All we have been hearing since 2011 is how the stock market is going to crash and then there will be hyperinflation and all sorts of strange relationships that never materialize. They simply focus on the level of the stock market in nominal terms without adjusting it for inflation or showing how it has performed relative to the rest of the economy.
This article is an edited ([ ]) and revised (…) version of the original (written by Martin Armstrong) to ensure a faster & easier read. It may be re-posted as long as it includes a hyperlink back to this revised version to avoid copyright infringement.
The Stock Market Expressed As the Total Value of Shares Traded Annually As a % of GDP
The chart below illustrates that the retail market is not in crash mode just yet and it is still nowhere near the overbought levels of 2007.
Crisis In Liquidity
The chart below reflects the crisis we have in liquidity. The more government tries to also regulate banks, they have been withdrawing from proprietary trading and we find the trading volume has been shrinking.
Government manipulates the statistics to always try to reflect that everything is OK and they are doing a fantastic job. Below is the ECB’s assessment of liquidity trying to pretend it’s back to normal.
Real liquidity is HALF that of 2008 yet the ECB’s Financial Market Liquidity Index is a complete fraud for it simply measures the spread between bid and ask and not the volume traded…Honestly, the bid ask spread can narrow and let a panic start and that will quickly vanish as market-makers withdraw. There is far less depth to the markets today than before back in 2007. A return on investment also means nothing with respect to liquidity.
As long as we have analysts relying upon government statistics without thinking about their construction, this is really the blind trying to lead the blind. What a joke!
munKNEE should be in everybody’s inbox and MONEY in everybody’s wallet!
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