CHURCH – PREPARE FOR ECONOMIC CRASH

Further to my previous post which looked at who owns global assets, this post looks at the appetite for investment and the fact it is heading into panic territory.

The Global Risk Appetite Index compares the performance of 64 global assets to judge how willing or unwilling investors are to take additional risk. The index last entered panic territory in October of 2015, when global recession seemed a threat as China’s capital markets threatened to meltdown.

This time around, the issues are manifold: trade disputes, the Italian budget, Fed tightening and emerging market turbulence all “contend to be the main driver of this risk appetite slump”, the Credit Suisse analysts write.

Some big investors are taking action. Check out this chart:

It shows that some very big guns are starting to cut exposure to stocks.

According to the AFR this week, the behemoth that is Australian Super just cut back on local and international equities. Could this be the start of the giant, global ‘risk-off/sell off

Church are you preparing for what’s coming? It will be church as described in the Book of Acts that will be a blessing.

“Now when the multitude of those who believed were of one heart and one soul, neither did anyone say that any of the things he possessed was his own, but they had all things in common. And with great power the apostles gave witness to the resurrection of the Lord Jesus. And grace was upon them all. Nor was there anyone among them who lacked; for all who were possessors of lands, of houses sold them and brought the proceeds of the things that were sold, and laid them at the apostles feet; and they distributed to each as anyone had need.” Acts 4: 32-34

“END TIMES” SIGN – ECONOMIC COLLAPSE

The only other times in U.S. history when stock prices have been this high relative to earnings, a horrifying stock market crash has always followed.  Will things be different for us this time?  We shall see, but without a doubt this is what a pre-crash market looks like.  This current bubble has been based on irrational euphoria that has been fuelled by relentless central bank intervention, but now global central banks are removing the artificial life support in unison.  Meanwhile, the real economy continues to stumble along very unevenly.  This is the longest that the U.S. has ever gone without a year in which the economy grew by at least 3 percent, and many believe that the next recession is very close.  Stock prices cannot stay completely disconnected from economic reality forever, and once the bubble bursts the pain is going to be unlike anything that we have ever seen before.

If you think that these ridiculously absurd stock prices are sustainable, there is something that I would like for you to consider.  The only times in our history when the cyclically-adjusted return on stocks has been lower, a nightmarish stock market crash happened soon thereafter

The Nobel-Laureate, Robert Shiller, developed the cyclically-adjusted price/earnings ratio, the so-called CAPE, to assess whether stocks are likely to be over- or under-valued. It is possible to invert this measure to obtain a cyclically-adjusted earnings yield which allows one to measure prospective real returns. If one does this, the answer for the US is that the cyclically-adjusted return is now down to 3.4 percent. The only times it has been lower were in 1929 and between 1997 and 2001, the two biggest stock market bubbles since 1880. We know now what happened then. Is it going to be different this time?  This insane bubble has been almost entirely fuelled by central bank manipulation, and now that manipulation is being dramatically scaled back. And the guys on Wall Street know what is coming. 

This bubble has lasted for much longer than it ever should have, and everyone understands that a day of reckoning is coming.

In case you don’t remember, in 1987 we witnessed the largest one day percentage decline in U.S. stock market history.

When it finally happens, millions upon millions of ordinary Americans will be completely shocked, but most insiders know that the other shoe is going to drop at some point.

In particular, watch financial stock prices very closely.  Last month, Richard Bove issued a chilling warning about bank stocks…

The Vertical Group’s, Richard Bove warns that the overall market is just as dangerous as the late 1990s, and he cites momentum — not fundamentals — as what’s driving bank stocks to all-time highs.

“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.” “I think that the risk in these stocks is very high at the present time.”

It isn’t going to take much to set off an unstoppable chain of events.  Our financial markets are even more vulnerable than they were in 2008, and the right trigger could unleash a crisis unlike anything we have ever seen in modern American history.

extracted from article by  Michael Snyder, a Republican candidate for Congress in Idaho’s First Congressional District,