Complex Systems, Feedback Loops, and the Bubble-Crash Cycle
by John P. Hussman, Ph.D.
Hussman Funds
Our expectations for a global economic downturn, including a U.S. recession, have hardened considerably in the past few weeks, with a continued expectation of a retreat in equity prices on the order of 40-55% over the completion of the current cycle as a base case. The immediacy of both concerns would be significantly reduced if we were to observe a shift to uniformly favorable market internals. Last week, market conditions moved further away from that supportive possibility. As I’ve regularly emphasized since mid-2014, market internals are the hinge between an overvalued market that tends to continue higher from an overvalued market that collapses; the hinge between Fed easing that supports the market and Fed easing that does nothing to stem a market plunge; and the hinge between weak leading economic data that subsequently recovers and weak leading economic data that devolves into a recession.
Continue Reading at HussmanFunds.com…
Source: http://financialsurvivalnetwork.com/2016/01/complex-systems-feedback-loops-and-the-bubble-crash-cycle/?utm_source=rss&utm_medium=rss&utm_campaign=complex-systems-feedback-loops-and-the-bubble-crash-cycle
