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Is the stock market rally now toast? Print
Written by Site admin   
Tuesday, 13 February 2018 14:24

So is this the big one?

There's no shortage of doomsters out there calling the end of the financial world as we know it.

They tell us it will be much worse than the 2008 banking crisis. There will be bank runs, bail ins, collapsing stock and bond markets with Gold up to $10-50,000 plus, as world credit implodes.

Or is this just a temporary blip that has taken out the cocky and unwary, who were making oodles of cash from what they had convinced themselves was a one way, no risk bet, blindly buying stocks and shorting volatility?

When, and if, the big one hits, bond yields could well be the catalyst. If at some point, governments are unable to sell their bonds without offering much higher interest rates, then that could well be the start of the big one.

For now, markets in general have not buckled. Bond interest rates have stabilised this week so Central Banks are still in control and the Gold price, that spikes up when danger is around the corner, is now falling back. No worries!!

 

From the blog

Australian Banks - Oh boy!

It's gradually dawning on the Reserve Bank of Australia that they have a problem.

The big four Aussie banks are holding around 85% percent of all Aussie home mortages.

As worldwide interest rates were creeping up throughout 2018, repayment costs have increased at the same time as housing prices are falling back. No great problem for those who bought property a decade and more ago.

The problem is for those who invested in the last few years. Very soon a good many mortgages will be in negative equity. If, or when, mortgage defaults increase, bank capitalisations will tumble and it could become a spiral, starting slowly and then accelerating across the real estate, mortgage and banking sectors with the predictable effect on the Australian dollar.

 For a full assesment of the bind Ausralian banks are in, click and listen to this video from Chris at Casey Resaearch and Martin North of Digital Finance Analytics.

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