香港樓市就開始有呢個特徵: 愈起愈多樓, 愈來愈多人買樓, 樓價愈來愈貴, 所以小心為上 !
kingworldnews.comOn the heels of another chaotic trading week in major markets, today one of the top economists in the world sent King World News an incredibly powerful piece warning about the most dangerous bubble in history and why the central banks are now in a panic. Below is the fantastic piece from Michael Pento.
July 24 – (King World News) – One
of the most ironic and fascinating characteristics about an asset
bubble is that central banks claim they can’t recognize one until after
it bursts. And Wall Street apologists tend to ignore the manifestation
of bubbles because the profit stream is just too difficult to
surrender.
The excuses for piling money into a particular asset class and sending prices several standard deviations above normal are made to seem rational at the time: Housing prices have never gone down on a national basis and people have to live somewhere, the internet will replace all brick and mortar stores, and perhaps the classic example is that variegated tulips are so rare they should be treated like gold….
I am willing to let the Dutch off the hook; back in the seventeenth century asset bubbles were virtually nonexistent because money was still in specie. But central banks have created the perfect petri dish for asset bubbles over the past three decades. Therefore, it’s imperative for investors to understand the classic warning signs of a bubble so you can avoid the inevitable carnage in the wake of its collapse.
As I identified in my book “The Coming
Bond Market Collapse”, there are three classic metrics to determine when
an asset has grown into a bubble: it becomes extremely over supplied,
over owned and overpriced compared to historical norms.
The real estate market circa 2005 was a
great example of a classic bubble. The supply of new homes boomed as
new home construction rates peaked around 2 million units per annum in
the middle of the last decade. That’s about 400k units higher than what
would be considered the historical average.
Just prior to the start of the Great
Recession the level of home ownership in the U.S. soared. This rate hit a
high of 69% during 2005, after bouncing around 64-66% for decades.
Today’s home ownership rate has fallen back to just 63.7%, which is the
lowest in 25 years.
And finally, during the real estate
bubble homes were massively overpriced. According to Trulia, at its 2006
peak home prices were 39% overvalued based on consumer incomes and cost
to rent. On a national level the median home price to income ratio shot
to 4.7 in 2006, compared to the 2.6 historical average. The current
home price to income ratio has climbed back to 4.4 on a national basis.
However, even though home prices are currently vastly overvalued, the
housing market is not in a classic bubble because the real estate market
is not currently in the conditions of being over owned or over
supplied.
But the bond bubble is a classic bubble thanks to Wall Street and the Federal Reserve. The
bond market qualifies as being in a state of over supply because there
has been an additional $60 trillion in total global debt that has
accrued since 2007.
During the first half of this year,
$891 billion in bonds were issued in the U.S. alone. That’s up 7.5% from
the same period in 2014, which was itself a record year, according to
the Securities Industry and Financial Markets Association.
Higher-yielding “Junk Bonds” led the
way with $185 billion so far in 2015. Volume for June topped out at $29
billion from 60 issuers, the most for any June on record. The previous
June saw just $12.8 billion in volume from 31 issuers. June also follows
the two busiest months of this year, with April and May pulling in $39
billion and $37 billion, respectively. That makes for a record quarter
of $105 billion, the largest recorded quarterly volume ever. Talk about
being oversupplied!
But just as more risk was taken toward
the final stages of the housing bubble in the form of sub-prime mortgage
issuance, for every speculative-grade company that has had its credit
rating upgraded this year about two others have been downgraded. This is
the worst ratio since 2009. U.S. companies that issue high-yield debt
posted two consecutive quarters without earnings growth for the first
time since the financial crisis. And their average level of
debt-to-earnings is at an all-time high as well.
Next, bonds are over owned because
investors are yield-starved. In the first quarter of this year alone,
net cash inflows into bond funds totaled $102 billion — that’s the
largest inflow since 2001. And last year investors poured $204 billion
into bond funds, surpassing inflows of $121 billion into stock funds.
And finally, bonds are overpriced
compared to historical norms. Bond yields and prices are inverted; as
bond prices fall, yields rise. Today, the yield on the bench mark US
10-year Treasury sits at around 2.3%. This is very close to its historic
low and far below the 7% average over the last 40 years — making the
price of bonds massively expensive at the current level—especially in
light of record debt levels and the increase in central bank balance
sheets.
I first explained the classic signs of a
bubble at the start of the real estate crisis to help investors
identify a problem before it grows too far out of control. Perhaps the
Fed should now take heed and ask the question if seven years of zero
percent interest rates could possibly lead to a bubble in fixed income.
But even more importantly, the question everyone should be asking is:
what happens when bond prices crash and who is going to buy all that
debt?
Once the Fed starts raising interest
rates investors may start to sell their high-yield junk bonds in the
same manner as sub-prime mortgages were the first to crack in the
housing bubble in 2008. This would exacerbate the drop in prices and
cause yields to rise yet further and faster.
Prices will also tumble because
government regulations have stripped banks of their proprietary trading
desks; and bids for plummeting bond prices may become as rare as a
variegated tulip. Spiking debt service payments will crumble the stock
and real estate markets that have been built on synthetic, free-money
based economies.
The Most Dangerous Bubble In History And Why The Central Banks Are In A Panic
The bottom line is that the bond market
is the most dangerous bubble in history precisely because every asset
class derives its value from the cost of money. Therefore, even though
stocks and real estate aren’t in a classic bubble they have still become
vastly overvalued due to the frantic search for yield over the course
of seven years.
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