Will the Stock Market Crash?
We ask the tough question.
We keep Bloomberg TV on in our office as a matter of course. As I'm operating from the east end today, I've been listening to CNBC in the background.
It's been a long time, and the Keith McCullough candor was worth the price of admission. I also enjoyed Art Cashin, for whom I have great respect, and nodded my head in agreement as he spoke of forced selling out of Europe.
Here's the thing; we've long said -- and I'm talking way back -- that perception is reality in the marketplace.
Credit of a different breed -- that of credibility -- is the issue at hand for markets at large. We posited those thoughts in 2007 before the crisis arrived, with an eye towards this.
Full faith and credit in the system: our financial institutions, our leaders, and capitalism itself.
As I now listen to pundits posture on undervalued US equities, strong corporate balance sheets, and how oversold the tape is on a technical basis (it feels to me like folks are still waiting to sell), I can't help but think of a passage I read on Minyanville a few years back.
Markets crash when -- by definition -- traditional metrics of measurement break.
I'm not saying this will happen, but I'm not saying it won't. There is a difference between a manufactured stock market rally and a legitimate economic recovery. We've been talking about it in the 'Ville for years.
If the world has finally awoken to that fact, historical precedent need not apply.
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