MARGIN DEBT as a percent of the economy is higher today than on 2000 and 2007 The median price to earnings ratio sits at 22.6...higher than the market peak in 2007...at 22.6 the S$P index is currently 25.3 %%% above It's median fair value... Price to sales ratio is now not only higher than In 2007 but also at any other time in history with the exception of the top of the Internet bubble in 2000.... What does this tell you....the fed has once again juiced the markets.... http://www.cnbc.com/2016/04/19/buckle-up-stocks-could-drop-25-percent-or-more-commentary.html
One of the reasons FED delays with rate increase. As soon as bubble hedge funds start pull money out of the market it may crash. First we were told that this is because of unemployment, then Greece, then housing market, then China, then we were told that this is because of oils, then inflation was the reason. There is always could be found a reason not to rise the rates. But, nobody would tell you the real reason. And the real reason is simple. Higher rates will push many fund managers pull money out of the market - bad 2015, 2016 is not better add to it rate increase.... Pulling money out of the market right now when the market is pumped by borrowed from FED cheap money (which may become no cheap) may create panic and snow ball effect. I guess FED played that scenario on their powerful computers. It would be foolish for them not to do it - they have all the data for it: who borrowed, how much and where it is invested. By doing it before the election could be suicidal for Democratic party. They need good and stable market at least until November. I guess that was one of the main subject when during Obama and Yellen last meeting. I would love to see the list of the biggest borrowers from FED to know how much were borrowed and where these money were invested - at least top 100. Does anyone know whether this info is available to public?
http://finance.yahoo.com/news/hedge-funds-suffer-worst-outflows-144423959.html just an addition to what was said above
Saut is a good read every Monday : Investment Strategy by Jeffrey Saut - Currently the bulls have the winds at their backs. Now if you're looking for the big crash, the ingredients aren't there yet. As Jeremy Grantham points out earlier in the year,“The most important missing ingredient is a fully-fledged blow-off. This should come complete with crazy speculative anecdotes for your grandchildren, massive enthusiasm from individual investors, an overwrought, overcapacity economy, and, at minimum, a 2-sigma [two standard deviations] S&P 500 at 2300.” I think negative interest rates is one ingredient but I'd wait til mid to later this year to see for sure if it's causing some distortion in the European marketplace. You could argue that negative interest rates there are weighing on bond yields here..... Aramco could be another ingredient. A potential multi trillion dollar company could go on a buying spree..........