Is another economic bubble about to burst?:
A massive rally in U.S. stocks since March has reawakened bullish spirits, but insiders are jumping out of the market in a sign the run up is getting stretched.
Company executives are selling stock at a rate not seen in two years after a near 50 percent rise in the S&P 500 from a March 9 low. That suggests directors and managers may think stock prices are nearing the top end of their range in the current economic climate…
…Increased insider selling has in the past been an indicator of an inflection point for equity markets, said Ben Silverman, director of research at InsiderScore.com.
Sales of stock by company insiders suggests managers have a dim view of the market’s prospects…
This would be because there’s nothing to the so-called “improvement” in economic prospects. A huge infusion of cash – most of it created out of thin air by central banks – caused a temporary slow down in the collapse. This was coupled with a bunch of “ye-haw, everything’s great, again” economic spin to create the recent stock market boom – and not just here, but around the world and especially in China, where the bubble has risen higher and faster than anywhere else (this fueled by the Chinese government increasing the money supply by 26% and then essentially ordering banks to lend it on easy terms). But, meanwhile, Chinese exports – the thing which makes the Chinese economy tick – have fallen for 9 straight months; US consumer sales are down (in spite of alleged bumps up which are actually just price fluctuations on necessities); bankruptcies and loan impairments continue to rise; commercial real estate is in the midst of a collapse which may beggar the residential home melt down…on and on it goes, not a scintilla of good economic news, and now the piper will have to be paid.
Added to this is clear evidence of deflationary pressures (such as grocery stores cutting prices, etc. here and around the world). What we’ve got is all the elements of a Depression without anyone wanting to admit that is what we’re in. No admission – but as I always say, look at what people do as opposed to what they say. For all the talk of “green shoots”, the actuality is people in the know (about their own corporations as well as others) are bailing out a rapid clip.
It going to get a lot worse before it gets any better – and it won’t get better until we realize that only hard work will get us out of this. There’s no Economic Fairy named Barack Obama who will wave his magic wand of stimulus and make it all better – we’ve screwed up for generations, and now we have to pay up.
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