Still waiting for the mother of all financial bubbles to burst

The S&P and Dow have moved sideways since their large drop on September 9. The Nasdaq rose again last week. The stock market is a gigantic financial bubble as the average share is more than 25 times earnings. The bond market is an even bigger bubble. It won’t take much of a trigger for this to blow sky high. When it does, the Federal Reserve will not be able to to anything about it because interest rates are already near zero. They can’t lower the rates again. They have painted themselves into a corner.

In previous weeks, I have outlined the hollowed out fundamentals within the Nasdaq and technology generally. Today, let’s switch gears and look at my Insurance sector. It has zoomed up by a huge 5.1% in September. Is this rise warranted?

Symbol  Last 3 Quarters EPS  3 Year Sales Growth
AON 8% 0%
PRU -22% -10%
FNF 4% 7%
ALL -17% 2%
PGR -23% 7%
HIG -21% -8%
GNW N/A -5%
MET -25% 2%
RDN 33% 20%
AIG N/A -8%

 
Only RDN had reasonable earnings growth. But all of the above had terrible sales growth figures. It will only after these gigantic bubbles burst that we will again have a stock market supported by the economic fundamentals of the companies.

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