Karl Denninger, a professional trader, says the financial markets look eerily like they did just before the “dot-com bust” (2000) and the financial meltdown of 2008. Denninger explains, “This is the same sort of situation we are in today. Nobody knows how long it will go on, but you are in a place right now with record margin debt in the United States. That’s very, very dangerous because at the point the margin calls start, the cascade is almost impossible to stop. You’ve got imbalances throughout the system. You’ve got the Federal Reserve where it has to start taking risk off the balance sheet. . . . We all know how this party is going to end. The building is going to catch on fire, and the door is one person wide, and there are 15,000 people in the room. The problem is figuring out how far it goes. At the point the market wakes up to the fact that none of this is going to get resolved at all—ever, that’s when it comes apart. . . . Risk/reward is in a bad place right now. P/E numbers are very high, and the growth numbers are very low”
Join Greg Hunter as he goes One-on-One with Karl Denninger of Market-Ticker.org.
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