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titanic1

the 5 biggest bubbles in markets today

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 titanic1    244

 

Bubbles aren’t new—they’ve been around since Dutch tulips—but it’s only recently that they’ve worked their way into the average investor’s lexicon. That’s probably because bubbles happen much more frequently these days.

We never used to get a giant speculative bubble every 7–8 years. But that has been the case since the new millennia.

In 2000, we had the dot-com bubble.

In 2007, we had the housing bubble.

In 2017, we have the everything bubble.

Real Estate

You can spot real estate bubbles all around the world now. Canada, Australia, Sweden, Hong Kong, China—and California—to name a few.

Home prices in California have risen by 69% since 2010. Meanwhile, Canadian housing has shot up 1040% over the same period.

Why do these bubbles exist? For starters, ultra-loose monetary policy (which is also the reason that the bitcoin bubble exists).

What will be the catalysts that deflate these real estate bubbles? I’m not sure, but usually there isn’t a catalyst. The marginal house price just gets too expensive.

It seems pretty nutty that another real estate bubble is forming just ten years after the last one that nearly wiped out the planet. But real estate has been part of the food fight in asset prices and it appears to be peaking.

Cryptocurrencies

You have probably heard about the madness in cryptocurrencies, like Bitcoin, Ethereum, and ripple. Ethereum is up about 3,600% this year. As for bitcoin, it is old and boring and up only 343% this year. 

Alt-currencies are being launched left and right, in initial coin offerings (ICOs). These ICOs explode on the first day of trading, and everyone gets rich. Free money!

When people are making free money, you are pretty close to the end. These ICOs conjure memories of the IPO craze in 1999. That’s the funny thing about free money—everyone wants in.

Cryptocurrencies are a massive bubble because people are making money all out of proportion to their intelligence or work ethic, which is one of the hallmarks of a bubble.

Stocks

Credit Bubble

Indexing

We have all the classic warning signs of a big market top:

Extra-tight credit
Extra-low volatility
FAANG
Complacency in general
Retail looking smart, pros looking stupid
Short rates rising, curve flattening
Pain trade is probably lower, not higher
And yet people are mostly ignoring them.

Read more at:  
http://www.businessinsider.com/here-are-the-5-biggest-bubbles-in-markets-today-2017-10/#get-ready-6

Harvard professor and renowned economist Kenneth Rogoff, who in the past argued for a reduction in the amount of physical cash, recently said that the bitcoin price “will collapse,” due to continued regulatory pressured from governments.

In his piece, written for The Guardian, Rogoff stated:

“My best guess is that in the long run, the technology will thrive, but that the price of bitcoin will collapse.”

After briefly mentioning bitcoin’s 1,600% surge in the past 24 months, Rogoff argued that what will happen from here will depend on governments and how they react to the cryptocurrency. Per his own words, a technologically superior bitcoin could easily emerge, but bitcoin’s established lead in credibility, along with the large ecosystem of applications built around it, keep it at the top.

However, Rogoff argued that “ it is folly” to think the number one cryptocurrency will be allowed to displace fiat currency, as governments may accept a few small transactions with cryptocurrency, but they won’t take large-scale anonymous payments which make it a lot more difficult to collect taxes and track down criminal activity.

https://www.cryptocoinsnews.com/bitcoin-price-bubble-will-collapse-ex-imf-economist-kenneth-rogoff/

House prices bubble: UK cities where values could soon CRASH

HOUSE prices in almost 20 English cities and towns could be in a dangerous bubble that is close to bursting, a national mortgage broker has warned.

Home values are at risk of collapsing in areas where prices are rising - despite a drop in borrowing, according to data analysis by One 77 Mortgages. 

Most of the places identified as vulnerable are in the north of England, raising fears the region could become the epicentre of a market downturn. 

https://www.express.co.uk/finance/personalfinance/865623/House-prices-crash-UK-area-values-news-2017-2018-forecast

Vancouver is ranked among global cities most at risk of a housing bubble for the second time this year as the cost of a typical single-family home surged to a record $1.6 million, about 20 times the median household income. The seemingly relentless run-up has defied attempts to cool it, including a 15-per-cent tax on foreign buyers imposed by the previous, Liberal-led government last year.

https://www.thestar.com/business/real_estate/2017/10/11/british-columbia-eyes-all-options-to-cool-vancouver-housing-market-finance-minister-says.html

-So if you are in a bubble, now would be a good time to get out before it bursts -T

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