At the beginning of 2018, we initiated a new EVA series titled “Bubble 3.0” with excerpts from David Hay’s upcoming book tentatively titled “Bubble 3.0: How Central Banks Created the Next Financial Crisis”.
This week started on another low note, as US equities tumbled on weakness in energy and tech. On Tuesday, the S&P 500 temporarily slid 10% below its record September close, while the Nasdaq fell to nearly 14% below its August high. In an equity market that has skated by whimsically on the back of relaxed monetary policy and historically low interest rates for nearly 10 years, trouble has not oft been on the mind of the fully-invested, US-concentrated, passively-exposed, large-cap investor. It seems as if we might have reached a breaking point.
How soon we forget. George Santayana long ago wrote these immortal words: “Those who cannot learn from the past are doomed to repeat it”. However, a more recent thinker took his observation one step further by wryly observing (with a little paraphrasing by yours truly): “And the rest of us are doomed to suffer along with them”.
One of the reasons for the proliferation of technological innovation within the United States over the last several decades is due to its “lighter touch” on regulation when compared to global counterparts. Even when comparing the tech industry to other industries within the United States, the technology sector is the least regulated industry with just 27,000 federal laws verses 128,000 for the financial sector and 215,000 for manufacturing.
In this exclusive Quarterly Webinar, David Hay discusses what’s happening in the housing market, credit spreads and US treasuries, small cap stocks, the credit bubble, US corporate profits, global trade war, US stock market, and echoes of October 1987.