jfi
•The ETF Bubble has reached its bursting point, with slower inflows to equity funds, and recent outflows from bond funds.
•Equity markets are historically extended, as the US Bull Market has now achieved record status with respect to duration and magnitude.
•Valuation metrics are extreme by most measures, with the total US stock market cap / GDP ratio back to the bubble highs of 2000.
•Earnings revision breadth is falling precipitously in the face of peaking earnings growth.
•Corporate leverage is at all-time highs.
•Monetary conditions are tightening with a Fed hiking cycle and balance sheet reduction program well under way, and newly initiated tapering programs from the ECB and BOJ are adding to liquidity pressures.
•Global economic growth outside the US is slowing, and emerging markets are being punished by a strong dollar.
•Annualized volatility measures across most asset classes achieved record lows.
•Investor sentiment remains complacent with brokerage cash balances at historically low levels.
•The “buy the dip” mentality has become fully ingrained in investor psychology as a fool-proof formula for alpha.
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