Via analysts at UBS on US equites. Thye argue there are seven conditions that need to be met for the formation of a stock market bubble.
Six of the seven have been met:
the end of a structural bull marketprofits under pressureloss of market breadtha 25 year gap from the prior bubbleretail investor participationa “this time is different” prevailing sentiment
among investors
Number 7 is loose monetary policy, and while the Fed cut on Wednesday we are not there (yet, at least).
UBS:
“What we are missing are benign monetary conditions””Then some of
the $6.6 trillion in money market funds could easily switch into
equities”forecasts 35% chance of a bubble forming in 2025, the trigger would be ther FOMC eventually lowering rates enough, another 100bp lower is the UBS estimate
This article was written by Eamonn Sheridan at www.forexlive.com.
