“We’ve Seen this Before” – in 1999, then Stocks Crashed

[marmar]

“We’ve Seen this Before” – in 1999, then Stocks Crashed
by Wolf Richter • November 29, 2015


[font color="blue"]“A lot of deterioration and decay under the hood”[/font]

The fourth quarter is normally a very strong quarter, and December exceptionaly strong in the global markets, says Christine Hughes, Chief Investment Strategist at OtterWood Capital. This quarter too, global markets are in the green after a powerful rally in October.

But for the year, the S&P 500 has been stagnating. Wthout the top 10 mega-cap stocks (which are up 14%), the index is actually down 6%. This spread between the top ten names and the rest of the index now amounts to 20%.

“We’ve seen this before,” Hughes says. Last time a spread of this magnitude occurred was in 1999. At that time, the rest of the market was strong. And it ended in a three-year crash. This time, the rest of the market is already weak. Then there’s Glencore, whose collapse would ricochet around the global credit markets and hit stock markets. So here’s Christine Hughes, charts and all:

CEOs, Wall Street are furiously making hay while the storm moves in. Read… M&A Spikes to Craziest Frenzy Ever, even as Bottom Falls out of Riskiest End


http://wolfstreet.com/2015/11/29/weve-seen-this-before-in-1999-then-stocks-crashed/

[Warpy]

1. Yep, boom and bust, boom and bust

and you always know when the boom has run out of gas, the top starts to flatten out. This has lasted a lot longer than other flat markets have, the bustlet earlier this fall only dropping the Dow about 600 points overall.

I'm not a bit surprised that M&A frenzy has taken over, there's just no way to make boom profits in any of the markets and that means even hedge funds with their banks of computers doing their trading for them aren't making the huge bucks they used to. Acquiring other companies is the only way to maintain the illusion of increasing wealth for the wealthy.

Now all we need on top of this is a wave of useless real estate development, like big yuppie trophy houses and condos that investors will buy and keep empty trying to make a real estate score. Or maybe big office towers in cities that have high office vacancy rates. Maybe more shopping centers in areas where bankruptcies have wiped out small businesses to the point that strip malls look like a hockey player's smile with all the darkened stores.

We're overdue for a bust, in other words. The PTB might be sinking a huge amount of money into delaying it until next year so they can get a fascist into office.

[Fuddnik]

2. It seems like everywhere I look around the Tampa Bay area, Berkshire Hathaway signs are popping up.

Office buildings, vacant real estate, strip malls. It wasn't like that a year ago.

And what do you mean "waiting" for a fascist to get into office? Methinks that horse escaped the barn a long time ago.