re: There are some major issues lurking in the US financial markets

so Omaha, im trying to understand the opinions in the last few replies with you, Doc, Vol.

Are you guys saying we are going the right direction again or that the signs are pointing the rough times in the near future?

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My opinion is that assets are overpriced

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Which assets?

Real estate? Stocks? Gold? Silver? Oil? Government securities?

All of the above?

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I think that companies with priced in earnings growth of 25% will set up for a pretty large failure once that growth stalls.

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That's the case ALL THE TIME.

Nothing new to see here....

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The are soooo many of these companies though.

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I doubt there is statistically more of them now than in the past.

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What are your thoughts on stock prices?

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The next 25,000 point move on the Dow Jones will be up.

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The next 25,000 point move on the Dow Jones will be up.

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The p/e of the s&p was 22.18 on 1/1/2016

Earnings are not fully reported but projections have the 1/1/2019 figure at 19.96

I know i am a simpleton but how can we be paying so much more for less

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If I understand your question, then the answer is tax cuts increased earnings.

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That's the case ALL THE TIME.

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Except in the pass those companies didn't carry some of the largest market caps

Before or after 2050?
Market is on record start for the year - best since 1991.
So the FEAR PORN Cra-p hits in December then boom again

I honestly can't figure out what's happening in China right now. We have both the Shanghai and Hong Kong markets bottoming just before Powell's remarks on 1/4, and then taking a steady climb up to last Wednesday, 2/13, before taking a small dip into the current weekend.

I had been expecting a move down after the week-long holiday for the Lunar New Year (2/4 - 2/8), but the markets rose through it. As I mentioned in a recent post, the China story has been a big deal so far in 2019. On the one hand, we are seeing markets become bullish on reports of massive monetary stimulus from the PBoC. On the other hand, we are not yet seeing that stimulus fully reflected in the underlying economy, with Chinese inflation for Jan 2019 coming in less than expected on Friday ( LINK), and Chinese M1 money supply for Jan 2019 was up just 0.4% y-o-y ( LINK), although there are some funky things going on with monthly dropoffs around the new year in recent years.

This would be ordinary enough for China, I suppose, except that there are also some crazy imbalances being reported in the real estate sector there, such as:

Nikkei Asian Review (2/13/2019): " China's housing glut casts pall over the economy" (A building binge leaves cities with 65 million empty apartments)

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Funding problems for some developers

Investors are also growing jittery about the property sector. While the outlook for top developers like Country Garden and China Vanke remains stable, the bond market is flashing warning signs about debt held by many smaller Chinese property groups.

Four of them now carry a "CCC" rating from S&P Global Ratings -- deep into junk territory. Such ratings signal that companies are "vulnerable" and may not survive a slide in business conditions. The credit agency only rates 13 companies in the Asia-Pacific region this low out of the roughly 1,120 companies that it evaluates.

Hong Kong-headquartered Guorui Properties is one of them. The company was downgraded two notches to "CCC" by S&P on Feb. 4, a move reflecting "uncertainty over the company's refinancing plan for its imminent debt maturities" -- a warning that the midsized developer could default on its debts. Another developer, Yida China Holdings, was downgraded at the end of January to "CCC+," with analysts raising concerns that the company's "capital structure, with limited cash balance and weak liquidity, is unsustainable in the longer run and is vulnerable to adverse market conditions." The Shanghai-based business park operator has not paid the annual dividends it declared last March.

Similarly, Moody's on Jan. 23 took action on Jiayuan International Group, dragging its rating down two notches to "Caa1" with a negative outlook. The ratings agency is concerned that a recent sharp fall in share price coupled with an unstable ownership structure could "undermine investor confidence [and] increase refinancing risks."

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So these downgrades on 1/23 and 2/4 were occurring right in the middle of the stock market run-up. Weird.

I'm not ready to say that the Chinese government's stimulus operation has been a failure. They've seemingly had their backs to the wall several times before over the past 20 years, and they always seem to boost the economy back into growth. However, I also know that pattern can't last forever, and they are now dealing with small-player, local shadow banking leverage on a huge aggregated scale that they've never dealt with before. So can the Chinese government bailout the industrial and real estate sectors once again? Maybe, we'll have to see some positive inflation and money growth numbers before we'll know if that's happening.