Well, it seems to be a bit agressive. But I would agree if: Fed reduces the balance sheet from USD 4.2 trillion to USD 2.1 trillion (which is not very likely) and increases the interest rate to 5% (which would make it impossible to survive for the zombie companies). And China would have an negative growth outlook as well as Europe would collapse (due to Italy, Brexit). Let's put probabilities behind this scenario: FED reduction to 2.1 (5%, I am generous), FED interest (5%, again I am generous), China (15%; but only due to the virus, let's wait and see, but if, the credit bubble would burst and the effect would overcompensate any measures taken by the FED), Europe (15%).
In total: I agree that the valuation of US companies are an exaggeration and under the current circumstances are not justified, so I would expect a correction. Nevertheless, if they (so the market) keep the current level until the US election, in this case the market would become nuts and we would see a melt up scenario (since then the market would anticipate further tax cuts and this would justify higher valuations, even though I really don't like it).
UnknownUnicorn5971148
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Add:
We have two ways.
-Blow the bubble more up
-Let the bubble burst
klemen_mavsar
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1183,55 points
nsprph
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FED WILL DO ANOTHER QE OTHER THAN REPO. PEOPLE WHO FOUGHT THE FED HAVE LOST. DON'T FIGHT THE FED !
In total: I agree that the valuation of US companies are an exaggeration and under the current circumstances are not justified, so I would expect a correction. Nevertheless, if they (so the market) keep the current level until the US election, in this case the market would become nuts and we would see a melt up scenario (since then the market would anticipate further tax cuts and this would justify higher valuations, even though I really don't like it).