Mark Spitznagel Warns Today's "Distorted" Market Is "Set Up For A Major Crash"

The current market "entirely artificial" environment driven by zero-interest-rates and central bank asset purchases,
More...


although I agree I don't see why this is going to change.
All those smart people who think this is "artificial" and are short or flat are not understanding, that there will never be a way back to normal.
There are 3 things that can happen.
1) Its going on for a long long time and people will adobt to the fact that the FED has a negative balance sheet and continues purchasing bonds.
Maybe it will even be the case that the Fed will erase this negative balance sheet which officialy means they print money
2) Fed will try to rise interest rates.
In this scenario, the market will immediatly react and the FED will be forced by everybody to return to QE. Fed tried this by even talking about tapering and was punished. They are not repeating this mistake.
Higher interest rates are also impossible on a longer term because USA simply can't afford them.
4) Complete currency crash because nobody wants to hold doller any more with a FED printing more and more money.
So in any of these cases, would you prefer to own USD or would you prefer to own stocks ?
Maybe there is a little crash or correction coming but it will be wise to buy any dip along the way because we will never come back to a normal interest rate level. Its simply impossible with all the dept we have collected worldwide.
 
"Higher interest rates are also impossible on a longer term because USA simply can't afford them. "

"afford", the market doesn't care. the market will determine interest rates.
 
Quote from zdreg:

"Higher interest rates are also impossible on a longer term because USA simply can't afford them. "

"afford", the market doesn't care. the market will determine interest rates.
More...

the FED will continue to buy back bonds to lower interest rates as long as it works.
If the market begins to ask for a risc margin and thus the interest rates will rise it will be to late anyway. There will be a point of no return (maybe 6% on the 10y, no idea) where we will se a complete Bond crash within a few days. Even in this case, we will see exploding stock markets because there will be a flight towards anything that is NOT cash or bonds.
High interest rates for an extendet period of time is simply not possible and will never happen again until we see a dramatic dept reduction (which is highly unlikely).
Bottom line is that soon people will realize its SAFER to be in Stocks and not in Bonds and Earnings etc. will not matter any more. This will be a start point of a stock market rally that will beat anything we have seen before.
 
That zerohedge guy seems to think the stock market is in a bubble.

"A view that assets are in a bubble is thus a view that the Fed is keeping interest rates too low, relative to the outlook for growth and inflation."
 
Market will correct >20% at some point.

Nobody knows when.. i reckon sometime next year, but it could defy gravity for a bit longer than that.
 
The game can continue for a long time. Central banks have an unlimited balance sheet only until the market takes it away.
 
Global stock markets are worth like $75 trillion.
And the global bond market is two or three times bigger.
The central banks cant keep $250 trillion pumped up forever.
The whole thing becomes more and more overvalued and will crash under its own weight.
 
More interesting points from zero hedge guy

Not Until The End Of 2014 - If Ever

"As I discussed recently in "What Is A Liquidity Trap And Why Is Bernanke Caught In It?" the problem for the Federal Reserve is that when they attempt to reduce liquidity support from the markets, as they did in 2010 and 2011, it immediately results in a selloff in financial markets, a loss of consumer confidence and a downturn in economic growth. Even talk of "tapering" earlier this year had similar consequences. "

He thanks the QE has cause a BUBBLE b/c when the Fed stops providing QE the market falls.

Neat correlation
 
Quote from Topsurfi:

although I agree I don't see why this is going to change.
All those smart people who think this is "artificial" and are short or flat are not understanding, that there will never be a way back to normal.
There are 3 things that can happen.
1) Its going on for a long long time and people will adobt to the fact that the FED has a negative balance sheet and continues purchasing bonds.
Maybe it will even be the case that the Fed will erase this negative balance sheet which officialy means they print money
2) Fed will try to rise interest rates.
In this scenario, the market will immediatly react and the FED will be forced by everybody to return to QE. Fed tried this by even talking about tapering and was punished. They are not repeating this mistake.
Higher interest rates are also impossible on a longer term because USA simply can't afford them.
4) Complete currency crash because nobody wants to hold doller any more with a FED printing more and more money.
So in any of these cases, would you prefer to own USD or would you prefer to own stocks ?
Maybe there is a little crash or correction coming but it will be wise to buy any dip along the way because we will never come back to a normal interest rate level. Its simply impossible with all the dept we have collected worldwide.
More...

I like how you number in powers of 2. Keep up the great posts.
 
You must log in or register to reply here.
Back
Top