Markets facing potential ‘Minsky moment’ collapse, strategist says…
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Despite lingering global economic risks from the Covid-19 pandemic and geopolitical tensions, Wednesday saw the S&P 500 and Nasdaq both notch record highs.
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A “Minsky moment,” named after economist Hyman Minsky, refers to a sudden market collapse following an unsustainable bull run, which in this case could be fueled by the “easy credit” environment created as a result of unprecedented fiscal and monetary stimulus measures.
Asset prices could be on the cusp of a sharp collapse known as a “Minsky moment,” and may retest lows last seen in March, according to Ron William, market strategist and founder of RW Advisory.
Markets have experienced a broad bullish period in recent months as investors bet on further stimulus from governments and central banks, and the prospect of a coronavirus vaccine. Despite lingering global economic risks from the Covid-19 pandemic and geopolitical tensions, Wednesday saw the S&P 500 and Nasdaq both notch record highs, while the Dow Jones Industrial Average closed above 29,000 points for the first time since February.
A “Minsky moment,” named after economist Hyman Minsky, refers to a sudden market collapse following an unsustainable bull run, which in this case could be fueled by the “easy credit” environment created as a result of unprecedented fiscal and monetary stimulus measures.
Speaking to CNBC’s “Squawk Box Europe” on Thursday, William cited a number of factors as potentially driving this crash, the first of which was the narrow nature of recent market gains, with much of the positive price action in the U.S. driven by tech giants.
“This is this ongoing story of tech street, Wall Street and Main Street all diverging,” he said. “If we look at the equal weighted index of the S&P 500, it has barely broken above its June peak and has actually been flatlining ever since, so we can see there the ’FAANG-tastic divergence, as I call it.”
This is the highest VIX ever at an all time high in the S&P pic.twitter.com/IIzTgtN1YB
— zerohedge (@zerohedge) September 2, 2020
$qqq up 1% every single day never on any news
— BLACK SWAN – HODL puts (@RetirementRight) September 2, 2020
Market extremes bring out the worst in some people.
— Sven Henrich (@NorthmanTrader) September 2, 2020
NASDAQ now 5-standard deviations rich to its 12-year trend. Undeniable truth: EVERYTHING reverts to its mean, eventually.t.co/WlElsbWzn0
— Jack Rodeghier (@glarustrading) September 2, 2020
Surprising to see such outflows from growth ETFs in the midst of this euphoric rally. pic.twitter.com/aMINvnqc8z
— David Schawel (@DavidSchawel) September 3, 2020
Yes t.co/HZBvykmpMO
— BLACK SWAN – HODL puts (@RetirementRight) September 2, 2020
Apple's P/S goes fully parabolic as it approaches 9X revenue.
Previous spikes led to major market tops including 1987, 2000 & 2007.
Apple's revenue growth has been flat over the last 12 months & not growing all that much since the Trade War started.
Chart by @charliebilello. pic.twitter.com/C4foNIz0TN
— Tiho Brkan (@TihoBrkan) September 1, 2020
🇺🇸 The ratio of total put options to call options traded on U.S. exchanges dropped to 0.51 Tuesday, taking the five-day average to 0.54, the lowest since December 2010 – Bloomberg pic.twitter.com/zekMfqZu6P
— Christophe Barraud🛢 (@C_Barraud) September 2, 2020
— M/I_Investments (@MI_Investments) September 2, 2020
— M/I_Investments (@MI_Investments) September 2, 2020
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