Business

The market bubble has become so massive that even Wall Street is nervous.

To be clear, investment banks do best when stocks are in a bull market. And they love bubbles because it means more M&A, IPOs, dead offerings, stock issuance and other deals from which they derive their revenues.

So for Wall Street CEOs to openly start warning that the market is in a bubble… they have to be really REALLY nervous about what they’re seeing... and know that a stock market crash is coming

On that note this week, not one but TWO major bank CEOs warned about the markets.

S&P futures are flat, still spooked by the WSJ's report that Gary Cohn will not be the next Fed chair, while both European stocks and Asian shares gain in a overnight session on edge in which everyone is looking forward to today's main risk event: the ECB meeting and Draghi press conference due in under two hours. The dollar continued to weaken against most G-10 peers as tensions over North Korea, concerns over Stan Fischer's resignation and the increasingly cloudy Fed outlook outweighed positive sentiment from the US debt ceiling extension.

While the world has grown used to The Pope sticking his papal nose in the world's business ("horrrific" borders, "grave risks" of libertarians, and the virtues of socialism); Britain's most senior clergyman, the Archbishop of Canterbury, has now decided that it is not enough to preach His word, but better to use his position of influence and adulation to discuss what's wrong with capitalism...

The British economic model needs fundamental reform.

 

So what do you do when the bubbly market for your exorbitantly priced New York City commercial real estate collapses by over 50% in two years?  Well, you lever up, of course. 

As Bloomberg notes this morning, the 'smart money' at U.S. banking institutions are tripping over themselves to throw money at commercial real estate projects all while 'dumb money' buyers have completely dried up.

Over a decade ago, the U.S. residential housing market was revealed to be perhaps the biggest ponzi scheme ever created as easy financing enabled people to buy/build countless investment properties, that they were in no way adequately capitalized to own, with no money down all based on the premise that the house could be 'flipped' before the first mortgage payment even came due.  It was a classic ponzi that worked great for a while but inevitably turned south when home prices suddenly soured and their was no cash equity backing the trillions of dollars in outstanding mortgage debt.