Alternative Visions - Are US Stock Markets About to Turn Down Again? - 03.30.18
Dr. Rasmus looks at the forces pumping up US stocks, especially Tech stocks and S&P500, and the emerging counter forces that may soon prevail to send US stock markets into another major correction. Forces driving the bubble are continuing record stock buybacks and dividend payouts, and now record levels of merger & acquisitions (up 67% in 2018 and $1.2 trillion) and the Trump tax cuts boosting profits 10%-31% and their distribution into buybacks, dividends, and M&A activity. Forces growing that may reverse the trend and bubbles include: tech stocks peaking and attacks on Tech companies by politicians, Federal Reserve continued interest rate hikes, derivatives exposures to ETFs, cryptos, VIX, a renewed slowing of global economies and trade, China stock market contraction, European non-performing bank loans, and the Bank of Japan’s destruction of corporate bond markets with its QE purchases. Rasmus concludes with the talk of ‘Trade War’ under Trump as a factor threatening stocks. The trade war is phony, and really a ‘war’ targeting China while exempting US allies except for token changes, as evidenced by the just concluded US-South Korean agreement. Trump’s ‘trade war’ with China is discussed in historical context with Reagan’s ‘trade war’ on Japan in 1985 and Nixon’s targeting Europe in 1971. Rasmus concludes Trump vs. China will prove less successful than Reagan-Japan and Nixon-Europe.
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