Business

20 years, to the day, after Greenspan's iconic speech that warned of the unintended consequences of "irrational exuberance," we find ourselves, yet again, in the midst of perhaps the largest asset bubble in history.  In fact, Greenspan's warning, previously made in a speech on Dec. 5, 1996, eerily reflects many of the same concerns surrounding the market today with low interest rates and lower risk premiums driving an unprecedented equity bubble.

As BofA's rates strategist Ralf Preusser writes in a note this morning, "not even a month since the US election and markets seem unrecognizable" adding that the Trump election represented a paradigm shift. Fiscal easing would take over from monetary easing and would allow for the dollar and rates to rise in unison, a trend not seen for a while.

While investors are focused on Italy, Bloomberg's Mark Cudmore warns that another Mediterranean country is poised to grab their attention very soon. A currency crisis in Turkey is rapidly deteriorating, setting the stage for dramatic and unscheduled central bank action.

The lira has weakened by more than 11% in the last six weeks against an equally weighted dollar-euro basket. This devaluation is exacerbating the situation rather than providing a relief valve.

Back in April, we commiserated with BBG ex-trader and commentator, Richard Breslow, who when looking at the ongoing events in markets, had a near nervous breakdown. For those who missed it, here are the key excerpts:

The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all time highs. Case in point, just out from Reuters: