5 Charts that Prove this Market Bubble is Not Slowing Down

By Craig Wilson

This post 5 Charts that Prove this Market Bubble is Not Slowing Down appeared first on Daily Reckoning.

The stock market continues to show volatile signs of a market bubble. Here’s five charts that show that a very real bubble is on the horizon.

1. Economic Bubbles and The Breadwinner Economy

Former Congressman and Reagan’s budget director, David Stockman highlights that, “Another month has passed in which the number of Breadwinner jobs remain below where it was when Bill Clinton was in the White House. Since then two presidents have come and gone, and now possibly a third. Yet there are still 300,000 fewer jobs in the productive center of the U.S. economy than there were in early 2001.”

Stockman levels, “This suggests something isn’t right, and that point is further driven home by the pancaking of the industrial economy over the last decade. Specifically, industrial production in June was still lower than at the pre-crisis peak”

What all of this equates to is a crisis of economic stagnation. It bolsters national debt and puts forward a threat to fiscal governance. Stockman summarizes that, “You can’t justify a healthy economy purely on the claim that jobs grew by 209,000 in July or that GDP is up at a minimal 1.9% rate in the first half of the year.”

2. Of Market Bubbles and Bank Loans

Financial market analyst, Lee Adler highlighted in mid-June that we have entered a period of calm before the storm. He argues that the storm is due to begin when the Federal Reserve starts to shrink its massive balance sheet.

Adler writes, “Some of the increase in debt that had driven the economy and the asset bubbles has bled off. With the Fed announcing that it will reduce its balance sheet, that’s likely to deter speculative borrowing even more.”

“The bull market has been driven by free and easy credit. The free part is going away. The easy part is about to.”

The direction of this line over the next few months could render an important signal for the stock market.

3. Peak Margin Debt in 2017

Margin debt is the debt a brokerage customer incurs by trading on margin. The method typically takes place when investors offer securities to their brokerage firm in order to get a loan. The method is often coupled with market crashes and devastating economic conditions.

The NYSE updated report for the month of June (there’s a month lag) showed that margin debt has hit whopping 539.1 billion. While that figure may be slightly down from the previous two months, it is still over 60% larger than the average margin levels seen in 2008.

This approach to using loans as securities to fund markets is not only increasing in quantity – but increasing in risk.

Via NYSE

4. IMF: A Dangerous Chinese Debt Bubble

The International Monetary Fund released its latest reporting on China. The report noted that, “International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing …read more

Source:: Daily Reckoning feed

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