In his April commentary, titled “It’s Everywhere, In Everything: The First Truly Global Bubble,” Jeremy Grantham warned that we are actually seeing the greatest global bubble of all times: “From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it’s bubble time!” He warned, “The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.” So far, it’s looking like a very good and timely call. However, it ain’t over, until it’s over. The fat ladies are starting to sing: The major central banks are pumping liquidity into the credit markets, and the Fed is likely to cut rates. Mr. Grantham was skeptical back in April: “Naturally the Fed and Fed equivalents overseas will move to contain the economic damage as the Fed did last time after the 2000 break. But the heart of the last bubble, the NASDAQ and internet stocks, still declined by almost 80% and 90%, respectively. (The heart of the bubble this time is probably private equity. In 10 years, it may well be described as the private equity bubble just as 2000 is thought of as the internet bubble. You heard it here first!)” ....morning briefing....yardeni.com
nicknamed
Just a Big Bush!?
Dario