The Next Economic Crisis Has Started: The Secret Stock Market Bubble

published on July 20, 2020

This was the average gdp growth of the global economy in 2019 this was the gdp drop that we saw during the financial crisis of 2008 this was the gdp drop that we saw during the worst parts of the great depression and this is what the economic darling of

Singapore has just gone through in the last three months that is right singapore has experienced a 412 percent drop in gdp which was the largest plunge of a major economy

Since the uk had a 191 percent gdp plunge that happened just a few weeks before and those are just the most recent countries that have reported economic data in the last three months

Countries like the united states haven't even reported their numbers recently but regardless what has amazed me is that just five months ago economists and investors were worried

About if we would see a 05 percent growth rate and a quarter versus a 1 growth rate in a quarter and that small 05 difference in gdp would have a tangible effect on things like the stock

Market interest rates and real estate and yet now these 19 to 40 percent plunges that we are seeing are being completely written off by

Investors i mean since march 23rd the stock market has risen by more than 44 so why is this happening and what will we see going forward well we might see something that i like

To call the economic waterfall so picture that the economy is like a bunch of different ships that are floating along different points of a river and all this means is that not all

Aspects of the economy will reach the end of the river and go over the waterfall or go over the end at the same time for example the financial crisis of 2008 actually started in 2006 you see 2006

Was actually when the real estate bubble began to burst and that was the year where we started seeing the rapid increase in mortgage delinquency rates and foreclosures on homes

However it wasn't until mid 2007 that we started to see the first big bankruptcies from the financial crisis and then finally in 2008 after years of poor economic indicators from the financial sector and

The real estate market we finally saw the stock market crater and unemployment rate numbers began to skyrocket so that example just means that certain parts of the economy

Reach the end of the river and fall over the waterfall at different times and we are seeing something similar today just at a much more rapid pace than we saw

In 2008 so in march we began to see the slowdown in manufacturing and the increase in unemployment in april and may we saw the top lines and bottom lines of businesses begin to be dramatically affected

And in june and july we have now started to see one of the worst economic indicators to go over the waterfall and that is bankruptcies you see when businesses began to lose their revenue in april

We saw that those same businesses were burning through their savings and simultaneously taking out loans in order to get through these tough troubling times but after months of businesses like

Restaurants hotels and travel companies seeing their revenue cut down by over 70 percent from what it once was we started to see many of these companies run out of money and declare bankruptcy

And what's frightening is how quickly these bankruptcies have been accumulating so in april of this year bankruptcies were actually down by about 40 percent compared to the average over the last

Several years but now we have seen in back to back months in may and june bankruptcy rates that are 50 percent higher than they normally are and in fact we may have just started to see the very

Beginning of this bankruptcy surge yet it is already the worst bankruptcy surge that we have seen since the financial crisis so who is going bankrupt well here are some of the biggest

Name brands that you might know one of the largest franchisees in the world npc international who runs over 1200 pizza huts and 400 wendy's has recently filed for bankruptcy

Citing they have become unable to make payments on their 1 billion worth of debt because of the loss of revenue from the lockdowns and another company hertz which is a rental car company that was once worth

Over 20 billion dollars has recently filed for bankruptcy as well latim airlines is another multi-billion dollar company that has declared bankruptcy there's also the retail company neiman

Marcus which is actually owned by the canadian government but that's a whole different story they've recently declared bankruptcy and there's a whole litany of other companies like chuck e cheese j

Crew many telecom companies health care companies jcpenney gold's gym 24-hour fitness gnc new york and company and many others have all filed for bankruptcy within 30 days of each other and those

Are just the name brand companies there are hundreds of other giant companies and thousands of other slightly smaller ones that have filed for bankruptcy but i just do not have time to get to in this video and arguably the scariest

Thing is this right now there are tons of other businesses that are so close to bankruptcy and have already begun the filing process despite not even being out of

Money yet and the best example of this is oil companies already dozens of oil companies worth over 100 million dollars have filed for bankruptcy

While many other oil companies are either getting ready to declare bankruptcy or are significantly cutting down its expenses for example bp oil is laying off over 10

000 employees chevron and halliburton are also laying off tens of thousands of employees as well in fact there's an oil consultancy firm that expects over 70 large international oil corporations to declare bankruptcy

By the end of 2020 and they expect more will go under by 2021 so let's bring this back here's what we have seen so far go over the waterfall the manufacturing sector the debt compilation the unemployment

Crisis a significant drop in gdp and now some large company bankruptcies so what's going to go over the waterfall next and that is a tough question to answer but there are definitely some worrying

Signs that might mean the stock market could be one of the next items to go over the waterfall let me put it this way if i were to say to you that a company has experienced a one percent increase in earnings from

The previous year but has experienced a 72 percent growth in its stock price since march 23rd then you would probably be a little bit worried that the company's stock might be overpriced

And that company is apple which is currently the most valuable company in the world with a valuation of about 165 trillion dollars now i know that the stock market is both

A combination of what's happening now less the economy the optimism of the market and the general future outlook for the company but what is worrying in this case is that we are seeing a similar trend

Occurring with the most valuable companies in the world for example microsoft saw a 20 increase in earnings yet has seen a fifty percent increase in its stock google has seen a four percent increase

In its earnings in a forty percent increase in its stock price and there are tons of other examples just like this and it's worth noting that all of these companies earnings reports were from march

Meaning that these were company earnings before the lockdowns went into full effect but what has happened is that over the past few months there has been a disproportionate amount of money being

Invested in the very top companies of the stock market and the money is being invested at such a high rate that the investments are outpacing the company's real economic growth and as i kind of already

Mentioned there are a few reasons why this is happening and i actually did cover some of these reasons in a previous video about the stock market and how really only about a dozen investment firms

Dictate how well the stock market actually does so if you're interested please go check out that video but i think that a key reason why these companies specifically are being invested in at a disproportionate rate

Right now is because these companies have hundreds of billions of dollars in the bank and have decent long-term growth potential so let me ask you this if you had to invest in a company during

A major economic downturn would you want to invest in a restaurant chain like pizza hut which doesn't have a ton of money in the bank and is experiencing a downturn and running out of money or would you want

To invest in a company like apple who has over 200 billion dollars in the bank as a safety net and could theoretically not make a single dollar in revenue for years upon years and still survive as a company the

Answer should be obvious and that is kind of what i think we are seeing today because there are tons of companies at the bottom in the middle of the stock market that are really struggling right now but because the

Ones at the top are getting an influx of investment money we are getting the illusion that the stock market as a whole is performing well when in reality it's only largely the

Top companies in the stock market so what does this mean well it could mean that if the top companies in the s p 500 keep performing well then the stock market might remain

Relatively okay during these tough economic times but it could also mean that these stocks are inflated so maybe as soon as there is a small sign that these stocks are underperforming

Or that the future of the economy doesn't look as good as it once was we could see a massive stock market correction in the future or even a crash so i'd like to ask you guys what do you think is going to happen to the

Economy and the stock market within the next six months or so let me know in the comments down below and i know that there's a lot of other factors that i couldn't get to in this video so just

Keep that in mind and let me know what you think in the comments down below also remember to hit that subscribe button and that notification bell if you want to see more videos just like this and i have another one coming out in the

Next few days so stay tuned for that in the next few days and please hit that like button because it would mean a ton to me and would help me out with a youtube algorithm but anyways please make sure

To click on my next video or my documentaries playlist and i will see you guys there in my next video in just a few seconds

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