Regular Co-Host: Charles Hugh Smith, Author & Publisher of OfTwoMinds.com
With Charles Hugh Smith & Gordon T Long
28 Minutes - 21 Slides
Charles Hugh Smith and Gordon T Long discuss the US Equity Market Technicals. They position the technical charts which they go through in the context of the following primary sources of system risk to the markets:
1. Too much debt globally; public and private debt has skyrocketed since 2008.
2. Mal-investment due to perverse incentives: borrow money for stock buybacks rather than invest in new productive capacity, etc.
3. Stagnant income/revenues: households, companies and nations cannot support more debt
4. The rise of high-frequency trading (HFT) has increased the odds of flash crashes and instability
5. Rising U.S. dollar has triggered capital flight from emerging markets and China
6. China's economy is grinding to a halt, crushing demand for commodities and commodity-dependent economies
7. Opaque banking: shadow banking in China, dark pools in offshore banking centers, etc. True totals of debt, leverage and quality of collateral are all unknown
8. Deteriorating collateral globally. How many of the 60 million empty "investment" flats in China can be sold for the purchase price? This is just one example of illiquid, impaired assets that are grossly overvalued.
Just 3 Potential Triggers
Gordon T Long takes the lead is laying out three technical market triggers that are currently at play, which he feels will significantly disrupt the markets and heighten volatility:
- Have Entered a "Revenue Recession",
- Cycle Timing,
- Shifting Global Sentiment & Confidence
However, Gordon doesn't see this cyclical bull market to be quite over yet. Though he sees a scare coming in the near term, he feels the central bankers still have three arrows left in their quiver and until they are all fired the markets still have more room to run. He lays this out in his theory of an unfolding final "M" Top.
.. lots of charts here!