The recent rise in U.S. bond yields has intensified financial market shocks, with the technology-based Nasdaq Index retreating more than 10% from its February high, making the stock market “bubble” a topic of discussion again in the investment community.
This year, including the movie “The Big Short” protagonist prototype, in 2008 before the outbreak of the financial tsunami sold short real estate mortgage securities of well-known hedge fund manager Michael Burry, as well as “Dr. Doom” economist Roubini (Nouriel Roubini (Roubini) are warning that the speculation, speculation to raise the bubble, will eventually collapse.
Roubini pointed out in a commentary published this month, the U.S. economy is experiencing a “K-shaped recovery” process, in the stock market record high stage, with stable jobs and benefits for the people, the financial situation remains good, but those engaged in low value-added work of the blue-collar class, but the debt, facing a continuous deterioration of economic prospects. reflecting the clear decoupling of the financial market and the real economy. Roubini said bluntly, the stock market record high, for most people is meaningless.
Roubini cited a study by economists at the U.S. Federal Reserve pointed out that the phenomenon of uneven distribution of wealth is becoming increasingly serious, the top 1% of the rich hold more than 50% of the stock market assets, while the bottom 50% of people in the distribution of wealth, only 0.7% of the stock market assets. In order to turn around from the dilemma of inequality between the rich and poor, many retail investors choose to take the path of speculation. According to Roubini, a large number of investors bet their personal savings on trading platforms like Robinhood to leverage and buy certain worthless stocks.
According to Roubini, the drama of retail investors backing video game retailer GameStop and teaming up to beat back the short sellers hides an ugly truth: “A group of people with no hope, unemployed and lacking professional skills are once again being exploited. Many believe that the way to financial success is not through great job performance, patient saving and investing, but by betting on worthless assets like cryptocurrencies as a way to get rich quick.”
Capital markets are already full of bubbles, supported by “ultra-loose monetary policy”. Roubini stressed that at a Time when the inequality of wealth distribution is increasing and the stock market has reached new highs, it is clear that the current market frenzy will “end in tears” (will end in tears).
The same negative view of the stock market mania phenomenon Burry revealed at the end of last year, he was selling short tesla (Tesla), and several times since this year, predicted that full of speculation, speculation phenomenon of the U.S. stock, fear ushered in a “devastating collapse” (devastating crash). He stressed that the previous warnings have been made, but no one listened. This time again, no one is still listening, but will prove that once warned everyone. He pointed out that speculative stocks will eventually fall into a bubble, will make the gamblers bear heavy debt. According to foreign media observation, Burry in a clear expression of their own position, then did not continue to be cross media “bubble warning”.
In fact, the U.S. bond yields climbing, the impact of stock market performance, has made many investors began to feel uneasy. According to Goldman Sachs forecasts, the U.S. gross domestic product (GDP) is expected to grow by nearly 7% this year, the highest level since 1984; however, the rebound in economic growth has led to expectations of rising Inflation, and U.S. bond yields have climbed higher, compared to the returns offered by stocks, which are not so bright, and stock market volatility has increased.
Lindsey Bell, chief investment strategist at Ally Invest, said that inflation concerns are a stumbling block for the stock market in the near future, and the market is expected to see more weakness in the future, with technology stocks, which have previously surged a round, likely to be hit the hardest.
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