Corrections In Bear Markets Are Up? Grantham, Who Forecast 2000 and 2008 Declines: “The Bubble Is Bursting”

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Grantham, Who Forecast 2000 and 2008 Declines: “The Bubble Is Bursting”

A multiyear bubble in American stocks is now deflating as sentiment turns negative despite solid fundamentals, and investors should own as few U.S. equities as possible, according to GMO LLC.

The size and duration of the moves in stock prices in the final three months of 2018 toward their long-term average valuation is consistent with the moves linked with the bursting of the technology boom in early 2000 and the crash of 1929, according to Martin Tarlie, part of the asset-allocation team at the firm overseeing about $70 billion.

Too Loose, Too Long: Central Banks Lack Weapons to Combat Next Recession

New York (CNN Business)If there’s a serious recession on the horizon, the world’s central banks may have trouble fighting it.

Central banks took dramatic and unorthodox steps to prevent economic collapse during the financial crisis. They slashed interest rates, and in the years that followed spent trillions on bonds as part of an effort to spur growth.
One decade later, global central banks are only starting to reverse those moves.
Interest rates in developed economies remain incredibly low; in some places, they’re even negative. The Federal Reserve is unloading some of the bonds it bought, but central banks in Europe and Japan have not yet done so.
The question now is whether central banks waited too long to raise rates to more normal levels, leaving them unprepared for the next crisis.
“If we have a recession, I think it’s going to be worse than normal,” said Kenneth Rogoff, a professor at Harvard University and former chief economist at the International Monetary Fund. “It will be more difficult to respond.”
Politics is also making life more complicated for central banks. In countries like India and Turkey, they’ve faced threats of political interference, while President Donald Trump has repeatedly criticized the Federal Reserve.

Before the ECB Can Even Raise Rates Once, Market Already Expects It to Wait

BENGALURU (Reuters) – The European Central Bank is expected to wait until the fourth quarter to raise its deposit rate, later than thought just a month ago, according to economists in a Reuters poll, who also said the chances of a euro zone recession have grown.

Here come the defaults: Credit outlook darkens

CNN19 hours ago
Financial institutions are bracing for more companies to default on debt. … Association of Credit Portfolio Managers survey anticipates default rates will drop.

ECB rate hike to be delayed as recession risks rise again: Reuters poll

Reuters16 hours ago
BENGALURU (Reuters) – The European Central Bank is expected to wait until the fourth quarter to raise its deposit rate, later than thought just a month ago, …

Italy central bank slashes 2019 GDP growth forecast

Reuters1 hour ago

ROME, Jan 18 (Reuters) – The Italian economy will grow just 0.6 percent this year, the Bank of Italy said on Friday, slashing a projection of 1.0 percent made a ..

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California student debt is way up. New study shows how much

Sacramento Bee17 hours ago
Californians owed $133 billion in student loan debt in late 2018, more than double the amount owed a decade earlier, according to a new analysis from credit …

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