Monday, 16 October 2017

This Leading Stock Market Indicator Flashes Bright Red. Again.


It really is time to get back to harbour for U.S. stock market speculators; a plethora of other indicators are also signaling stock market returns will be poor going forward. At best. 

Inflation

                                                                                                                - Ludwig von Mises

And here is what inflation looks like, in this case for the U.S.


To learn more about how the money supply (quantity of money) is calculated in the above chart, see this article.


Saturday, 14 October 2017

Yield-Starved Stock Market Speculators Bet On The Greater Fool Like Never Before


Compared To Price Inflation, This Is One Gigantic U.S. Stock Market Bubble


Friday, 13 October 2017

I.e. Time For Another Bust Soon Then...


U.S. Stagflation - Much More To Come By The Look of Things...

More Serious Than Stock Market Participants Appear To Believe

This Makes Stock Market Contrarians Cheer!

Wednesday, 11 October 2017

Today's Words of Investing Wisdom: Put To Sleep By Euphoria

Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria. - John Templeton


A Toxic Development: VIX Hits All-Time Low, Money Supply Volatility Hits 9-Year High


Why could this development be a toxic one? Because money supply volatility may lead to increased financial instability. In fact, it often precedes it.


In simple terms, the increases in money supply volatility, driven by sharp declines in the growth rate, that have taken place all year, and especially since March, represent increased risk for financial investors.

The VIX on the other hand, which a few days ago hit record lows, is indicating stock market participants do not expect much volatility.


In other words, the VIX could be sending the completely opposite message of that of the money supply volatility and may, especially at this stage with stock market prices and valuations at record highs, indicate a low degree of risk aversion or even complacency among investors.


With a surging money supply volatility and a record low VIX, this combination could be an especially toxic one for stocks if (when?) the money supply volatility triggers increased financial instability. This again would likely trigger increased stock market volatility and lower valuations which would, given the current level of the VIX, be completely unexpected. And, as we know, the stock market does not like negative surprises.

For more on the importance of money supply developments, see:

The Austrian Theory Of The Business Cycle - A Short Synthesis