The Factors Behind US Investor Confidence
US stock markets have remained bullish in the face of
deepening domestic and international risks, owing to three key factors. But
with two of these coming under pressure, the durability of the current cycle
will depend on the third: the US Federal Reserve.
Navigating Today’s Frothy Financial Markets
With stock markets soaring, two factors can serve as
early warnings of where and when a financial-market bubble might burst, and
whether it will be followed by a market correction or a broader economic
crisis. It all comes down to the intrinsic productive value of the underlying
assets, and how investments are financed.
Will We Ever Learn to Avoid Bubbles?
It isn’t hard to spot a bubble forming. But
experienced investors will know it’s very very hard to spot when it might
finally come a cropper. That’s partly because it doesn’t really need a
catalyst; it doesn’t require political disruption, financial scandal or shifts
in monetary policy (although there is plenty of that about, of course). The
end, as Societe Generale AG’s Albert Edwards points out, is often remarkably
simple: “A reversal in price momentum in an asset class that has risen sharply
for a number of years (sucking in huge quantities of loose money) is often
sufficient in itself to cause prices to crash.”
Goldman’s Top Stock Analyst Is Waiting for AI
Bubble to Burst
Why Are Stocks, Gold, and the Dollar Surging?