Authored by Sven Henrich via NorthmanTrader.com,
In this week’s edition of Straight Talk Guy Adami, Dan Nathan and I are diving into the surprising jobs report, the hot topics of the widening wealth gap and social unrest, the Fed’s role in all of it, the implications of the widening rift on our society, the risks of a building record rift between asset prices and the real economy and we also offer a heartfelt discussion of the reasons of why we do what we do, offer our often contrarian and critical opinions.
Markets closed the week at a red flag screaming 151% market cap to GDP. There is no history, none, that shows valuations above 150% market cap to GDP are sustainable. None.
But this is what you get when you have a market that treats a phase one trade deal as something better than the trade volumes that were in place before the trade war ever started. This is what you get when a market treats phase one Covid vaccine trials as an actual vaccine already in place. This is what you get when a market prices in a perceived uptick in employment from a total collapse as an economy already having returned to full employment. This is what you get when a market perceives the injection of trillions of dollars as a substitute for actual growth in the economy.
This is what you get:
Sven Henrich
✔
@NorthmanTrader
Welcome to the first massive financial asset bubble inside of a recession.
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6:52 AM - Jun 5, 2020
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A financial asset bubble the likes we have never seen before. Asset bubbles happen at the end of a business cycle. Now we have one with nothing, absolutely nothing, on a extended proven growth path and the global economy still in a recession.
What bubble do we have in store for when the economy actually emerges from the recession?
Fact is the China US relation is frayed, the phase one trade deal in shambles in terms of actual volumes. There is no vaccine and while we’ve had a slowing of infections of wave 1 of the virus it is still ravaging in places such as Brazil and Mexico and back on the uptick in countries that have reopened their economies. The jury is still out.
And employment?
Sven Henrich
✔
@NorthmanTrader
Here's your "V".
http://www.zerohedge.com/markets/heres-your-v-no-market-not-forward-looking
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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