One of the most common questions asked about the 2008 financial crisis is “didn’t people know that the housing market was in a bubble?” Well, yes. Some did but most people who were paying attention at the time were making enough money to keep their opinions to themselves.
At this point in the cycle, with the price to earnings reaching record levels, just about every economist out there is sure that we’re in a bubble and they’re not keeping quiet about it this time. Even the infamous investing firm Goldman Sachs has now chimed in saying that there is an 88% chance of a bear market within the next 2 years.
Of course, predicting a market crash is kind of like predicting an earthquake. You never really know when one will happen or why. So, we must continue as if everything will go on as planned but at the same time be prepared for the worst.
Market Overview
Just moments ago we had a critical update from the Catalan Republic. After being backed into a corner Catalan President Puigdemont has upheld the claim to independence.
Puigdemont has been dancing between the election results that showed a 92% mandate to leave Spain, the Spanish government who is pledging to bring down the hammer, and Catalonian businesses who are threatening to leave rather than face a Catalexit.
The Spanish Index ESP35 is falling fast with declines of 0.75% since the market opened a few moments ago.
Elsewhere in Europe, the shift towards populist politics continues. The central country of Austria saw some rather shocking results in their elections over the weekend with 27% of the electorate voting for the far-right Freedom Party.
31 year old Sebastian Kurz, the former foreign secretary and head of the conservative party is now expected to form a coalition with the Freedom Party to become the countries youngest ever Chancellor and the world’s current youngest leader.
…and here we thought populism in Europe had been squashed with Marine Le Pen’s loss.
The EURUSD is losing ground this morning on both of the above issues breaking below 1.18…
A Pox on a Proxy
If things are looking sour in Europe, they’re really heating up in Kurdistan. In the early hours of the morning, Iraqi forces made a move on the oil-rich region of Kirkuk.
Kirkuk has been a contested area for a while now and their inclusion in the recent Kurdish referendum was a sore spot for Iraq.
Kurdish forces were able to destroy a few armored vehicles before retreating. This morning’s action was just a skirmish but does have the potential to turn into something bigger as the Kurdish public is being asked to join the fight.
The vehicles that were destroyed were actually USA supplied Abrahms Tanks, which were provided to the Iraqi Popular Mobilization Forces known as Hashd Al Shaabi, which means that both sides in this fight are actually armed and funded by the good old US of A.
Though it seems many analysts feel the tensions in Iraq will not harm oil supply lines, prices are up sharply this morning as traders react to the news.
Close to a New High
After a shaky September, the Crypto markets are putting on a very strong show so far in October. Bitcoin itself is up 30% since the beginning of the month and the Crypto Copyfund, which tracks the six strongest cryptocurrencies has gained 22%.
In this chart, we can see a simulation of the results for investing in the Crypto Copyfund over the last 3 months if you would have started with an amount of $10,000.
As you can see, the investment would have started with a scary drawdown but for those who have a high tolerance for risk and stuck with it, the investment would now be worth $16,000.
That’s it for today. The week ahead will likely be very busy for all markets. Let’s make it a good one. 🙂
