Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Heart84 said the bust was coming BEFORE the election.
Yes, likely the first signs of the deflationary bust starting before the election and roughly a 6-9 month period of intense deflationary price action going into the middle of 2021. Stocks down 50-75% from summer peak to bust trough bottom.
Will having Trump or Biden in office make any difference on how fast the market drops?
No because the groundwork for the bust has already been put into place. Just think of it like a massive avalanche that just needs a couple of snowflakes to start the slide. The Fed has created exponential leverage and complexity into the system since last fall with the repo market crisis. That was all pre-virus and there were already big cracks in liquidity showing then. Add on top of that everything that has happened post-virus. Fed pause in easing near the end of summer will start to set this all into motion.
And this is not just a U.S. story. Almost all world central banks are doing the exact same thing. +/- $250 trillion in global debt and quadrillions in derivatives. The world has never seen a building avalanche like this one. Election uncertainty + virus "reemergence" + European banking crisis are all likely to be the final snowflakes.
Think about this environment though. Record high headlines and the Wall Street vs. Main Street discord really heats up. The mainstream narrative that gets picked up is that Wall Street got bailed out with trillions and Main Street go a couple of "measly" "stimulus" measures. Main Street got left behind (again) and income inequality is exceeding 1929 record high levels.
This will be increasingly pushed by the Democrats as we get closer to Elections. They will continue their "Big Corporation evil, Unfair Taxes" in order to get Trump beat.
The lockdowns, the riots and the neglect of the working man are all Politics at this point to win an election.
what will prevent the bust from happening? I always have the worst timing =(. Buying a house this summer near the high and then selling our house in the Fall during the bust....sigh.
If Joe happens to tap Liz, the health care and financial sectors could get a head start on your predicted market dive.
Would rather see Amy or Kamy on that Dem ticket...
I still am not sure Biden can hold up through peak election cycle. Would not be surprised to see a last minute "replacement." Big name VP pick could mean their plan is to replace him very soon once in office.
what will prevent the bust from happening? I always have the worst timing =(. Buying a house this summer near the high and then selling our house in the Fall during the bust....sigh.
I don't think really anything can stop what is coming down the road at this point. The only alternative would be for the Fed to just keep rapidly expanding their balance sheet (and not pause first) indefinitely to the point of massive inflation. But then we get major inflation and eventually hyperinflation. I think the far more likely scenario is the Fed pauses near the end of summer thinking "mission accomplished" and not realizing the extent of the deflationary pressures they have been masking since last fall. That underestimate sets the great unwind into motion.
During the bust is when the Fed goes parabolic in their expansionary measures to try and get in front of the deflationary freight train. They will take their balance sheet somewhere in the neighborhood of $20 trillion. That is when they overshoot and we start to see an inflationary cycle starting in early 2022.
You have some time before the bust. Can you sell your house near the end of summer/early fall?
FYI for those of you following my previous call on oil when it was $10/barrel who have asked questions along the way - I started a new thread on this topic just now. I am selling all of my oil plays today. It has exceeded my short-term target range of $30-35 barrel.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
