Just what kind of Bubble is it?

[Fox]

Hey everyone, don't really post new topics but I have a question/thought to get us on the same page of things.

The FEDs, and othe CBs, money hose is finally filtering out and finding itself into every Parkable asset and investment possible (as opposed to being put into the productive economy like the FED said it would). The result is we have ALL investment boats rising.

What I'm having trouble determining is what IS the actual bubble we are in?
Junk bonds? But then Sovereign Bonds are priced out of whack as well. Spain's 10yr note is almost on par with the US 10yr note. Madness!

Stocks are going on a tear. The S&P is now on its longest run ever without a 200dma pull back

I'm thinking the bubble is in actual various currencies, the USD being only one of several mis-priced currencies out there. However what yard stick do you use to measure the value of currencies when most of the money is sitting parked in banks and CB balance sheets, and not showing up in the money supply or economy? Even Shadowstats has a muted M3

In any case, your thoughts?

[thriftyandboringinohio]

Re: Just what kind of Bubble is it?

... However what yard stick do you use to measure the value of currencies when most of the money is sitting parked in banks and CB balance sheets, and not showing up in the money supply or economy? Even Shadowstats has a muted M3..

Thanks for the post, Fox. You have a couple different interesting ideas here.
First is the idea that even though central banks have printed mountains of new money since 2008, they have captured it with various "sterilization" schemes that have been at least partially successful.
I agree with you, I would have expected more signs of inflation by now.
It's easy to find folks who feel that a day of reckoning must eventually arrive, and somehow this mountain of money will find a way out of the cage and come crashing into the general economy to create spectacular inflation.
Around here that sounds like the "Poom" in the Janszen Scenario

The second idea is how to measure the value of a currency. Our Finster has posted prolifically on this topic.
For me, crude oil and gold are much different than all other goods and currencies.
I look often at the price of both, and when I see "the price of oil is going up" I translate that to "the value of the dollar is going down".
Guys like Finster can process big data to compare currencies and commodities in many permutations, but I can't.
So I watch gold and oil

EJ has written about major CBs taking turns devaluing their own currencies by some agreement, either explicit or tacit, and hinted that it may be possible to predict whose turn is next to devalue.
If one could pull that off, one might become a very rich FOREX trader.

[Milton Kuo]

Re: Just what kind of Bubble is it?

What kind of bubble is it? The popping kind.

More seriously, I think the most overpriced assets are the toys of the rich (artwork, super high-end housing, and whatever else the ultra-wealthy buy to show off) and speculative assets people buy in hopes of becoming one of the rich: high-flying technology company stocks, cryptocurrencies, etc.

[thriftyandboringinohio]

Re: Just what kind of Bubble is it?

Kind of making me think... isn't a currency's value determined by the trust that people puts in it? I mean, If america's showoff wasn't going so well with the world peace and all, wouldn't that bubble already be popped and the spectacular inflation going on as well?

Just my opinion, "and some analysts I follow"

Thanks,

Phil

Sure, the value of a currency is based on how much people trust it.
But it's awful hard to accurately measure and model trust. So we look for surrogates that we can measure and model quantitatively as indirect measures of trust.
If markets are working, interest rates are a pretty direct expression of trust.
But ZIRP and other interest rate manipulations make that less useful these days, it amounts to price fixing for the price of money.

The chart shows a soaring Fed balance sheet, which I agree is pretty worrisome.
Other charts and indicators look just as worrisome.
Even still, the US dollar looks good by comparison, what many call the cleanest dirty shirt.

The hypothetical situation you describe as a bubble popping and a spectacular inflation following the pop is pretty much the Janszen scenario, the ka-poom theory.
Triffin's dilemma/paradox is a similar theoretic construct that EJ references and uses in the models behind the Janszen scenario.

It's easy to agree that a bad outcome is inevitable.
It's much harder to know when that might happen.
I sure don't.

[SilverMan]

Re: Just what kind of Bubble is it?

... I think the most overpriced assets are the toys of the rich (artwork, super high-end housing, and whatever else the ultra-wealthy buy to show off) and speculative assets people buy in hopes of becoming one of the rich: high-flying technology company stocks, cryptocurrencies, etc.

Agreed.

[touchring]

Re: Just what kind of Bubble is it?

More seriously, I think the most overpriced assets are the toys of the rich (artwork, super high-end housing, and whatever else the ultra-wealthy buy to show off) and speculative assets people buy in hopes of becoming one of the rich: high-flying technology company stocks, cryptocurrencies, etc.

+ Apple

[lektrode]

Re: Just what kind of Bubble is it?

+ Apple

+ all or pert near ALL of 'the sharing economy' stawks...