I’m not going to predict when and how the US stock market will crash as I did by laying out the stages of its fall for 2018. That was easy, but the times are different now.
Back then, the Fed had laid out a precise schedule for its tightening, and it was apparent to me where the big increases in Fed tightening would be sufficient to bring down the market that the Fed had artificially rigged.
Today, the Fed is back to easing — back to doing what it does to juice markets up. And the correspondence between what central banks do with their balance sheets and what the stock markets do is now almost 100%.
All of 2019 looks like lockstepping to me.
The Fed, of course, is the primary mover for the US market. Therefore, US stocks being overpriced in the extreme may not matter so long as the Fed is willing to keep the money pumps redlining at maximum RPM.
However, the more the market’s metrics move above all rational and historic benchmarks, as I’ll show they now have, the greater its fall will be if the Fed pulls the plug, AND the more sensitive it will become to the Fed even wiggling the plug. So, the situation is, in that sense, more perilous than at anytime past because some of the market’s most fundamental valuation metrics are now printing at levels never seen before.
Let me lay that out for you.
Read the rest here: http://thegreatrecession.info/blog/stock-market-more-overpriced-than-ever/