!

    • Morty Mc Mort
      Aug 5, 2019 at 10:21 am

      I would add, that you should get Plenty of Fiber!! – When the going gets tough… Well… the TOUGH get GOING!!!

      • alex in San Jose AKA Digital Detroit
        Aug 5, 2019 at 2:17 pm

        Interestingly, a follower of the low-carb way of eating myself, but i notice that a fair range of different diets work, and the commonality among them is, more fiber and probably a bit of an increase in physical activity.

    • polecat
      Aug 5, 2019 at 10:56 am

      Hear Here !

    • ft
      Aug 5, 2019 at 11:00 am

      2banana, you have provided a clear and useful recipie that answers the often-asked question of “…what do I do?” Kudos. Hope you don’t mind if I share it with some friends.

    • Em
      Aug 5, 2019 at 11:04 am

      I like your list of how to keep in focus what matters most!

    • NBay
      Aug 6, 2019 at 4:51 pm

      In the spirit of “Nothing goes to heck in straight line”, and all the postings/strategies above and below, last nite watched a great PBS program on Mars. The ESA just sent up a probe that will help to further zero in on life possibly evolving there in better Martian planetary times.

      I have been in the actuarial “death zone” (and anecdotally have seen a lot of friends go at 51 on up) for a while now (a ref to above 26K Ft or so, as us old guys at coffee are fascinated by Everest expedition documentaries; couldn’t make it today as back is very bad, mostly my fault for choices made).
      So if they do prove life can start so easily (e.g. twice within just this solar system!) I would personally like it if it is proven before I have to give whatever atoms I have at that time back to the Earth. Have already seen enough Hubble pictures, and it’s replacement will be even better.
      We are all part of something really really big, and stardust ourselves, and to me that is all really really cool.

      • NBay
        Aug 6, 2019 at 6:34 pm

        PS: Physics guys chasing the really small keep finding more and more “pieces” so that world may also be really really big! Quite a paradox for us sharing same size.

  11. mharris240
    Aug 4, 2019 at 10:03 pm

    “These kinds of conversations are popping up everywhere; it’s just a casual conversation among geniuses.”

    Reminds me of the Dot Com bubble when taxi drivers, barbers , and other “geniuses”, were offering stock tips on which tech stocks to buy. That signaled the near top of the market, and after listening to you Wolf, I’m thinking that we’re close to a top again.

    From my viewpoint, the ONLY asset class that isn’t overvalued is the precious metals market… where gold and silver have been ignored for the past six years, but are now starting to rise from the ashes again.

    I’ll stick with my precious metals holdings and some gold etfs.

    • Memento mori
      Aug 5, 2019 at 12:41 am

      I dont think gold has been undervalued, look at the price chart, it looks inflated just like other assets.

    • Aug 5, 2019 at 10:12 am

      And uranium.

  12. IdahoPotato
    Aug 4, 2019 at 10:14 pm

    Wall Street is always pushing the “trillions of dollars on the sidelines waiting to jump in” narrative. it is either disingenuous, or a fallacy of composition.

    They refuse to admit that for every $1 worth of stock that will be bought, there will be $1 that will be sold. The amount of “money on the sidelines” only influences what kinds of assets gain precedence over others – stocks vs bonds vs hard assets.

    • NBay
      Aug 6, 2019 at 7:07 pm

      Yeah. GS Univ PhD grad Cramer jerk said, “Mkt was like a fashion show, things goin in and out of vogue”. He parleyed GS PhD into what he said he always wanted to be, a sportscaster.

  13. Frugal By the Bay
    Aug 4, 2019 at 10:44 pm

    We want to buy a house in two years hopefully after a recession hits. Sadly, we live in a grotesquely expensive part of the Bay area where an average 1500 sq ft house in a good school 1.6 million plus.

    We’ve started investing in index funds in 2011 and have made a lot of money in the last 8 years. But we just took out all our gains about 500k (only leaving the original principal) from the stock market because we feel like everything is overvalued right now. My husband who works for a very large, truly global multinational is predicting a recession next year. I have a decade theory that crashes are most likely happen at the end of a decades

    There was so much propaganda about how the market has to go up after a rate cut. I knew someone in Wall Street was profit taking, so we made a point to pull it out before then.

    We’ll see if this was a good decision and the 2.8% CD will beat the market over the next two years. Yes, we are losing some of our principal to inflation. Maybe we’ll get a discount on the house. One can only hope.

    • nicko2
      Aug 4, 2019 at 11:54 pm

      Housing prices in prime areas are just as likely to rise if there is a global crisis.

      • Frugal By the Bay
        Aug 5, 2019 at 1:54 am

        Go up, in a recession ha. Houses in the Bay are no where close to rental parity. At 2xs rental parity, housing in the Bay Area will get crashed even in a minor recession. Couples are mortgaged to the hilt and will fall into the two-income trap.

        Our neighbors just bought a 1.5 million dollars in a shitty school district and told us they cannot afford private school (they don’t have an extra $1500 a month – shocking). Both work full time and if one loses their job, it’s going to be tough times.

        You can bank on no appreciation and declining prices and no rental parity. You’d be stupid to invest here. Only so many people have 1.6 million to buy a middle class home. Where will these buyers come from in a recession?

        • polecat
          Aug 5, 2019 at 10:58 am

          China ?? Oh, wait …

      • Rinaldo
        Aug 5, 2019 at 4:05 am

        That is really interesting.
        Why would they go up?

        • sc7
          Aug 5, 2019 at 5:41 am

          My guess is he is one of a handful of posters invested heavily in real estate that he can’t objectively look at the possibility that real estate won’t be forever “to the moon” on a linear path.

          Ive noticed this on other finance related sites, a lot of real estate investors carpet bomb threads with comments about how real estate will “only go up”, and if you don’t buy into their “buy now or be priced out forever” mantra, then they give you the “money on the sidelines”, “won’t get a mortgage in a recession”.

          Tell that to me and about 30 people I know who all bought in the last recession just fine and made a killing. No problem getting a mortgage if you had a job.

        • Patience
          Aug 5, 2019 at 10:47 am

          End of a fiat currency, they have to inflate debts away imo.

          Watch all of mike Maloney videos about hidden secrets of money on YouTube.

          First a possible deflation then serious inflation. But who knows when things are happening due to media reports being garbage, except wolf of course.

  14. Just Some Random Guy
    Aug 4, 2019 at 11:22 pm

    I must live in my own bubble., All this talk of collapsing economies flies against everything I see in my daily life. Today I spent the day on the lake on my boat. The lake was PACKED full of people on their boats burning $3.85 gas like there was no tomorrow. Days I like this I’m glad I paid $3K for a slip and didn’t have to deal with any boat launch craziness.

    And then afterwards, we went out to eat at a restaurant on the lake. 45 minute wait for a table to drop $100+ on dinner for the family. Surrounded by a ton of other families.

    That’s my reality every weekend. I’m out enjoying life, spending money surrounded by other people doing the same. There is a palpable sense of prosperity out there.

    Then I check in on blogs like this and you’d think it’s 1933.

    It’s an interesting phenomenon.

    • Aug 4, 2019 at 11:39 pm

      People spending their F-U money while they still have it?

    • nicko2
      Aug 5, 2019 at 12:02 am

      Sounds positively middle class. Price out a marina berth and champagne party and get back to us.

    • xear
      Aug 5, 2019 at 1:18 am

      Did you listen to the report? People partying away is exactly what Wolf said. We are in the bubble excess phase.

      Let me tell you a story about the ant and the grasshopper….

      • sierra7
        Aug 5, 2019 at 12:36 pm

        Xear:
        Or, the story of, “The Scorpion and the Frog”! LOL!

    • MD
      Aug 5, 2019 at 2:45 am

      Yep decadent partying just like it’s 1927, when it was declared, just like today, that everything was just fine despite the rampant and reckless speculation.

      I think you’ve missed to whole point of the piece!

    • alex in San Jose AKA Digital Detroit
      Aug 5, 2019 at 3:29 am

      just Some Random Guy – Are you by any chance in the Midwest? Those boat engines are probably under 10HP and sip gas. $100 dinner … if it’s for a standard family with Mother, Father, and 2.4 children, well, rounding up on the children to 3, that’s $20 per head. That’s pretty cheap. OK let’s say you’re on the 1-child bandwagon, that’s still just a bit over $30 a head which is not too bad.

      Let’s say the area you’re in manufactures things used in building houses. Because we’re in a housing bubble, your area is going to be doing great. Save that emergency money while you can!

      For the 90% in most of the country, it’s pretty 1933’ish. I just found out today that my local jazz club is no longer open on Sunday nights. They used to have an open jam session with a lot of really good musicians. I personally saw, I’m pretty sure, a singing career get launched there. Sunday nights were great. And now it’s gone.

      My downtown is emptying out. We’ve lost a McDonald’s, a Walgreens, a Ross, a Safeway, etc yadda yadda all just emptying out.

    • Rinaldo
      Aug 5, 2019 at 4:17 am

      “People enjoying life, spending money surrounded by other people doing the same.”

      That is exactly what they did in Holland just before the Tulip bubble blew, in 1927 in the US, UK, Germany etc., in 1988 in Japan, in 1999 in the US, in 2007 in the entire Western world. Did I forget something? Yes, John Law and the South Sea bubble.
      The most important difference being in 2019 it is a world wide debt bubble, blown up by corporate debt, Gov debt and consumer debt.

    • Heff
      Aug 5, 2019 at 5:14 am

      “There is a palpable sense of prosperity out there.”

      Interesting…

      And if you would have traveled to Miami in late 2006 you would have seen nothing but dozens and dozens of construction cranes dotting the sky-line, erecting new condos. Construction going non stop. A real “sense of prosperity”. 6 months later? All stopped. Crap happens – sometimes very fast.

      Historically, the debt in this country MUST double every 9-10 years for our gdp to remain consistent year over year. That, my friend, is impossible.

    • sc7
      Aug 5, 2019 at 5:43 am

      I remember this in 2006 as well. Waits at every restaurant. By late 2008, you could go anywhere in a Fri/Sat and there was never a wait.

      The signs were readily apparent that things were deteriorating by mid-06, but the average Joe din’t catch on until two years later.

    • Paulo Zoio
      Aug 5, 2019 at 6:06 am

      Oh I feel so rich: my zillion dollar valuated unicorn went to an IPO, my stock portfolio is at all-time highs, my condo hit all-time valuations. I’m such a genious that I think I deserve to eat lobster 3 times a day.
      Then I woke up from la la land and realise that I was late to work.

    • MCH
      Aug 5, 2019 at 3:17 pm

      You know, this was exactly how people felt in 1928 and most of 1929. The train that hits you is usually the one you don’t see coming. Sometimes, even if you see it coming, you still can’t get out of the way fast enough.

    • Aug 5, 2019 at 6:48 pm

      Yes, because it’s all going on their credit cards, to be paid with borrowed money or advances or stocks they’re going to sell.

      We’ve all seen this before.

    • Johnny Witt
      Aug 7, 2019 at 2:02 pm

      No Dude, it’s not like 1933: It’s like 1929.
      All those things you describe happen at the peak of prosperity in the debt cycle.

  15. Jason
    Aug 5, 2019 at 12:10 am

    Same comments were made in early-mid 1929!

  16. bitterpill
    Aug 5, 2019 at 12:14 am

    “What made the market so vulnerable to panic? It wasn’t so much a matter of irrational exuberance … as it was a matter of irrational complacency.”

    Paul Krugman MARCH 2, 2007

  17. Unamused
    Aug 5, 2019 at 12:22 am

    Is the Everything Bubble Ripe Yet?

    Overripe. It’s starting to smell bad.

    The financiers have come up with some weird policies to keep it all afloat and keep the profits coming. So it seems possible the financiers could keep The Bubble going until it goes utterly rotten, at which point the whole thing just crumbles.

    At this point they can simply use the government to bail out themselves and their buddies at the expense of everybody else. Life is good.

    • Aug 5, 2019 at 11:39 am

      BYND is holding up well. Nothing overripe about that.

      • Unamused
        Aug 5, 2019 at 12:10 pm

        An overpriced falafel, aka Purina Vegan Chow.

        Down 1.61%, so not immune to contamination.

        • IdahoPotato
          Aug 5, 2019 at 5:24 pm

          Please don’t insult falafels. Beyond Meat is just pink slime.

      • Unamused
        Aug 5, 2019 at 1:11 pm

        I’m sorry Mr. Bierce. That was unkind.

        I don’t speculate in stock markets. I don’t do rigged casinos. I invest in productive assets and sure things. I have little use for currency, except as a convenience for others, and like gold for its corrosion resistance and little else. And I put no faith in Princes.

        • Aug 5, 2019 at 1:28 pm

          Unamused,

          I think Ambrose Bierce was kidding. BYND is down 26% over the past few days.

        • Unamused
          Aug 5, 2019 at 1:48 pm

          BYND is down 26% over the past few days.

          As it should be. Fake meat is a waste of good vegetables and assorted other ingredients better reserved for worthy purposes, a testament to the ability of psychoanalytic marketing techniques to exploit the weak-minded and gullible. You’d think people could figure out their best interests lay in dealing with the real world.

          Dang, see what happens when you get me started?

          http://www.wakingtimes.com/2015/08/18/everything-is-fake-top-40-pieces-of-fakery-in-our-world/

  18. Prairies
    Aug 5, 2019 at 1:04 am

    I could use a bicycle back security

  19. medial axis
    Aug 5, 2019 at 1:30 am

    Hmm. Might swap some more of my fiat for bitcoin. I was pondering whether to anyway, after reading about the Bank of China’s somewhat supportive article on it. Wolf’s mention of Bicycle Back Securities[1] has tipped me in that direction.

    [1] Almost as insane as Bananas on the Blockchain.

    • Hg
      Aug 5, 2019 at 1:18 pm

      Notice the BTC/GLD investor does not require a Fed backstop in order to HODL the investment; they are convinced of its soundness through contrary signal noise. Whether or Not they delude themselves, it is instructive to contrast this with a Stock Investor who literally “can’t believe it” when their investment collapses. They exclaim somebody should “do something!!”. The Fed of course obliges. Rinse and Repeat. Each time, The Goldbug and the Hodler nod and return to their business; while, the F.U.Man grows ever more cocky and panic stricken by turns.

      • medial axis
        Aug 5, 2019 at 2:50 pm

        To me gold is the past, bitcoin the future. I’m really not that bothered about its price. What’s far far more exciting is the innovation going on it the crypto space[1] and the ethos within it. It’s not about profit, it’s about people. It’s about a better and fairer system. As I keep saying, it’s about decetralisation. This is happening outside crypto too. People are moving away from a throw away economy to a recycle and, better still, make to last. An ever growing GDP isn’t possible in such an economy, it’s a bad sign.

        [1] One (small) instance is the Lightning Network (LN), which enables unlimited (small as you like) instantaneous (cheap) peer to peer payments. Anyone can build on top if the LN, no need to ask, just do it. Just like those rolling out the LN didn’t ask bitcoin for permission, they’re just doing it. It is history in the making. Don’t miss it.

  20. Rinaldo
    Aug 5, 2019 at 3:20 am

    You nailed it, also felt like a genius in the beginning of 2008, after I had doubled my CFD account in 6month.

  21. John
    Aug 5, 2019 at 5:29 am

    Thank you Wolf. Gonna re-invest because of Brexit, I guess. Saw this coming on the tape, and what you have been writing. No where else to go, for awhile. This might tone down a lot of noise or increase it. No pain no gain. Some companies are powerhouses.

  22. Tim
    Aug 5, 2019 at 6:27 am

    It all cyclical.

    A downswing is due.

    Be prepared.

  23. Pete
    Aug 5, 2019 at 6:40 am

    As a UK resident, I’m wondering if it’s time to sell my flat (apartment) and then rent for a while. Take the profit and buy some gold. Maybe that’ll hedge my modest public pension. Then again I’m on a variable mortgage. Perhaps deflation will end up paying most of my mortgage.

    • Anon1970
      Aug 5, 2019 at 12:48 pm

      Since the demise of the gold standard in 1914, the British pound has performed a lot worse than the US$. Stay in your flat and be glad you have one.

    • Nicko2
      Aug 5, 2019 at 1:37 pm

      Too late to sell, rent it out for a few years instead to wait for Pound to stabilize.

  24. Shawn
    Aug 5, 2019 at 7:30 am

    Negative interest rates, jerking the dog off to feed the cat.

  25. RD Blakeslee
    Aug 5, 2019 at 7:41 am

    Wolf, I wish you could statistically quantify the financial performance of that class of people who have not “invested” in the ordinary meaning of that term, but have not been poor – in other words, successful folks, not necessarily “rich” but who have been financially stable through the rise and fall of the bubbles.

    We see and hear plenty about the big-shot investor’s performances – The George Soros’s, the Warren Buffet’s, the Bernie Madoff’s.

  26. vinyl1
    Aug 5, 2019 at 7:42 am

    If you have a portfolio of conservative stocks, you will probably be OK. They may go down 30-40%, but they will continue to pay dividends. Utilities, banks, and oil companies aren’t going anywhere, although they are certainly overpriced right now.

    • Johnny Witt
      Aug 7, 2019 at 2:13 pm

      vinyl1, yeah unless they go down 90% and stop paying those dividends.
      I believe in div paying equities, but everything has its day. You have to be diversified in negative/ non corelated assets, or be very astute with the tea leaves (which usually means pretty much a full time job in itself).

  27. Gorbachev
    Aug 5, 2019 at 7:42 am

    Such a good podcast today.It got me confused

    about my investments.Will cash be deflated-will

    stocks and bonds go to heck -will robots do all the

    work leaving me no tenants to rent to. Yikes.

    I need a drink,stirred not shaken.

  28. Stephen
    Aug 5, 2019 at 7:56 am

    So, the real question is for all of us – do we feel lucky? Reminds me of the old Clint Eastwood movie, ‘well punk, do you feel lucky.’ It’s pretty sad that the investing class has to keep its ears to the ground do hear a nuance in a Central Bank’s announcement as to whether new crack (lower rates and QE) are going to be delivered. You may disagree with me, but if you are an investor waiting for a central bank to bring more stimulus (in whatever way) to keep the party going another week, month, year, then you have been addicted too long and should retreat into real tangible assets. I know it seems like the party will not end, but it just does. So, do you feel lucky today?

  29. Iamafan
    Aug 5, 2019 at 8:00 am

    Anyone reading this blog cannot say they were/are surprised! You have had lots of warnings. Now, enjoy the ride. Numbers are ignored for a while.

    • polecat
      Aug 5, 2019 at 11:14 am

      How can one enjoy the ride, when one is shackled to the highest slide .. seeing as how – from that top-most rise .. their headed straight-down, to their demise.

      • Iamafan
        Aug 5, 2019 at 11:30 am

        Well I didn’t drink the Kool Aid. I don’t think Buffett did either. It’s ok I’ll wait.
        That was the ongoing message here. Stay liquid.

  30. breamrod
    Aug 5, 2019 at 8:06 am

    the fed will just keep printing until all confidence is lost in the currency. The U.S. market might end up going to 40,000 but what will the money buy? Gold and land will be the last men standing

  31. Michael Engel
    Aug 5, 2019 at 8:46 am

    China is a “Yang” market.
    A baby clog losing its grip can cause a financial stroke.
    Aug 24 2015 was PBOC mini stroke.
    Aug 24 1814 GB forces entered DC and burnt the white house.
    Beware of Aug & Sep. They are not friendly to stocks investors.
    China suspended US Ag orders, but not BA orders. China didn’t confiscated Buick and US doesn’t incite HK.
    China does not artificially weakened RMB.
    They let it go.
    Shanghai Stock Exchange (SSEC) bear market rally have ended.
    In a stepping stones to a much lower target.
    Down the road, China will be force to depart their most beloved asset : Gold !
    “US Forever” sparkling on communist finger, will get a smaller finger size.
    Trump changed the global architecture forever.

  32. Setarcos
    Aug 5, 2019 at 9:05 am

    F You kinda money can quickly become I F’d Up my money. Dogs look up to us. Cats look down on us. Pigs see us as equals.

    • Setarcos
      Aug 5, 2019 at 9:14 am

      – Churchill

    • DawnsEarlyLight
      Aug 5, 2019 at 10:04 am

      “Ready are you? What know you of ready?”

      -Yoda

    • NBay
      Aug 6, 2019 at 8:15 pm

      And we are. “Long Pig” is what south seas cannibals called age of exploration European sailors when caught. We taste the same, too. Both are smart social omnivores. (diff is female rule)
      Pig embryo used in Embyology class, at least in pre DNA manipulation days….late 70’s.

  33. Winston
    Aug 5, 2019 at 9:09 am

    But… but… this time is different…

  34. SocalJim
    Aug 5, 2019 at 9:57 am

    Here is an interesting article from marketwatch … claim is the superrich are INCREASING exposure to real estate … the title is “The superrich are selling stocks, buying properties and keeping cash ready” … you can google that to read the article.

    • bitterpill
      Aug 5, 2019 at 11:14 am

      Perhaps the “super rich” are supporting higher valuations in the housing mkt, but what happens when a recession does unfold and fewer people have big bucks to rent their places, while their home values decline? The super rich are building their own doom machine (fine with me)!

      • SocalJim
        Aug 5, 2019 at 11:18 am

        I think the superrich see an inflationary outcome that may not be the most likely outcome, but has enough probability associated with it that they are willing to allocate some amount of capital to it.

        • Jeff T
          Aug 5, 2019 at 3:33 pm

          I think the super rich are allocating plenty of money for political donations to whom they need to, to insure that they can get their crimes made legal and continue to feed off the public and goverment.

        • NBay
          Aug 6, 2019 at 8:19 pm

          Good one Jeff!

      • IdahoPotato
        Aug 5, 2019 at 5:27 pm

        Vancouver mansions with swimming pools are being rented out to college students for dirt cheap. Those rich slumlords must be thrilled.

        https://www.businessinsider.com/college-kids-renting-mansions-vancouver-housing-market-2019-4

        • NBay
          Aug 6, 2019 at 8:26 pm

          Still surprised some smart architect/contractor teams haven’t gotten into making duplexes out of McMansions. NIMBY for now, but I still bet they are talking the idea.

    • Aug 5, 2019 at 12:55 pm

      When you think RE, you think Detroit, when they think RE they think Monte Carlo. Or if they are seriously super rich preppers, NZ.

      • d
        Aug 6, 2019 at 6:38 am

        “Or if they are seriously super rich preppers, NZ.”

        Those peopel dont realise something .

        They on the menu when the SHTF and they come to NZ.

        • NBay
          Aug 6, 2019 at 8:33 pm

          YEP! Won’t take locals long to see where lights are still on, if their own security guys don’t get them first.

  35. Wendy
    Aug 5, 2019 at 10:07 am

    The thing that I struggle with is that this site would have you believe that you need to maintain a very defensive position, yet people like Buffett don’t seem to sell anything, but use cash from dividends to buy more when everyone else is desperately selling. Although Buffett has not kept up with the S&P, he was similarly criticized for not keeping up with the dot com surge in 1999. Value investing was declared dead in 1999, and value ETFs have been lagging the markets again over the last several years. Although I applaud the thoughtful analysis on this site, it suggests that market timing is a valid option, when multiple academic studies, and my own personal experience, would suggest that it doesn’t work consistently.
    This bull market has certainly been the most hated, and despite the run up, I see plenty of skepticism, and no mass euphoria. Based on this, I think it will continue to move up, making it even more irrational, until the last skeptic rolls over. To get out now could lead to major FOMO, causing the hapless investor to re-enter the market at the exact wrong time in the future.
    All anyone can do is stay widely diversified, rebalance as needed, and quit trying to time the market.

    • Nicko2
      Aug 5, 2019 at 11:31 am

      Buffet is an insiders’s insider. He is the market.
      The smart money already sold months ago.

      • NBay
        Aug 6, 2019 at 8:37 pm

        “First billion is the hardest” -Buffet

  36. ZeroBrain
    Aug 5, 2019 at 10:17 am

    If everything is overvalued, isn’t that just a different way of saying the currency is devalued? And don’t we only define it as a bubble if prices revert? Hence we don’t know whether it’s a bubble or just currency devaluation – yet – and the Fed will likely play a big role in deciding the outcome.

    • Unamused
      Aug 5, 2019 at 10:33 am

      the Fed will likely play a big role in deciding the outcome.

      As seen in “Toxic Avengers: Endgame”. Already got a script.

    • Kenny Logouts
      Aug 5, 2019 at 11:02 am

      That’s it, just no one has woken up to it yet because it’s seemingly counter intuitive because salaries mostly haven’t gone up at the same pace.

      It’s all relative.

      Houses and land and shares etc have stood still. Everyone had seen their salaries and debts devalued.

      Debts being devalued is the mechanism that has been desired, while businesses can also borrow more money and pay their employees less.

  37. Mark Volman III
    Aug 5, 2019 at 10:54 am

    Egon von Greyerz has a similar fable of “Alfred the infallible stock market investor” who will lose 98% of his money.

    “…the stock market is…remarkable casino slot machine with a continuous flow of guaranteed payouts. No skill is required, and relatively little money. And the wonderful thing is that you don’t even need to be lucky since the machine just continues to spew out money without the need for either a strategy or dexterity…..”

  38. tommy runner
    Aug 5, 2019 at 11:06 am

    this time is different,
    we aren’t.

    • cesqy
      Aug 5, 2019 at 1:00 pm

      Confused Kid: Grandpa, how did you make money in the stock market?
      Smiling Grandfather: I got out too early?

  39. Bellinghouse
    Aug 5, 2019 at 11:07 am

    I disagree that the overseas markets have done so horribly, since your data appears to not include reinvestment of dividends. This has a major impact on many of the market indices you called out. For instance, here is the DAX with dividends:
    https://finance.yahoo.com/quote/%5EGDAXI/chart?p=%5EGDAXI

    I do agree that the S&P 500 is overvalued. The Shiller PE10 (29.6) has it 74% above its long term average (17).

    But if you look at this metric for many other countries, it is in face quite reasonable today given that their markets have not been surging:
    UK – 14, Spain – 13, Russia – 8, China – 13, Hong Kong – 15, Australia – 16

    Dividend yields are also quite strong, about 50% higher than in the US for the EAFE index. Price to sales and Market Cap to GDP are also good indicators that returns outside the US will be pretty good going forward. Not tomorrow certainly or next year, but in 10 or 15 years from today. Certainly better than a US Treasury bond paying 1.7%. And WAY better than a Bund confiscating 0.5% annually.

    So I just don’t buy the “Everything Bubble” thesis. Trying to market time has throughout history proved to be a losing strategy. The fact that a handful of people have done it successfully does not mean that it should be encouraged.

    • IdahoPotato
      Aug 5, 2019 at 5:31 pm

      +1

    • NBay
      Aug 6, 2019 at 8:43 pm

      Thanks. Forget to check bidding/yield on on my dumb little 3 year note today. Outta here for now.

  40. Aug 5, 2019 at 11:21 am

    The 90’s were different. This bubble rides on liquidity, money goes to work, people go to work and make contributions to their 401K. This is a turnkey market, so they are going to break out somewhere else (Treasuries?). Might be at 94 bond massacre moment sometime soon? That was the setup.

  41. RoundAbout
    Aug 5, 2019 at 12:00 pm

    Perhaps, world money flow was coming to the US because of the higher rates. If the rates go down, then that money leaves.

    Looks like China’s communists are going to massacre HK soon. Maybe tariffs go up or there is an embargo.

  42. Iamafan
    Aug 5, 2019 at 12:20 pm

    Remember folks, the article is about F.U. Money; make sure you get and have that and it is liquid; or it might not even count.

    • Aug 5, 2019 at 1:23 pm

      Iamafan,

      I totally agree. There are many things you can do with it. Getting liquid and waiting for opportunities is one of them. Buffett is doing that. He is sitting on a huge pile of cash.

      There are other things you can do with it. Back in 1995, as I said in the podcast, I quit my job and then spent three years traveling around the word, best mind-opener and best experience all around for me. I came back a totally changed man. No one can ever take that away from me!!

      I also met my wife during that time (fringe benefit of doing something crazy like that). And she is the biggest treasure I have!

      Be careful out there.

      • Iamafan
        Aug 5, 2019 at 1:54 pm

        I am sorry I had to emphasize that a NEST EGG is not necessarily FU money. I warned my son who lives in Brooklyn about this 3 weeks ago.
        Since he is in the gaming industry, I told him that there is a huge probability his job can disappear in the next recession. Sure enough, the company let go many employees last week. Today the Pres blamed his company for the recent violence. I told him he needs to have a minimum of 3 months rent and living expenses in his bank account and the rest in Treasuries. He is ready. I am cleaning his room here at home just in case he needs a house to crash in.

      • KFritz
        Aug 5, 2019 at 5:10 pm

        You got it, Sergeant Esterhaus!

  43. HR01
    Aug 5, 2019 at 12:38 pm

    Wolf,

    Your timing is impeccable.

    Many thanks for the report. Brings back memories of folks buying cars and other expensive toys using brokerage margin debt.

    CB’s were telegraphing last week that they’re out of ammo. ECB and BOJ both with no change to policy. PBOC? Um, they appear to be preoccupied at the moment. Fed basically tossed a bone and told the crack addicts to move along.

    On top of this, the new flunky in charge of the NY Fed (Williams) recently canned the number 1 and number 2 guys on the PPT. Oops.

    • Stephen
      Aug 5, 2019 at 1:08 pm

      “Fed basically tossed a bone and told the crack addicts to move along.” Congratulations. Of all the posts I have read here and on Zero Hedge, you are the first poster to understand the Fed’s move last week and it’s motive. It was indeed just a bone to placate crack addicts while the Fed keeps its real ammo dry to fight a real war another day. And the real war (hopefully not a shooting war) will go off sometime in the next year when the Fed will need rate cuts and stimulus just to keep the ship from capsizing.

  44. Aug 5, 2019 at 1:08 pm

    There are a number of bearish signals including an inverted yield curve.
    So when’s the near term stock market top gonna be? How far will it drop?
    Place your bets, place your bets…

  45. TownNorth
    Aug 5, 2019 at 1:57 pm

    Down almost 900 points. Yep looks ripe to me. Prescient post.

  46. Iamafan
    Aug 5, 2019 at 2:01 pm

    Somebody better get out there with CALMING words. Please no more tweeting nastiness. It ain’t helpful.

    • Aug 5, 2019 at 3:02 pm

      Jimmy Hendrix; “Fall mountain, just don’t fall on me…”

  47. Stephen
    Aug 5, 2019 at 2:05 pm

    And on the political side……will the deep state be willing to take down the market, and usher in a very bad recession to precipitate a take down in 2020? I don’t think so, but do not count out reckless behavior in the deep state sphere. Some billionaires have the bandwidth to survive a severe recession and may think it worth the gamble. I am probably overthinking this, but then again…..

  48. Lobo solitario
    Aug 5, 2019 at 3:34 pm

    Things are fairly screwed up, but our leader is in control!

    “… Even if they do get repo rates lower—perhaps by offering repo directly in the Standing Repo Facility (SRF), the problem will be keeping mid curve yields from falling even faster. The FX basis is driven primarily by short rate differentials, and lower LIBOR will reduce FX swap costs bringing hedged foreign buyers back into the US curve.”

    https://www.theinstitutionalriskanalyst.com/single-post/2019/07/22/Maybe-No-Rate-Cut-in-July

  49. DawnsEarlyLight
    Aug 5, 2019 at 3:49 pm

    ( ((
    \ =\
    –\- ‘-\
    (—-) ) ( \——
    (—-) ) –
    (—-) )
    (—-) ) —-/——

    Thumbs Up!

    • Aug 5, 2019 at 6:10 pm

      DawnsEarlyLight,

      This is awesome. Took me a moment to see it though :-]

    • Joe Johnson
      Aug 7, 2019 at 9:38 am

      What is it?

  50. Michael Engel
    Aug 5, 2019 at 4:10 pm

    Rough & volatile day on SPX & NDX.
    But both closed inside the cloud.
    Both Cikou Span closed inside the cloud.
    Potential for short term bounce, but the trend is down, until it change.

  51. RCohn
    Aug 5, 2019 at 4:39 pm

    Devaluations are NOT a sign of strength but one of weakness.
    Political military suppression of domestic demonstrations are not a sign of freedom , but one of totalitarianism . Look for China’s violent suppression of the Hong Kong demonstrations to further negatively color its negative world wide reputation.
    The signals have been clearly given; any US company with manufacturing in China is at the least imprudent and probably suicidal. It is time to bring back manufacturing to the US.
    Any monies flowing from China TO ,NZ,CAN, Great Britain , Euroland or the US contribute(will contribute)to balance of payments issues. Look for China to completely eliminate any such capital flows very soon . Some Chinese investors will be forced to repatriate monies to shore up their domestic liquidity problems.This combination of choking off capital flows moving overseas and money flowing back to China has HUGE NEGATIVE implications for real estate investment and equity purchases are uniformly NEGATIVE outside if CHINA.
    Look for China to be forced to sell their horde of US Treasuries and gold just to defend the yuan.Considering the very low yield and very high prices of US bonds, it is prudent to start dumping any bond holdings.
    Since %80 of Chinese domestic debt is denominated in dollars and %10 is denominated in Euros and the Yen , lower future profit margins in China have the potential for huge solvency issues in the near to intermediate issues.
    Equities in the US have been bid to all time highs based not on healthy revenue and profit margin growth , but based on stock buybacks. When these buybacks end , look for 1987 all over again with equities crashing % 50 in the next 6 months

    • Iamafan
      Aug 5, 2019 at 5:18 pm

      The U.S. has about $23 trillion in debt, and what can we show off about it? Pot holes, aging infrastructure, and holes letting rain in my JFK airport. I don’t even get a free cart. No free WiFi.

      I am not scared about China. I am scared about us. Looks like it’s getting worse.

      • Thor's Hammer
        Aug 5, 2019 at 6:22 pm

        Meanwhile Russia is nearly debt free, with by far the lowest debt burden of any industrialized country. Looks like the Obama/Trump sanctions have been doing their job by kicking Russia off the global debt train and promoting their national sovereignty—-.

        Anybody care to wager that a poll of Americans nurtured by our Free Press would uncover more than 1 in 10,000 who are aware of that fact?

        • Aug 5, 2019 at 7:45 pm

          Thor’s Hammer,

          In Russia, the bulge of the debt is with state-owned companies (almost all large companies) and with consumers:

          You need to update your knowledge and get off this Russians-have-no-debt BS. It’s a huge problem in Russia, according even to the Russian government. Here are some tidbits:

          Surging consumer debt to make up for declining disposable income:
          https://www.wsj.com/articles/russians-flock-to-easy-loans-as-income-dips-11564911001

          “The economy will definitely fall into recession” if the consumer-lending surge continues unchecked until the bubble bursts on its own, Minister for Economic Development Maxim Oreshkin said
          https://www.bloomberg.com/news/articles/2019-07-30/russia-minister-sees-economic-blow-up-unless-central-bank-acts

          Debt hangover at state-owned weapons makers:
          https://www.bloomberg.com/news/articles/2019-07-16/putin-s-huge-military-buildup-leaves-industry-with-debt-hangover

          It’s a well-known issue, discussed openly by the Russian government. You’re probably the only one out there who has not year heard about it because you don’t want to hear about it. Even I told you a couple of times before. In the future I will just block this nonsense because I don’t have time to shoot it down manually.

          And NO ONE is their right mind is buying ruble bonds unless they get paid a rich juicy yield that Russia cannot afford to pay. Russia has defaulted on its debt before, and the ruble loses value so fast it makes you dizzy, often overnight. So for the government to borrow in rubles is expensive. It leverages instead its state-owned enterprises that borrow in foreign currency.

        • Iamafan
          Aug 5, 2019 at 9:17 pm

          @thor’s hammer

          My brother’s common law wife is Russian. Her folks and siblings are in Russia. Life here in the USA is substantially better (according to her). There is no comparison. I don’t think she’ll ever go back.

        • Thor's Hammer
          Aug 6, 2019 at 8:46 am

          Debt to GDP ratio by Country 2019
          Source: World Population Review
          http://worldpopulationreview.com/countries/countries-by-national-debt/

          US national debt as a % of GDP— 109.45%
          Russian national debt as a % of GDP —19.48%

          Wolf, you are absolutely correct that national debt is not the same as state entity debt or personal debt, and that it is not the whole picture in Russia (or in the US.) Choosing to compare apples to lemons is not a productive argument

          Do you believe that the vast difference between American and Russian national debt is insignificant, especially if we experience a global recession/depression?

          Iamafan;
          I have no means of determining whether life in Russia is all peachy or far inferior to life in the USA. However anyone with eyes and ears cannot help but know that the information about Russia disseminated in our MSM is largely propaganda and that it has been hammered into the public consciousness for a generation. Have we forgotten Russiagate so soon? The only rational response is disbelief until proven otherwise. An equally appropriate response to the glowing prose that smells like propaganda from someone like Dmitry Orlov.

          Signing off from Wolf Street here—-

        • Leser
          Aug 6, 2019 at 4:40 pm

          Let us hear those views Wolf, please don’t “shoot them down”. We all know what Bloomberg, wsj, economist et al say about Russia. We’re coming hear to hear other views, not more of the same.
          Of course Russia has problems, which country hasn’t.
          From people who partly live in Russia or do regular business there I hear interesting views, it’s not a closed case I’m sure.

        • The Colorado Kid
          Aug 7, 2019 at 2:20 pm

          T.H., I sold my beloved Gazprom recently because of their massive Dollar denominated debt. We’re going to have a huge dollar liquidity squeeze here soon IMHO.

        • NBay
          Aug 7, 2019 at 4:33 pm

          Respect Thor, but his data site popped up as unsecured (on my comp), so I cleared out after quick look at home page, scanned computer&checked logs. Maybe it IS an “honest voice in the wilderness”, maybe it’s a small group’s agenda. Anyway, will never know.
          Just like I have to stick with coin of the realm, rules/laws of realm, I have to stick with data of the realm, and “allies”, hopefully I can pick, choose, and think well. Absolutely NO “Social Media”, unless this site counts. Don’t wan’t my access (computer) to be anymore compromised than it likely already is. With my bad back, it is a 1900 rich man’s library, lucky to have it, including “servants” to get me all ref books…real quick servants.
          So now I just try to keep what I have for younger loved ones. Nowhere even near F U money. But I DO know where far most all “F EVERYONE” money holders are, and it’s right here in USA. Over 70K of them right here, all worth min $50M on up to Bezo’s*. Also would like to add I grew up in and still live in F rest of U WEATHER/AREA, which is worth a LOT to me. Luther Burbank knew his stuff.
          *Credit Suisse high net wealth report, 2018, pg 23.

    • IdahoPotato
      Aug 5, 2019 at 5:37 pm

      “Look for China to be forced to sell their horde of US Treasuries and gold just to defend the yuan.”

      Won’t a 10% slide in the yuan (against the USD) neutralize the 10% tariffs?

    • Nicko2
      Aug 5, 2019 at 5:43 pm

      China is ramping up it’s trading with everyone else, even Huawei managed a huge profit despite US sanctions. Trump’s inane trade war has accelerated China’s development; they are becoming the new global power.

      • The Colorado Kid
        Aug 7, 2019 at 2:29 pm

        I take Kyle Bass’ view. We need to break China now while we have the upper hand with our Dollar. I don’t agree with much Trump is doing, but he’s right on this one in my estimation. We’re a bit like the Confederacy in the War between the States in that they only had a brief window to knock out the Union & we, similarly, only have a short time to derail China- time is not on our side with either reserve current status, or Global Hegemony if we don’t.
        On the flip side, maybe we would be better off if we weren’t the Global Empire.

    • Aug 5, 2019 at 6:40 pm

      I know, I bought a $40 Jan put in GM a couple weeks ago (seemed a cheap bet with a decent chance of winning) and I’d been wishing I bought more.

      I still expect the S&P to recover a bit before a correction hits, I could be wrong though. Its tempting to add more bets to the short side.

    • SocalJim
      Aug 5, 2019 at 7:32 pm

      As long as credit standards do not tighten, record low mortgage rates are a real estate investors dream. If you study history, SoCal real estate surged after the 87 crash, and it also did very well in the 2000 weakness.

  52. NoName
    Aug 5, 2019 at 4:40 pm

    Lots of comments saying what a good job the author did—would like to read his words that were spoken. Is there a way to paste those words here? They are available as CC on the video but I don’t want to sit and watch them go by….even on Speed x2. Thanks.

    • Aug 5, 2019 at 6:08 pm

      Yes. Patience. I will post the transcript in a couple of days. Need a little time to do it in between things.

      • NoName
        Aug 5, 2019 at 7:19 pm

        Good. I thought I saw the transcripts before. I’m often late to the party, so hadn’t noticed it takes a while to post those. Dow is down 450 points after hours right now (after down 1000 points? 24+hours).. do explain W T F is happening?! :) Thanks!

        • d
          Aug 6, 2019 at 6:45 am

          somebody instead of tweeting nasties got his buddies to label ccp china a currency manipulator.

        • NBay
          Aug 7, 2019 at 4:51 pm

          d,
          Yep…needs lots of enemies, foreign and domestic, for “agenda”, and followers to bitch about.

  53. Paul Morphy
    Aug 5, 2019 at 4:44 pm

    Very interesting presentation, Wolf. It does feel that for certain sections of society, it is like the GFC never happened. There are certain other sections of society who think that the crash of 2008 was a once in a generation event.

    No matter how much data is provided there will be another section of society who think that “it won’t happen to me”

    Northern Rock Bank should have been a salient lesson to everyone in this part of the world. It’s stock was roaring in 2007, it was one of the biggest banks on this planet by balance sheet size and by capital reserves. It was lending money, left right and centre. Within 18 months there was a run on the bank, and the Bank of England spent £25 trillion rescuing Northern Rock.

  54. KFritz
    Aug 5, 2019 at 5:22 pm

    Tangential comments and observations. My practical take-away from a recent post at Naked Capitalism by Dr. Michael Hudson was to look for a deliberate currency devaluation by the US Government/Federal Reserve in the next downturn–meaning that even the currency held by those prudent enough to avoid the equities markets will be hammered. Just not as badly as equity-holders.

    It will also be interesting to see how the “Black Swan funds” fare, especially Universa run by Mark Spitznagel with input from Naseem Nicholas Taleb. Those two have made big money in each of the last two downturns.

    • Gandalf
      Aug 5, 2019 at 8:08 pm

      Universa seems to be a very tightly held hedge fund. The only information that comes out about how it is doing is what gets doled out by Mark Spitznagel, with all sorts of claims of huge gains in the 2008 GFC and 2015 ETF meltdown.

      I would not be surprised at all if this turns out to be yet another Madoff-like Ponzi scheme

      If indeed, Universa were so wildly successful, it would post its results openly and publicly, like mutual funds.

      Spitznagel’s tight political connections to Ron Paul and Rand Paul are his choices to make, but a savvy investor might want to be concerned about the whether his economic views coincide with the gold standard loving, Fed Reserve hating Pauls

      • KFritz
        Aug 6, 2019 at 9:40 pm

        Insinuations of massive fraud are pretty strong medicine. Undue secrecy is a possible indicator, but secrecy, by itself, is not enough to try and convict. Based on what I”ve read about Black Swan strategy, such a fund might not be very profitable on a yearly basis–it would eschew a concentration on short term gain. I’m most interested in whether Black Swans will ahieve their stated objective of protecting their investors’ money from anomolous events, even if they don’t make a windfall.

    • Iamafan
      Aug 5, 2019 at 9:10 pm

      The Exchange Stabilization Fund only has about 22.5 B in USD left to buy what?
      https://www.treasury.gov/resource-center/international/ESF/Documents/June-FY19-Financial-Statements.pdf
      They need to buy Yuan! Not gonna happen.

  55. Calm Horizons
    Aug 5, 2019 at 6:17 pm

    Hmmm, where can I get me some o’ them OBBSs???

  56. Andrew
    Aug 6, 2019 at 8:51 am

    Wolf-
    Question for you:

    In these countries you reference, namely Japan- who in those countries has been making money during thewe stagflationary / deflationary times?

    How are they doing it and what is their investmwnt approach?

    Thx

    • Aug 6, 2019 at 9:28 am

      Andrew,

      Japanese consumers are doing well, thank you. On a per-working-age-person basis, they’re quite comfortable. Japan doesn’t import a lot of labor, so there is now a lot of competition among companies to hire. This has brought women into the workforce in much larger numbers than before.

      Women were traditionally having a hard time in a Japanese company, and mothers could almost never return to the workforce. This is now changing.

      Also, more women choose not to marry these guys that have this classic idea of what women should do. And these happily unmarried women – and there a lot of them – stay in the workforce.

      So actually, the number of working people in Japan is at a record, despite the declining population, and they’re Japanese, not immigrants. So households (including singles) are doing pretty good, and companies are making money on them.

      The Western media that are focused on the low birth rates in one of the most crowded countries on earth (most of it is covered with mountains where few people live) and on overall GDP growth and inflation have been missing the boat for 20 years.

      • NBay
        Aug 7, 2019 at 5:30 pm

        Have charts of aging populations in developed countries, with projections. Since it’s my favorite for profit (one way or the other) industry to follow; the “Bio-Medical” folks, which now includes many many many people who don’t know a Petri dish from a mason jar, but are good at accounting, management, finance, sales, etc, etc, among them.
        Anyway, even with universal health care, are “mopping up” class warfare operations (per Unamused) any worse in Japan than here? e.g., passing on something to young’uns is only for an ever decreasing few in Japan, too?

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