The soaring U.S. stock market has officially entered "crazytown territory," according to
Michael Snyder, publisher of The Economic Collapse, an aptly named investor blog that sees dire times ahead.
Snyder noted the Dow Jones Industrials Average hit 52 new highs in 2013, and was up 26.5 percent for the year. As an example of how crazy things have gotten, he stated, new stock market darling Twitter, which debuted in an IPO only in November, is now valued at a bit less $40 billion despite never having earned a cent.
"It is time to crank up the Looney Tunes theme song because Wall Street has officially entered crazytown territory. Stocks just keep going higher and higher, and at this point what is happening in the stock market does not bear any resemblance to what is going on in the overall economy whatsoever."
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
On his blog, which carries ads for emergency food supplies and land in Idaho for survivalist hideouts on the website's main page, Snyder said there is a disconnect between overvalued stocks and a still-weak economy.
For instance, U.S. store traffic during the holiday season and retail sales were lower than in 2012, mortgage applications have hit a 13-year low and the yield on 10-year U.S. Treasurys is rising and recently hit 3 percent.
"Just before the last financial crash, the U.S. national debt was sitting at about $10 trillion, but today it has risen to more than $17.2 trillion," he noted.
Moreover, the nation's current account deficit has ballooned by $100 billion per quarter in recent years, even as the true level of federally guaranteed mortgage debt has been obscured by moving it among government agencies, and student debt has skyrocketed.
"So don't be fooled by this irrational stock market bubble. Just because a bunch of half-crazed investors are going into massive amounts of debt in a desperate attempt to make a quick buck does not mean that the overall economy is in good shape."
Market analyst
John Hussman, the articulate perma-bear who owns Hussman Funds, issued his own dark year-end diatribe about U.S. stocks.
"With regard to present market conditions, the increasingly severe overvalued, overbought, overbullish features of the market here are coupled with soaring margin debt as speculators accumulate stock with borrowed money; record issuance of low-grade 'covenant lite' debt; [and] heavy issuance of new stocks — particularly characterized by speculative narratives," Hussman wrote in his weekly commentary.
Hussman, a frequent critic of Federal Reserve stimulus largesse who correctly predicted the 2008 financial meltdown, emphasized he is not putting a timetable on the next stock market bloodbath.
"My guess is that the present speculative advance may have a few percent to run — I'll be particularly concerned if the market does so in a rapid, uncorrected manner in the next couple of weeks, which could suggest crash probabilities approaching 100 percent. . . . It will be fascinating to see how this plays out."
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
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