On the heels of another wild week of trading in global markets, today Michael Pento warned that global markets are now set for total collapse. Pento takes KWN readers around the world on a trip down the rabbit hole which takes a sobering look at what is really taking place in the United States.
Wall Street came to a halt recently as Chinese e-commerce giant Alibaba made its initial public offering. The media became myopically focused over this so-called “historic event” and by its celebrity founder, Jack Ma. By the time the closing bell had rung, the hype and fanfare propelled Alibaba up 36 percent on its first day of trading and caused the world’s largest IPO to display a market cap worth $231 billion. The investing public seems to have forgotten the dangers associated with disregarding valuation metrics — Alibaba is trading at a price-to-book value ratio north of 27!….
Today we see that same irrational exuberance as investors fall over themselves to buy stock in a Chinese Internet company, though a Communist government retains total control over that country’s internet. If Premier Li Keqiang decides to pull the plug on the company it will become worthless overnight. While Alibaba does have revenue and earnings, the gross overvaluation of the enterprise echoes the tech bubble.
But Alibaba is not even the best example of this Fed-induced social media frenzy. The paragon of “irrational exuberance” would have to be the social media app called YO. What is the intellectual property behind this life-changing technology? Brace yourself: It just sends friends the thought-provoking message “Yo.” YO was developed in eight hours and was launched on April Fool’s Day 2014.
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