Hussman Weekly Market Comment: Baked In The Cake
The U.S. equity market is
now in the third, mature, late-stage, overvalued, overbought, overbullish,
Fed-enabled equity bubble in just over a decade. Like the 2000-2002 plunge of
50%, and the 2007-2009 plunge of 55%, the current episode is likely to end
tragically. This expectation is not a statement about whether the market will
or will not register a marginal new high over the next few weeks or months. It
is not predicated on the question of whether or when the Fed will or will not
taper its program of quantitative easing. It is predicated instead on the fact
that the deepest market losses in history have always emerged from an identical set of conditions (also evident at
the pre-crash peaks of 1929, 1972, and 1987) – namely, an extreme syndrome of
overvalued, overbought, overbullish conditions, generally in the context of
rising long-term interest rates.
