Brace for a Repeat Performance

It happened in 2000 (the .com bubble burst) and in 2008 (the housing bubble burst). We’re reaching about that time again. Despite the actions of clueless central bankers, it looks like we could be setting up for another presidential-election-year collapse.

Monday, stocks rose 0.6% in Asia and 0.5% in Europe but closed virtually unchanged in the U.S. on light volume. Precious metals fell 2% and their miners gave up three times that amount. Tuesday, stocks soared around the world — 0.9% in Asia and Europe and 1.3% in the U.S. on low volume. The VXO dropped 5% to close at 14.01 while gold miners gained 3%.

Wednesday, stocks gave back the previous day’s gains — falling 0.6% in Asia, 0.5% in Europe, and 0.9% in the U.S. on light volume. The VXO moved up 7% to close at 14.95. Precious metals gained 1.5% while their miners gained twice that amount.

Here’s an interesting chart. Keep in mind too that P/E ratios today are very manipulated to keep them lower than they actually are. In comparing with the past, today’s P/E’s should be considered higher. Stocks fell Thursday 0.5% in Asia and 0.6% in Europe, but in the U.S. they closed little changed on light volume.

Friday, stocks fell 1.3% in Asia, rose 0.6% in Europe, and fell 1% in the U.S. on light volume as the VXO rose 6% to close at 15.82. The 10-Year U.S. Treasury Bond yield fell 3% to close at 1.71 while precious metals and their miners gained 1% on the day.

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