Stocktake: Bubbly stocks may continue ‘bubbling up further’
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Summary:
US markets are close to bubble territory but it’s not time to cut back on risk just yet. That’s according to a recent Allianz note that assessed US equities based on a 10-criteria bubble checklist inspired by market historian and bubble expert Charles Kindleberger.
Of the 10 criteria, the most worrisome are overvaluations of multiple asset classes (both bonds and US stocks are expensive), ultra-easy monetary policy (a factor in all historical bubbles and “clearly present” today), financial sector deregulation (regulations were scaled back under the Trump administration), and a boom in innovative financial instruments (cryptoassets and special purpose acquisition companies, or Spacs). Please subscribe or sign in to continue reading.
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