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Guest Post:15 Signs That We Are Near The Peak Of The Stock Market Bubble

Submitted by Michael Snyder of The Economic Collapse blog,

One of the men that won the Nobel Prize for economics this year says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market." But you don't have to be a Nobel Prize winner to see what is happening. It should be glaringly apparent to anyone with half a brain. The financial markets have been soaring while the overall economy has been stagnating. Reckless injections of liquidity into the financial system by the Federal Reserve have pumped up stock prices to ridiculous extremes, and people are becoming concerned. In fact, Google searches for the term "stock bubble" are now at the highest level that we have seen since November 2007.

Despite assurances from the mainstream media and the Federal Reserve that everything is just fine, many Americans are beginning to realize that we have seen this movie before. We saw it during the dotcom bubble, and we saw it during the lead up to the horrible financial crisis of 2008. So precisely when will the bubble burst this time? Nobody knows for sure, but without a doubt this irrational financial bubble will burst at some point. Remember, a bubble is always the biggest right before it bursts, and the following are 15 signs that we are near the peak of an absolutely massive stock market bubble…

#1 Bob Shiller, one of the winners of this year's Nobel Prize for economics, says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market."

#2 The total amount of margin debt has risen by 50 percent since January 2012 and it is now at the highest level ever recorded. The last two times that margin debt skyrocketed like this were just before the bursting of the dotcom bubble in 2000 and just before the financial crisis of 2008. When this house of cards comes crashing down, things are going to get very messy…

"When the tablecloth gets pulled out from under the place settings, you're going to have a lot of them crash and smash on the floor," said Uri Landesman, president of Platinum Partners hedge fund. "That margin's going to get pulled and everyone's going to have to cover. That's when you get really serious corrections."

#3 Since the bottom of the market in 2009, the Dow has jumped 143 percent, the S&P 500 is up 165 percent and the Nasdaq has risen an astounding 213 percent. This does not reflect economic reality in any way, shape or form.

#4 Market research firm TrimTabs says that the S&P 500 is "very overpriced" right now.

#5 Marc Faber recently told CNBC that "we are in a gigantic speculative bubble".

#6 In the United States, Google searches for the term "stock bubble" are at the highest level that we have seen since November 2007 – just before the last stock market crash.

#7 Price to earnings ratios are very high right now…

The Dow was trading at 17.8 times the past four quarters of earnings of its 30 components, according to The Wall Street Journal on Friday. That was up from 13.7 times its earnings a year ago. The S&P 500 is trading at 18.7 times earnings. The Nasdaq-100 Index is trading at 21.5 times earnings. At the very least, the ratios are signaling that stock prices are rich.

#8 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.

#9 Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million dollars last quarter. But according to the financial markets it is currently worth about 22 billion dollars.

#10 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.

#11 Howard Marks of Oaktree Capital recently stated that he believes that "markets are riskier than at any time since the depths of the 2008/9 crisis".

#12 As Graham Summers recently noted, retail investors are buying stocks at a level not seen since the peak of the dotcom bubble back in 2000.

#13 David Stockman, a former director of the Office of Management and Budget under President Ronald Reagan, believes that this financial bubble is going to end very badly…

"We have a massive bubble everywhere, from Japan, to China, Europe, to the UK. As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future."

#14 Bob Janjuah of Nomura Securities believes that there "could be a 25% to 50% sell off in global stock markets" over the next couple of years.

#15 According John Hussman via Tyler Durden of Zero Hedge, the U.S. stock market is repeating a pattern that we have seen many times before. According to him, we are experiencing "a well-defined syndrome of 'overvalued, overbought, overbullish, rising-yield' conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing), and at three points in 2013: February, May, and today."

As I mentioned at the top of this article, this stock market bubble has been fueled by quantitative easing. Easy money from the Fed has been artificially inflating stock prices, and this has greatly benefited a very small percentage of the U.S. population. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

When this stock market bubble does burst, those wealthy Americans are going to be in for a tremendous amount of pain.

But there are some people out there that argue that what we are witnessing is not a stock market bubble at all. That includes Janet Yellen, the new head of the Federal Reserve. Recently, she insisted that there is absolutely nothing to be worried about…

"Stock prices have risen pretty robustly," Yellen said. "But I think that if you look at traditional valuation measures, you would not see stock prices in territory that suggests bubble-like conditions."

We shall see who was right and who was wrong. Let's all file that one away and come back to it in a few years.

So where are stocks going next?

If you had the answer to that question, you could probably make a lot of money.

Yes, the current bubble could burst at any moment, or stocks could continue going up for a little while longer.

After all, the S&P 500 has risen in December about 80 percent of the time over the past thirty years.

Perhaps that will be the case this December as well.

Perhaps not.

Do you feel lucky?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iu7gintNikY/story01.htm Tyler Durden

Auto Sales Spike To 6.5 Year High; Beat By Most Since "Cash-For-Clunkers"

Annualized auto sales spiked their most MoM in almost 3 years reaching their highest level since May 2007 and beating expectations by the most since cash-for-clunkers in 2009. Inventories are at record highs, GM channels are almost the most-stuffed on record, and incentives are surging once again… the “field of dreams” economy rolls on… what could possibly go wrong?

Mal-investment anyone?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i0yRXosknbU/story01.htm Tyler Durden

Auto Sales Spike To 6.5 Year High; Beat By Most Since “Cash-For-Clunkers”

Mal-investment anyone?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i0yRXosknbU/story01.htm Tyler Durden

One Of These Is The "Real" Economy

It seems some among the mainstream media believe “the economy is improving.” In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which “economy” is improving…

Chart: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HF4DyOzcfpc/story01.htm Tyler Durden

One Of These Is The “Real” Economy

Chart: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HF4DyOzcfpc/story01.htm Tyler Durden

Convicted Tyco Embezzler Dennis Kozlowski Granted Parole

When former Tyco International CEO Dennis Kozlowski was convicted for stealing $150 million in company money in 2005 on 22 criminal counts including grand larceny, conspiracy, securities fraud/sales and falsifying business records to a prison term of 8.33 to 25 years, he became the poster child for corporate greed. Shortly thereafter the entire financial system nearly collapse when everyone on Wall Street became a poster child for corporate greed and nobody went to jail. As such it became a moot point to make anyone a symbol for “corporate greed” since the Department of Justice itself admitted there is a brand new category reserved for the uber-greedy ones, also known as Too Big To Prosecute. Which is why moments ago, news broke that Kozlowski was granted parole after serving 100 months in jail, exactly nobody was surprised.

“Mr. Kozlowski is grateful to the parole board for its decision to grant him parole,” Alan Lewis, Kozlowski’s attorney at Carter Ledyard & Milburn, said in an email to FOX Business.

The New York State Board of Parole said it announced the decision to Kozlowski on Tuesday and his tentative release date is January 17, 2014.

Kozlowski had been denied parole in April 2012 on the grounds that he remained a threat to “public safety and welfare.” The former Tyco CEO filed suit after that denial.

Now that Dennis is no longer a threat to the public welfare, we expect him, Enron’s Skilling and of course MF Global’s Jon Corzine to form KozCorSki Asset Mismanagement and proceed to “manage” everyone else’s centrally-redistributed money (get to work Mr. Chairwoman) in the one way that modern society truly deserves.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/LAGS9xE5spQ/story01.htm Tyler Durden

Stocks Stumble As VIX Hits 2-Month High

Despite the double-POMO, US stocks fell with the highest volume in 2 weeks today. The S&P 500 and EURJPY were joined at the hip for entire day exchanging the leadership role with each momentum ignition rally faded at VWAP. No deer today but with VIX's move and stocks down 3-in-a-row, some are starting to worry (which with a 1.4% from the highs drop in the S&P is kinda pathetic). Treasuries rallied (but remain 2-4bps higher on the week) mirroring the move in the USD (which sold off back to unchanged on the week as EUR strengthened). Despite an early blip, gold flatlined but silver slid lower as WTI crude surged further (closing +3.7% on the week back over $96). VIX closed off its intraday highs but at 2-month highs as it seems hedgers unwound into underlying sales.

Only one thing matters…

and volume was very large today – highest in 2 weeks… (notice how EURJPY was jerked higher to enable a VWAP close at cash – and now futures are fading again)

Homebuilders and financials have been hammered in the last few days…

WTI is surging (catching up to Brent – not good for gas prices), gold flatlined as silver slid…

FX market roundtripped with the USD ending unch of the week…

and VIX remains disconnected (as we suspect weakness in stocks today was unwinding hedges and reducing underlying exposure in stocks)…

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/n-ALJrWlIds/story01.htm Tyler Durden

Congress Backs Terrorists In Syria … Then Says We Need NSA Spying Because There are Terrorists In Syria

The civil war in Syria started in March 2011. And see this.

However, the U.S. has been funding the Syrian opposition since 2006 … and arming the opposition since 2007. (In reality, the U.S. and Britain considered attacking Syrians and then blaming it on the Syrian government as an excuse for regime change … 50 years ago (the U.S. just admitted that they did this to Iran) . And the U.S. has been planning regime change in Syria for 20 years straight. And see this.)

The New York Times, (and here and here) , Wall Street Journal, USA Today, CNN, McClatchy (and here), AP, Time, Reuters, BBC, the Independent, the Telegraph, Agence France-Presse, Asia Times, and the Star (and here) confirm that supporting the rebels means supporting Al Qaeda and two other terrorist groups.

Indeed, the the New York Times has reported that virtually all of the rebel fighters are Al Qaeda terrorists.

The Syrian rebels are now calling for terrorist attacks on America. And we’ve long known that most of the weapons we’re shipping to Syria are ending up in the hands of Al Qaeda. And they apparently have chemical weapons.

And yet the U.S. is stepping up its support for the Islamic extremists.

The chair of the House Intelligence Committee – Mike Rogers – voted for arming the Syrian rebels. And the chair of the Senate Intelligence Committee – Diane Feinstein – has apparently quietly let arms flow to the rebels.

So are they admitting their mistake?

Heck, no! They’re using the specter of Syrian terrorists to justify mass surveillance by the NSA on innocent Americans …

And now he’s trying to use rebel Al Qaeda as an excuse for mass surveillance by the NSA.

As Juan Cole notes:

Senator Diane Feinstein and Rep. Mike Rogers took to the airwaves on Sunday to warn that Americans are less safe than
two years ago and that al-Qaeda is growing and spreading and that the US is menaced by bombs that can’t be detected by metal detectors.

Call me cynical, but those two have been among the biggest detractors of the American citizen’s fourth amendment rights against unreasonable search and seizure of personal effects and papers. I think their attempt to resurrect Usama Bin Laden is out of the National Security Agency internal playbook, which specifically instructs spokesmen to play up the terrorist threat when explaining why they need to know who all 310 million Americans are calling on our phones every day. [Here's what he's talking about. And here.]

CNN’s Candy Crowley interviews them

Now, obviously there are violent extremists in the world and the US like all other societies is likely to fall victim to further attacks by terrorists. But if they could not inflict significant damage on us with 9/11 (and economically and in every other way except the horrible death toll, they could not), then it is a little unlikely that this kind of threat is existential.

In fact the number of terrorist attacks in the US has vastly declined since the 1970s (as has violent crime over-all), as WaPo’s chart shows:

(The chart shows each attack as a number and does not show fatalities; obviously the Oklahoma City bombing and 9/11 would be prominent in that case. But the fact is that foreign terrorist attacks kill almost no one in America these days. You’re far more likely to fall in your bathtub and die than to face terrorism).

Rogers makes a big deal out of the fighting in northern Syria as a threat to the United States and says “thousands” of “Westerners” have gone to fight there. But

Rogers is just obfuscating by mentioning vastly exaggerated statistics.

The number of Americans estimated by the FBI to be fighting in Syria? 24. Two dozen. That’s it.

The Syrian civil war has nothing to do with the US, and is a local struggle rather unlikely to involve hitting America (more especially since, as Rogers carefully avoids mentioning, the US is committed to arming these rebels to fight against al-Assad.)

That’s right. Mike Rogers voted to give arms to the Syrian rebels. And while he may hope they don’t go to the al-Qaeda affiliates (as happened when Ronald Reagan gave $5 billion to the Afghan Mujahidin in the 1980s) [oops], he has no guarantee that won’t happen and is willing to take the risk. If Rogers were really, really concerned about the Jabhat al-Nusra, he wouldn’t be risking upping its firepower with Americans’ tax dollars as a justification for monitoring who your 15 year old daughter calls on her cell phone.

Let us say that again. Feinstein and Rogers just came on television to scaremonger the American people with the Syrian jihadis, and both of them voted to give the Syrian rebels millions of dollars in arms.

That’s a pretty good racket. You support the jihadis abroad and then point to jihadis abroad as the reason for which you have to get into the underwear of the American people.

Then they brought up Iraq, which is another local struggle. Dick Cheney repeatedly warned that if the US left Iraq, the terrorists created by the US Occupation (he didn’t put it that way) would follow us home. But it was never very likely an allegation. You could easily get an attack in the US by a disgruntled Sunni Iraqi. But that the Sunni Arabs of Iraq are gunning for the US? No sign of it.

Indeed, Al Qaeda wasn’t even in Iraq until the U.S. invaded that country.

And U.S. policy has lead to a world-wide increase in terrorism.

Of course, mass surveillance doesn’t really have much to do with terrorism in the first place.

No wonder Americans have such a low opinion of Congress. But people like Feinstein and Rogers couldn’t care less.

Bonus:

Mass Die-Off of West Coast Sealife: Fukushima Radiation … Or Something Else?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/f7LIF3h5fZk/story01.htm George Washington

These Were The Most Sold Items On Walmart's Record Breaking Cyber-Monday

Walmart today announced that Cyber Monday 2013 was the biggest online sales day in its history. The five-day period from Thanksgiving to Cyber Monday is the highest five-day stretch in online sales for the retailer to date, and Walmart.com processed more than one billion page views during that period. Somehow WMT managed to process all this traffic without having to spend $1 billion in taxpayer funds to “fix” it website or having to retain Google and Oracle to comb through its 500 million lines of flawed code. So what were WMT’s online shoppers spending most of their money on?

Below find the top-selling items at Walmart.com on Cyber Monday.

LG 50″ 1080p 60Hz LED HDTV