The cracks are starting to form in the Stock Market. Tech has plunged in one of the worst crashes since 2008. Energy companies are hanging off a cliff
as the price of USOIL
craters further, due to the ongoing trade wars and countries like Iran and Venezuela increasing production and avoiding sanctions. Home Builder stocks are hanging off a cliff
and new home buying has slowed significantly. The real estate market has stagnated for years and houses are as overpriced as they were before the Great Recession, and interest rates are rising now making houses even more overpriced. Health Care stocks are in one of the largest bubbles of their history thanks to the Affordable Care Act which is likely to be repealed during Trump's terms. Bonds have seen the worst crash since 2008 with little signs of stopping, putting extreme strain on the banking industry, with some banks like Duetsche on the brink of collapse, and defaults will only get worse as companies with extremely thin margins go bankrupt from lower commodity prices and higher interest rates. Retail and Manufacturing will also suffer badly from the trade war with China, as they will no longer be able to buy and produce cheap goods from China. It seems that the longest bull-run in history many finally be coming to an end, and it could get pretty ugly.
The cherry on top is Volatility
ETFs like VXX
which will be extremely profitable to buy, but also exasperate volatility
in the stock market, due to the heavy buying of volatility
that will be going on to hedge large stock market bets. For years, volatility
and short volatility
ETFs have suppressed volatility
by selling volatility
into an uptrend in the stock market. Now they will make volatility
much worse by buying volatility
into a downtrend in the stock market.
Based on the Elliott Wave
count, it's possible we're in a Neutral Triangle beginning in 2000, and that Wave-(e) will be about as big as wave-(a). So this may not be as bad as the Great Recession, but it could still be very ugly and there will likely be major bailouts by the government. However, at the end of this triangle around 2021, there is likely to be a flood out of USD and fiat currency, which will likely cause hyperinflation or chronic inflation
in many countries, including the US. This will lead to significantly higher asset prices across the board, sending the stock market to all time highs fairly quickly. The collapse in fiat currency will be primary caused by people losing faith in the government's ability
to pay their deficits without having to print money to pay for them.