Global equity melt-up in full swing even if investors hate themselves

When the fed tightens the money supply, watch the global housing collapse begin in earnest. Debt will eat up the markets liquidity like it has so many times before. Add to that perhaps a Chinese population cut off from dirty money smuggled abroad into US real estate and you have a "black swan" event. Another big crash is looming.


The Telegraph
By Ambrose Evans-Pritchard
15 July 2014

There is no longer much doubt. We are in the midst of a late-cycle blow-off in global equity markets.

Bank of America’s monthly survey of world fund-managers shows that investors have their second highest allocation to stock markets in thirteen years at 61pc. It is lead by shares in technology, energy, and even banks, and is stretched to a net 35pc overweight in Europe. “The summer 'melt-up' is likely to be followed by an autumn correction,” it said.

This happened in 2007 as you can see from the chart below, and again in early 2011 just before the European Central Bank triggered Part II of the EMU debt crisis by raising rates twice.

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