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Wikipedia

Everything bubble

The expression "everything bubble" refers to the correlated impact of monetary easing by the Federal Reserve (and followed by the European Central Bank and the Bank of Japan)[3] on asset prices in most asset classes, namely equities, housing, bonds, many commodities, and even exotic assets such as cryptocurrencies and SPACs.[4] The term is related to the Fed put, being the tools of direct and indirect quantitative easing that the Fed used to execute the monetary easing,[5] and to modern monetary theory, which advocates the use of such tools, even in non-crisis periods, to create economic growth through asset price inflation.[a][4] The term first came in use during the chair of Janet Yellen, but it is most associated with the subsequent chair of Jerome Powell, and the 2020–2021 period of the coronavirus pandemic.[3][6]

Powell defends his first major monetary easing at a press conference, September 2019.[1]

High up on his [President Biden's] list, will be dealing with the consequences of the biggest financial bubble in U.S. history. Why the biggest? Because it encompasses not just stocks but pretty much every other financial asset too. And for that, you may thank the Federal Reserve.

Richard Cookson, Bloomberg (February 2021)[2]

The everything bubble was not only notable for the simultaneous extremes in valuations recorded in a wide range of asset classes and the high level of speculation in the market,[7] but that its peak in 2021 occurred in a period of recession, high unemployment, trade wars, and political turmoil – leading to a realization that the bubble was a central bank creation,[3][8][9] with concerns on the independence and integrity of market pricing,[10][9][11] and on the Fed's impact on wealth inequality.[12][13][14]

In 2022, financial historian Edward Chancellor said "central banks' unsustainable policies have created an 'everything bubble', leaving the global economy with an inflation 'hangover'".[15] Rising inflation did ultimately force the Fed to tighten financial conditions during 2022 (i.e. raising interest rates and employing quantitative tightening), and by June 2022 the Wall Street Journal wrote that the Fed had "pricked the Everything Bubble".[16] In the same month, financial journalist Rana Foroohar told the New York Times, "Welcome to the End of the 'Everything Bubble'".[17]

History

Origin

The term first appeared in 2014, during the chair of Janet Yellen, and reflected her strategy of applying prolonged monetary looseness (e.g. the Yellen put of continual low-interest rates and direct quantitative easing), as a method of boosting near-term economic growth via asset price inflation (a part of modern monetary theory (MMT)[a]).[19][20][21][22]

The term came to greater prominence during the subsequent chair of Jerome Powell, initially during Powell's first monetary easing in Q4 2019 (the Powell put),[23][24] but more substantially during the 2020–2021 coronavirus pandemic, when Powell embraced asset bubbles to combat the financial impact of the pandemic.[25][6] By early 2021, Powell had created the loosest financial conditions ever recorded,[26] and most US assets were simultaneously at levels of valuation that matched their highest individual levels in economic history.[27][3][28] Powell rejected the claim that US assets were definitively in a bubble, invoking the Fed model,[b] to assert that ultra-low yields justified higher asset prices.[30][31] Powell also rejected criticism that the scale of the asset bubbles had widened US wealth inequality to levels not seen since the 1920s,[32][33] on the basis that the asset bubbles would themselves promote job growth, thus reducing the inequality.[14][34][35] The contrast between the distress experienced by "Main Street" during the pandemic, and the economic boom experienced by "Wall Street", who had one of their most profitable years in history, was controversial,[36][37] and earned Powell the title of Wall Street's Dr. Feelgood.[38]

Powell was supported by Congress, with speaker Pelosi saying in October 2020, "Well, let me just say that the number, I think, that is staggering is that we have more people unemployed and on unemployment benefits than any time in our country's history. We know that the Fed is shoring up the markets so that the stock market can do well. I don't complain about that, I want the market to do well."[39][8][40]

Peak in 2021

 
In February 2021, the Fed's Bullard said he did not see a bubble: "That's just normal investing".[41]

In early 2021, some market participants warned that Powell's everything bubble had reached dangerous levels. Investor Jeremy Grantham said, "All three of Powell's predecessors claimed that the asset prices they helped inflate in turn aided the economy through the wealth effect", before eventually collapsing.[42][43] Investor Seth Klarman said that the Fed had "broken the market", and that "the market's usual role in price discovery had been suspended".[11] Economist Mohamed El-Erian said "you have such an enormous disconnect between fundamentals and valuations", and that the record highs in assets were due to the actions of the Fed and the ECB, clarifying "That is the reason why we've seen prices going from one record high to another despite completely changing narratives. Forget about the 'great reopening', the 'Trump trade' and all this other stuff".[9] The Financial Times warned that the inequality from Powell's K-shaped recovery could lead to political and social instability, saying: "The majority of people are suffering, amid a Great Gatsby-style boom at the top".[12]

Several commentators called the 2020–2021 market created by Powell as being the most speculative market ever seen, including CNBC host Jim Cramer who said: "You can't lose in that market", and "it's like a slot machine" that always pays out. "I've not seen this in my career".[44] Bloomberg said: "Animal spirits are famously running wild across Wall Street, but crunch the numbers and this bull market is even crazier than it seems"[45] ("Animal spirits" is a term popularized in the 1930s by economist John Maynard Keynes to describe the influence of human emotions on finance and investing). The extreme level of speculation led to notable individual speculative events including the GameStop short squeeze in January 2021, the five-fold rise in the Goldman Sachs Non-Profitable Technology Index.[46] and the record rise in micro-cap stocks, 14 of which would have qualified for inclusion in the S&P 500 Index by February 2021.[47] At the end of January 2021, the Wall Street Journal markets desk said: "For once, everyone seems to agree: Much of the market looks like it's in a bubble",[48] while Goldman Sachs said that the S&P 500 was at or near its most expensive levels in history on most measures, with the forward EV/EBITDA breaking 17× for the first time.[49]

In February 2021, the Fed's Bullard said that they did not see an asset bubble and would continue to apply a high level of monetary stimulus.[41] Bloomberg wrote that Powell, in the final year of his first term, was afraid to tighten in case of a repeat of the crash he caused in Q4 2018.[50] The Financial Times warned US regulators to regard the experience of the Chinese stock market bubble, when monetary easing by the Chinese state in 2014 led to a bubble, but then a crash over 2015–2016, in Chinese markets.[51] In February 2021, the former head of the BOJ financial markets division warned that the BOJ should adjust the level of direct purchases it makes of Nikkei ETFs due to bubble concerns.[52][c]

Popping of bubble in 2022

By early 2022, rising inflation forced Powell, and latterly other central banks, to significantly tighten financial conditions including raising interest rates and quantitative tightening (the opposite of quantitative easing), which led to a synchronized fall across most asset prices (i.e. the opposite effect to the 'everything bubble').[54] In May 2022, financial historian Edward Chancellor told Fortune that "central banks' unsustainable policies have created an 'everything bubble', leaving the global economy with an inflation 'hangover'".[15] Chancellor separately noted to Reuters, "If ultralow interest rates were responsible for inflating an 'everything bubble', it follows that everything – well, almost everything – is at risk from rising rates".[55] By June 2022, James Mackintosh of The Wall Street Journal wrote that the Fed had "pricked the Everything Bubble",[16] while in the same month the financial journalist Rana Foroohar told the New York Times, "Welcome to the End of the 'Everything Bubble'".[17]

Records set in the US

The post-2020 period of the everything bubble produced several simultaneous US records/near-records for extreme levels in a diverse range of asset valuation and financial speculation metrics:

General

  • In December 2020, the Goldman Sachs GFCI Global Financial Conditions Index (a measure of US monetary looseness), dropped below 98 for the first time in its history (the GFCI goes back to 1987).[26]
  • In January 2021, the Citibank Panic/Euphoria Index hit broke 2.0 for the first time since its inception in 1988, surpassing the previous dot-com peak of 1.5.[7]
  • In February 2021, the ratio of margin debt-to-cash in Wall Street trading accounts hit 172%, just below the historical peak of 179% set in March 2000.[56]
  • In February 2021, the Congressional Budget Office estimated that US Federal Public Debt held by the public would hit 102% of US GDP, just below the historic all-time high of 105% in 1946.[57]

Bonds

  • In January 2021, the Sherman Ratio (the yield per unit of bond duration), known as the "Bond Market's Scariest Gauge", hit an all-time low of 0.1968 for the US Corporate Bond Index.[58]
  • In February 2021, the yield on the US junk bond index dropped below 4% for the first time in history (the historical default rate going back to the 1980s is 4–5% per annum).[59]

Equities

  • In January 2021, Goldman Sachs recorded that the forward EV/EBITDA of the S&P 500 had passed 17× on an aggregate basis, and 15.5× for the median stock, for the first time in history (note that the price-earnings ratio was less comparable due to the 2018 reduction in the US corporate tax from 39% to 21%).[49]
  • By January 2021, the short-interest on the S&P 500 dropped to 1.6%, matching the record low of 2000;[60] the "most-shorted US stocks" outperformed by the largest margin in history in 2020.[61]
  • In January 2021, the ratio of US corporate insider share sales-to-purchases ratio hit an all-time high of 7.8× (i.e. 7.8 times more corporate executives sold their company's stock than purchased it).[62]
  • In February 2021, the Buffett indicator, being the ratio of the total value of the US stock market (as defined by the Wilshire 5000) to US GDP, set an all-time high above 200%, surpassing the previous dot.com peak of 159.2% (and the 2009 low of 66.7%).[63][64][56] In 2001, Buffett said: "If the ratio approaches 200%—as it did in 1999 and a part of 2000—you are playing with fire".[63]
  • In February 2021, the Price-to-Sales ratio of US stocks hit an all-time high of 2.95×, surpassing its dot.com peak of 2.45× (and the 2009 low of 0.8×).[63]
  • In February 2021, the price-to-tangible book ratio of US stocks hit an all-time high of 14×, surpassing its dot-com peak of 9× (and the 2009 low of 3×).[63]
  • In February 2021, the US equity put/call ratio, hit 0.40×, almost matching the March 2000 low of 0.39× (a low ratio means investors are very bullish).[56]
  • In February 2021, the combined capitalization of the top 5 stocks in the S&P 500 (being Apple, Microsoft, Amazon, Tesla, and Facebook) was 21% of the index, surpassing the prior March 2000 peak of 18% (being Microsoft, Cisco, General Electric, Intel, and Exxon).[56]
  • In February 2021, a record 14 members of the Russell Microcap Index, and a record 302 members of the Russell 2000 Index were larger than the smallest member of the S&P 500 Index.[47]

Housing

  • In November 2020, the Robert J. Shiller cyclically adjusted price-to-earnings ratio for US housing, hit 43.9×, just 3.8% below its all-time record of 45.6× set in 2006.[65]

Cryptocurrencies

  • In January 2021, the total value of cryptocurrencies passed US$1 trillion for the first time in history, with most currencies setting new highs in value.[66]
  • In February 2021, bitcoin passed US$50,000 per unit for the first time in history.[67]

Special-purpose acquisition vehicles

  • In 2020, a record 248 special-purpose acquisition company (SPACs) raised US$83 billion in new capital at their initial public offering; and by Q1 2021, a further record US$30 billion was raised in a single quarter.[68] SPACs are notoriously poor-performing assets, whose returns 3-years after merging are almost uniformly heavily negative; their proliferation is a signal of an economic bubble.[68][69]

Commodities

  • In July 2020, gold futures broke the US$2,000 per ounce level for the first time in history.[70]
  • In August 2020, lumber prices, as defined by the CME one-month futures contract, broke the old historic record high of US$651 per thousand board feet, to reach US$1711 in May 2021.[71]

Notable US cases

As well as the above asset-level records, a number of individual assets with extreme valuations and extraordinary price increases were identified as being emblematic of the everything bubble:[72]

  • Ark Innovation ETF (Ticker:ARKK), American exchange traded fund, and major investor in Tesla and other technology firms.[16][73][74][72]
  • Goldman Sachs Non-Profitable US Technology Index, a proprietary index of US technology firms that were loss-making.[46][73]
  • Russell Microcap Index stocks, the smallest listed US stocks where a record number grew in a short period past the size of the smallest S&P 500 stock.[47]
  • S&P Clean Energy Index, proprietary index of (mostly) US clean energy firms whose P/E ratio tripled.[16][75]
  • Tesla Inc. (Ticker:TSLA), the American electric car manufacturer.[73][76][77][72]

See also

Notes

  1. ^ a b MMT asserts that excessive asset price inflation will lead to an increase in real price inflation, which will lead to an increase in yields, and correspondingly reduce the asset price inflation (i.e. a self-stabilizing system).[4] Critics say that most historical periods of excessive asset price inflation did not produce such self-stabilization, but instead produced financial collapse and real price deflation (e.g. post-1920s America, post-1990 Japan, and post-2008 Europe); in other cases, the inflation was not controllable, also leading to a financial collapse (e.g. the 1970s in the United States).[4][18]
  2. ^ The Fed model is a disputed form of equity valuation which has been challenged by academics, and particularly at very low yields.[29] A notable example is post-1990s Japan when ultra-low yields did not stop Japanese equity valuations from dropping substantially for decades, only stopping when the Bank of Japan started directly buying equities to support their price.[18]
  3. ^ The Bank of Japan is the largest owner of Japanese shares through direct daily purchases of Nikkei ETFs, leading to questions over the integrity of the pricing of Japanese securities, and their long-term viability.[53]

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Further reading

External links

everything, bubble, expression, everything, bubble, refers, correlated, impact, monetary, easing, federal, reserve, followed, european, central, bank, bank, japan, asset, prices, most, asset, classes, namely, equities, housing, bonds, many, commodities, even, . The expression everything bubble refers to the correlated impact of monetary easing by the Federal Reserve and followed by the European Central Bank and the Bank of Japan 3 on asset prices in most asset classes namely equities housing bonds many commodities and even exotic assets such as cryptocurrencies and SPACs 4 The term is related to the Fed put being the tools of direct and indirect quantitative easing that the Fed used to execute the monetary easing 5 and to modern monetary theory which advocates the use of such tools even in non crisis periods to create economic growth through asset price inflation a 4 The term first came in use during the chair of Janet Yellen but it is most associated with the subsequent chair of Jerome Powell and the 2020 2021 period of the coronavirus pandemic 3 6 Powell defends his first major monetary easing at a press conference September 2019 1 High up on his President Biden s list will be dealing with the consequences of the biggest financial bubble in U S history Why the biggest Because it encompasses not just stocks but pretty much every other financial asset too And for that you may thank the Federal Reserve Richard Cookson Bloomberg February 2021 2 The everything bubble was not only notable for the simultaneous extremes in valuations recorded in a wide range of asset classes and the high level of speculation in the market 7 but that its peak in 2021 occurred in a period of recession high unemployment trade wars and political turmoil leading to a realization that the bubble was a central bank creation 3 8 9 with concerns on the independence and integrity of market pricing 10 9 11 and on the Fed s impact on wealth inequality 12 13 14 In 2022 financial historian Edward Chancellor said central banks unsustainable policies have created an everything bubble leaving the global economy with an inflation hangover 15 Rising inflation did ultimately force the Fed to tighten financial conditions during 2022 i e raising interest rates and employing quantitative tightening and by June 2022 the Wall Street Journal wrote that the Fed had pricked the Everything Bubble 16 In the same month financial journalist Rana Foroohar told the New York Times Welcome to the End of the Everything Bubble 17 Contents 1 History 1 1 Origin 1 2 Peak in 2021 1 3 Popping of bubble in 2022 2 Records set in the US 2 1 General 2 2 Bonds 2 3 Equities 2 4 Housing 2 5 Cryptocurrencies 2 6 Special purpose acquisition vehicles 2 7 Commodities 3 Notable US cases 4 See also 5 Notes 6 References 6 1 Further reading 7 External linksHistory EditOrigin Edit The term first appeared in 2014 during the chair of Janet Yellen and reflected her strategy of applying prolonged monetary looseness e g the Yellen put of continual low interest rates and direct quantitative easing as a method of boosting near term economic growth via asset price inflation a part of modern monetary theory MMT a 19 20 21 22 The term came to greater prominence during the subsequent chair of Jerome Powell initially during Powell s first monetary easing in Q4 2019 the Powell put 23 24 but more substantially during the 2020 2021 coronavirus pandemic when Powell embraced asset bubbles to combat the financial impact of the pandemic 25 6 By early 2021 Powell had created the loosest financial conditions ever recorded 26 and most US assets were simultaneously at levels of valuation that matched their highest individual levels in economic history 27 3 28 Powell rejected the claim that US assets were definitively in a bubble invoking the Fed model b to assert that ultra low yields justified higher asset prices 30 31 Powell also rejected criticism that the scale of the asset bubbles had widened US wealth inequality to levels not seen since the 1920s 32 33 on the basis that the asset bubbles would themselves promote job growth thus reducing the inequality 14 34 35 The contrast between the distress experienced by Main Street during the pandemic and the economic boom experienced by Wall Street who had one of their most profitable years in history was controversial 36 37 and earned Powell the title of Wall Street s Dr Feelgood 38 Powell was supported by Congress with speaker Pelosi saying in October 2020 Well let me just say that the number I think that is staggering is that we have more people unemployed and on unemployment benefits than any time in our country s history We know that the Fed is shoring up the markets so that the stock market can do well I don t complain about that I want the market to do well 39 8 40 Peak in 2021 Edit In February 2021 the Fed s Bullard said he did not see a bubble That s just normal investing 41 In early 2021 some market participants warned that Powell s everything bubble had reached dangerous levels Investor Jeremy Grantham said All three of Powell s predecessors claimed that the asset prices they helped inflate in turn aided the economy through the wealth effect before eventually collapsing 42 43 Investor Seth Klarman said that the Fed had broken the market and that the market s usual role in price discovery had been suspended 11 Economist Mohamed El Erian said you have such an enormous disconnect between fundamentals and valuations and that the record highs in assets were due to the actions of the Fed and the ECB clarifying That is the reason why we ve seen prices going from one record high to another despite completely changing narratives Forget about the great reopening the Trump trade and all this other stuff 9 The Financial Times warned that the inequality from Powell s K shaped recovery could lead to political and social instability saying The majority of people are suffering amid a Great Gatsby style boom at the top 12 Several commentators called the 2020 2021 market created by Powell as being the most speculative market ever seen including CNBC host Jim Cramer who said You can t lose in that market and it s like a slot machine that always pays out I ve not seen this in my career 44 Bloomberg said Animal spirits are famously running wild across Wall Street but crunch the numbers and this bull market is even crazier than it seems 45 Animal spirits is a term popularized in the 1930s by economist John Maynard Keynes to describe the influence of human emotions on finance and investing The extreme level of speculation led to notable individual speculative events including the GameStop short squeeze in January 2021 the five fold rise in the Goldman Sachs Non Profitable Technology Index 46 and the record rise in micro cap stocks 14 of which would have qualified for inclusion in the S amp P 500 Index by February 2021 47 At the end of January 2021 the Wall Street Journal markets desk said For once everyone seems to agree Much of the market looks like it s in a bubble 48 while Goldman Sachs said that the S amp P 500 was at or near its most expensive levels in history on most measures with the forward EV EBITDA breaking 17 for the first time 49 In February 2021 the Fed s Bullard said that they did not see an asset bubble and would continue to apply a high level of monetary stimulus 41 Bloomberg wrote that Powell in the final year of his first term was afraid to tighten in case of a repeat of the crash he caused in Q4 2018 50 The Financial Times warned US regulators to regard the experience of the Chinese stock market bubble when monetary easing by the Chinese state in 2014 led to a bubble but then a crash over 2015 2016 in Chinese markets 51 In February 2021 the former head of the BOJ financial markets division warned that the BOJ should adjust the level of direct purchases it makes of Nikkei ETFs due to bubble concerns 52 c Popping of bubble in 2022 Edit By early 2022 rising inflation forced Powell and latterly other central banks to significantly tighten financial conditions including raising interest rates and quantitative tightening the opposite of quantitative easing which led to a synchronized fall across most asset prices i e the opposite effect to the everything bubble 54 In May 2022 financial historian Edward Chancellor told Fortune that central banks unsustainable policies have created an everything bubble leaving the global economy with an inflation hangover 15 Chancellor separately noted to Reuters If ultralow interest rates were responsible for inflating an everything bubble it follows that everything well almost everything is at risk from rising rates 55 By June 2022 James Mackintosh of The Wall Street Journal wrote that the Fed had pricked the Everything Bubble 16 while in the same month the financial journalist Rana Foroohar told the New York Times Welcome to the End of the Everything Bubble 17 Records set in the US EditThis section needs to be updated Please help update this article to reflect recent events or newly available information August 2022 The post 2020 period of the everything bubble produced several simultaneous US records near records for extreme levels in a diverse range of asset valuation and financial speculation metrics General Edit In December 2020 the Goldman Sachs GFCI Global Financial Conditions Index a measure of US monetary looseness dropped below 98 for the first time in its history the GFCI goes back to 1987 26 In January 2021 the Citibank Panic Euphoria Index hit broke 2 0 for the first time since its inception in 1988 surpassing the previous dot com peak of 1 5 7 In February 2021 the ratio of margin debt to cash in Wall Street trading accounts hit 172 just below the historical peak of 179 set in March 2000 56 In February 2021 the Congressional Budget Office estimated that US Federal Public Debt held by the public would hit 102 of US GDP just below the historic all time high of 105 in 1946 57 Bonds Edit In January 2021 the Sherman Ratio the yield per unit of bond duration known as the Bond Market s Scariest Gauge hit an all time low of 0 1968 for the US Corporate Bond Index 58 In February 2021 the yield on the US junk bond index dropped below 4 for the first time in history the historical default rate going back to the 1980s is 4 5 per annum 59 Equities Edit In January 2021 Goldman Sachs recorded that the forward EV EBITDA of the S amp P 500 had passed 17 on an aggregate basis and 15 5 for the median stock for the first time in history note that the price earnings ratio was less comparable due to the 2018 reduction in the US corporate tax from 39 to 21 49 By January 2021 the short interest on the S amp P 500 dropped to 1 6 matching the record low of 2000 60 the most shorted US stocks outperformed by the largest margin in history in 2020 61 In January 2021 the ratio of US corporate insider share sales to purchases ratio hit an all time high of 7 8 i e 7 8 times more corporate executives sold their company s stock than purchased it 62 In February 2021 the Buffett indicator being the ratio of the total value of the US stock market as defined by the Wilshire 5000 to US GDP set an all time high above 200 surpassing the previous dot com peak of 159 2 and the 2009 low of 66 7 63 64 56 In 2001 Buffett said If the ratio approaches 200 as it did in 1999 and a part of 2000 you are playing with fire 63 In February 2021 the Price to Sales ratio of US stocks hit an all time high of 2 95 surpassing its dot com peak of 2 45 and the 2009 low of 0 8 63 In February 2021 the price to tangible book ratio of US stocks hit an all time high of 14 surpassing its dot com peak of 9 and the 2009 low of 3 63 In February 2021 the US equity put call ratio hit 0 40 almost matching the March 2000 low of 0 39 a low ratio means investors are very bullish 56 In February 2021 the combined capitalization of the top 5 stocks in the S amp P 500 being Apple Microsoft Amazon Tesla and Facebook was 21 of the index surpassing the prior March 2000 peak of 18 being Microsoft Cisco General Electric Intel and Exxon 56 In February 2021 a record 14 members of the Russell Microcap Index and a record 302 members of the Russell 2000 Index were larger than the smallest member of the S amp P 500 Index 47 Housing Edit In November 2020 the Robert J Shiller cyclically adjusted price to earnings ratio for US housing hit 43 9 just 3 8 below its all time record of 45 6 set in 2006 65 Cryptocurrencies Edit In January 2021 the total value of cryptocurrencies passed US 1 trillion for the first time in history with most currencies setting new highs in value 66 In February 2021 bitcoin passed US 50 000 per unit for the first time in history 67 Special purpose acquisition vehicles Edit In 2020 a record 248 special purpose acquisition company SPACs raised US 83 billion in new capital at their initial public offering and by Q1 2021 a further record US 30 billion was raised in a single quarter 68 SPACs are notoriously poor performing assets whose returns 3 years after merging are almost uniformly heavily negative their proliferation is a signal of an economic bubble 68 69 Commodities Edit In July 2020 gold futures broke the US 2 000 per ounce level for the first time in history 70 In August 2020 lumber prices as defined by the CME one month futures contract broke the old historic record high of US 651 per thousand board feet to reach US 1711 in May 2021 71 Notable US cases EditAs well as the above asset level records a number of individual assets with extreme valuations and extraordinary price increases were identified as being emblematic of the everything bubble 72 Ark Innovation ETF Ticker ARKK American exchange traded fund and major investor in Tesla and other technology firms 16 73 74 72 Goldman Sachs Non Profitable US Technology Index a proprietary index of US technology firms that were loss making 46 73 Russell Microcap Index stocks the smallest listed US stocks where a record number grew in a short period past the size of the smallest S amp P 500 stock 47 S amp P Clean Energy Index proprietary index of mostly US clean energy firms whose P E ratio tripled 16 75 Tesla Inc Ticker TSLA the American electric car manufacturer 73 76 77 72 See also EditCriticism of the Federal Reserve K shaped recovery Fed model Greenspan put Stock market bubbleNotes Edit a b MMT asserts that excessive asset price inflation will lead to an increase in real price inflation which will lead to an increase in yields and correspondingly reduce the asset price inflation i e a self stabilizing system 4 Critics say that most historical periods of excessive asset price inflation did not produce such self stabilization but instead produced financial collapse and real price deflation e g post 1920s America post 1990 Japan and post 2008 Europe in other cases the inflation was not controllable also leading to a financial collapse e g the 1970s in the United States 4 18 The Fed model is a disputed form of equity valuation which has been challenged by academics and particularly at very low yields 29 A notable example is post 1990s Japan when ultra low yields did not stop Japanese equity valuations from dropping substantially for decades only stopping when the Bank of Japan started directly buying equities to support their price 18 The Bank of Japan is the largest owner of Japanese shares through direct daily purchases of Nikkei ETFs leading to questions over the integrity of the pricing of Japanese securities and their long term viability 53 References Edit Cox Jeff 25 September 2019 The Fed will be growing its balance sheet again but don t call it QE4 CNBC Retrieved 16 February 2021 Cookson Richard 4 February 2021 Rising Inflation Will Force the Fed s Hand Bloomberg Retrieved 4 February 2021 a b c d Curran Enda Anstey Chris 24 January 2021 Pandemic Era Central Banking Is Creating Bubbles Everywhere Bloomberg Retrieved 24 January 2021 a b c d Summers Graham October 2017 The Everything Bubble The Endgame For Central Bank Policy CreateSpace ISBN 978 1974634064 Metrick Andrew 6 January 2021 Interview with Sir Paul Tucker Yale Insights Retrieved 21 January 2021 It s no longer a Greenspan Put or a Bernanke Put or a Yellen Put It s now the Fed Put and it s everything a b Lachman Desmond 19 May 2020 The Federal Reserve s everything bubble The Hill Retrieved 9 November 2020 a b Authers John 25 January 2021 The Stocks Bubble O Meter Is Flashing Bright Red Bloomberg a b Greifeld Katherine Wang Lu Hajric Vildana 6 November 2020 Stocks Show Jerome Powell Is Still Wall Street s Head of State Bloomberg Retrieved 11 November 2020 a b c Gisiger Christoph 7 January 2021 Mohamed El Erian This Is Starting to Get to Dangerous Levels Neue Zurcher Zeitung Retrieved 10 January 2021 That is the reason why we ve seen prices going from one record high to another despite completely changing narratives Forget about the great reopening the Trump trade and all this other stuff Derby Michael S 20 May 2020 Fed s Mester Isn t Worried Central Bank Has Broken Market Pricing Ability Wall Street Journal Retrieved 17 February 2021 a b Baupost s Seth Klarman compares investors to frogs in boiling water Financial Times 21 January 2021 Retrieved 12 February 2021 Value investing guru says the Federal Reserve has broken the stock market a b Luce Edward 3 January 2021 America s dangerous reliance on the Fed Financial Times Retrieved 4 January 2021 Saravia Catarania 29 January 2021 Low U S Rates Exacerbate Racial Wealth Gap Paper Shows Bloomberg Retrieved 17 February 2021 a b Joyner April Ahmed Saqib Iqbal Davies Megan 28 August 2020 Levitating stocks unlikely to help Fed s economic equality efforts Reuters Retrieved 17 February 2021 a b Daniel Will 29 May 2022 One of the greatest financial historians alive says central bankers have been incompetent for decades and inflation is our big hangover Fortune Retrieved 5 August 2022 a b c d Mackintosh James 14 June 2022 The Fed Pricked the Everything Bubble The Wall Street Journal Retrieved 4 August 2022 a b Klein Ezra 22 June 2022 Welcome to the end of the Everything Bubble New York Times Retrieved 5 August 2022 a b Richard Koo October 2014 The Escape from Balance Sheet Recession and the QE Trap A Hazardous Road for the World Economy Kindle Edition Wiley ISBN 978 1119028123 Smith Noah 5 July 2015 There Is No Tech Bubble Still Be Worried Bloomberg Retrieved 7 January 2021 The danger isn t that we re in a unicorn bubble The danger isn t even that we re in a tech bubble The danger is that we re in an Everything Bubble that valuations across the board are simply too high Irwin Neil 15 July 2014 Janet Yellen on the Everything Bubble New York Times Retrieved 27 November 2020 DeFotis Dimitra 13 July 2017 Chair Yellen Is Emerging Markets Rally Part of An Everything Bubble Barron s Retrieved 29 December 2020 Murphy Jason 13 January 2018 What happens if the everything bubble bursts The New Zealand Herald Retrieved 22 February 2021 Howell Mark 16 January 2020 The Federal Reserve is the cause of the bubble in everything Financial Times Retrieved 9 November 2020 Long Heather 20 January 2020 The global economy is likely to rebound in 2020 but the IMF warns of eerie parallels to the 1920s Washington Post Retrieved 11 November 2020 Authers John 11 June 2020 Powell s Ready to Play the Fresh Prince of Bubbles Bloomberg Retrieved 9 November 2020 a b Miller Rich 14 December 2020 U S Financial Conditions Easiest on Record Goldman Sachs Says Bloomberg Retrieved 25 December 2020 Lachman Desmond 7 January 2021 Georgia and the everything market bubble The Hill Retrieved 7 January 2021 Powell Jamie 2 February 2021 Snap AV US valuations eclipse dotcom madness Financial Times Retrieved 12 February 2021 Humpe Andreas McMillan David 2018 Equity bond yield correlation and the FED model evidence of switching behaviour from the G7 markets Journal of Asset Management 19 6 413 428 doi 10 1057 s41260 018 0091 x hdl 1893 27892 S2CID 158210939 We demonstrate that at low levels of the real bond yield the correlation between the equity and bond yields turns negative This arises as the lower bond yield implies heightened macroeconomic risk e g deflation and economic stagnation and causes equity and bond prices to move in opposite directions Ponczek Sarah Wang Lu 17 December 2020 Soaring Stock Valuations No Big Deal to Powell Next to Bonds Bloomberg Retrieved 18 December 2020 Lahart Justin 23 December 2020 Has the Fed Rewritten the Laws of Investing The Wall Street Journal Retrieved 25 December 2020 Rabouin Dion 13 October 2020 Jerome Powell s ironic legacy on economic inequality Axios Retrieved 11 November 2020 Gold Howard 17 August 2020 Opinion The Federal Reserve s policies have drastically increased inequality MarketWatch Retrieved 19 November 2020 Chapatta Brian 9 June 2020 Fed Needs Better Answers on Runaway Markets and Inequality Bloomberg Retrieved 11 November 2020 Randall David 11 September 2020 Fed defends pedal to the metal policy and is not fearful of asset bubbles ahead Reuters Retrieved 11 November 2020 Regan Michael P 21 December 2020 2020 Has Been a Great Year for Stocks and a Bear Market for Humans Bloomberg Retrieved 21 January 2021 Phillips Matt 26 December 2020 Market Edges Toward Euphoria Despite Pandemic s Toll The New York Times Retrieved 3 January 2021 Grant Jim 28 June 2020 Powell Has Become the Fed s Dr Feelgood Wall Street Journal Retrieved 11 November 2020 Transcript of Pelosi Interview on Bloomberg News Balance of Power with David Westin Speaker gov 29 October 2020 Retrieved 26 November 2020 Msika Michael 22 January 2021 BofA Warns U S Policy Is Fueling a Bubble in Wall Street Prices Bloomberg Retrieved 16 February 2021 a b Cox Jeff 15 February 2021 Fed s Bullard doesn t see asset bubble and doubts policy will tighten soon CNBC Retrieved 16 February 2021 Waiting for the Last Dance GMO Asset Management 5 January 2021 Retrieved 5 January 2021 Graffeo Emily 5 January 2021 Jeremy Grantham reiterates his warning that the stock market is in an epic bubble Business Insider Retrieved 5 January 2021 Belvedere Matthew J 24 November 2020 Cramer calls this stock market environment the most speculative he s ever seen CNBC Retrieved 13 February 2021 A Speculative Frenzy Is Sweeping Wall Street and World Markets Bloomberg 19 December 2020 Retrieved 15 February 2020 a b Powell Jamie 20 January 2021 This is nuts where are the profits Financial Times Retrieved 17 February 2021 a b c Mackintosh James 18 February 2012 Tiny Company Boom Makes Markets Look Silly Wall Street Journal Retrieved 20 February 2021 Wursthorn Michael Otani Akane 31 January 2021 Markets Look Like They re in a Bubble What Do Investors Do Now Wall Street Journal Retrieved 16 February 2021 a b Santoli Michael 23 January 2021 Goldman Sachs The stock market is at or near the most expensive levels ever by most measures When will it matter CNBC Retrieved 14 February 2021 Miller Rich 26 January 2021 Powell With Year to Run at Fed Aims to Avoid Past QE Mistake Bloomberg Retrieved 27 January 2021 Noble Josh 4 February 2021 China s struggle to control stock bubble offers lessons in investor mania Financial Times Retrieved 17 February 2021 Fujioka Toru Ito Sumio 16 February 2021 BOJ Should Avoid ETF Buys Fueling Stock Bubble Ex Official Says Bloomberg Retrieved 19 February 2021 Lee Min Jeong Hasegawa Toshiro 20 December 2020 BOJ Becomes Biggest Japan Stock Owner With 434 Billion Hoard BloombergQuint Retrieved 19 February 2021 Swint Brian 6 May 2022 The Famous Fed Put Is Now a Fed Call and the Bad News Is Piling Up Barron s Retrieved 4 August 2022 Chancellor Edward 19 May 2022 Inflation revives spectre of the long bear market Reuters Retrieved 6 August 2022 a b c d Ponciano Jonathan 12 February 2021 Is The Stock Market About To Crash Forbes Retrieved 14 February 2021 The Editorial Board 12 February 2021 The Pandemic Spending Hangover Wall Street Journal Retrieved 16 February 2021 Chippata Brian 14 January 2021 Bond Market s Scariest Gauge Is Worse Than Ever Bloomberg Retrieved 15 February 2021 Gonzalez Carolina 8 February 2021 U S Junk Bond Yields Drop Below 4 for the First Time Ever Bloomberg Retrieved 13 February 2021 Chung Juliet 22 January 2021 Short Bets Pummel Hot Hedge Fund Melvin Capital Wall Street Journal Retrieved 13 February 2021 Authers John 12 February 2021 Bonfire of the Shorts Is a Precedent Busting Black Swan Bloomberg Retrieved 13 February 2021 Wang Lu 20 January 2021 Buybacks Snap Back Amid Feverish Selling by Corporate Insiders Bloomberg Retrieved 13 February 2021 a b c d Regan Michael P Hajric Vildana Ballentine Claire 12 February 2021 Warren Buffett s Favorite Valuation Metric Is Ringing an Alarm Bloomberg Retrieved 13 February 2021 Minski Jill 4 February 2021 Market Cap to GDP An Updated Look at the Buffett Valuation Indicator AdvisorPerspectives Retrieved 17 February 2021 Brown Aaron 13 November 2020 Home Prices Are In a Bubble Full Stop Bloomberg Retrieved 13 February 2021 Wigglesworth Robin 12 February 2021 Digital tulip or new asset class Bitcoin s bid to go mainstream Financial Times Retrieved 14 February 2021 Ossinger Joanna 15 February 2021 Bitcoin Extends Its Rally to an All Time High Close to 50 000 Bloomberg Retrieved 16 February 2021 a b Naumovska Ivana 18 February 2021 The SPAC Bubble Is About to Burst Harvard Business Review Retrieved 18 February 2021 Li Yun 10 February 2021 Unusual first day rallies in SPACs raise bubble concern Every single one of them has gone up CNBC Retrieved 18 February 2021 Mazneva Elena Vasquez Justina 27 July 2020 Gold Steadies After Futures Jump to 2 000 for the First Time Bloomberg Retrieved 14 February 2021 Franck Thomas Lumber futures swing 10 in wild session as speculative frenzy ends CNBC Retrieved 2022 09 05 a b c Helman Christopher 14 June 2022 Star Stockpicker Finds New Crusade Raging Against The Everything Bubble Fortune Retrieved 8 August 2022 a b c Cannivet Michael 24 January 2021 Best Bubble Stock For 2021 Zoom Or Tesla Forbes Retrieved 15 February 2021 McKenzie Michael 11 February 2021 Ark s Cathie Wood dismisses bubble talk and Tesla doubters Financial Times Retrieved 15 February 2021 Newman Billy 19 February 2021 Green bubble warnings grow as money pours into renewable stocks Financial Times Retrieved 21 February 2021 Mackintosh James 18 August 2020 The Everything Bubble Isn t Everything and Maybe Not Even a Bubble Wall Street Journal Retrieved 15 February 2021 Mansharamani Vikram 3 September 2020 Tesla The Everything Bubble Embodied Newsweek Retrieved 15 February 2021 Further reading Edit Summers Graham October 2017 The Everything Bubble The Endgame For Central Bank Policy CreateSpace ISBN 978 1974634064 Naim Dr Alasdair GM October 2021 The End of the Everything Bubble Why 75 trillion of investor wealth is in mortal jeopardy Harriman House ISBN 978 0857199645 External links Edit Scholia has a profile for everything bubble Q105464456 The Everything Bubble Graydon Carter Vanity Fair October 2015 Here s the potential upside when the Everything Bubble finally pops MarketWatch August 2019 Implications of the Everything Bubble Bloomberg TV Interview with Scott Minerd Guggenheim Partners February 2020 Tesla The Everything Bubble Embodied Vikram Mansharamani Harvard University September 2020 The everything bubble is back in business Australian Financial Review December 2020 Georgia and the everything market bubble Desmond Lachman The Hill January 2021 Retrieved from https en wikipedia org w index php title Everything bubble amp oldid 1145220384, wikipedia, wiki, book, books, library,

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