It’s going to get a lot worse… Stock market valuations stand at one of the three great bubble extremes in U.S. history. The likelihood of a 1987-style stock-market crash today is higher than previously thought.

It’s probably going to get worse for a while before it gets better.

I don't think we are being told the truth about true economic data like inflation or jobs numbers
🚨🚨🚨 pic.twitter.com/L6xrm2sBpp

— Wall Street Silver (@WallStreetSilv) October 20, 2023

Stock market valuations stand at one of the three great bubble extremes in U.S. history.https://t.co/AFtJoWNCl6

I know you don't care.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it."
– Upton Sinclair

Bookmark this. pic.twitter.com/NOAF7ez6qm

— John P. Hussman, Ph.D. (@hussmanjp) October 19, 2023

Fed Chair Jay Powell on why longer-term yields are moving higher: “It’s not apparently about expectations of higher inflation. And it’s also not mainly about shorter term policy moves.” To his point, real yields are surging toward 2.5%, the highest since 2008. pic.twitter.com/IyaTOOCXqA

— Lisa Abramowicz (@lisaabramowicz1) October 20, 2023

Leading Economic Index (LEI) from ⁦@Conferenceboard⁩ has declined for 18 consecutive months, which has only happened in recessions that took place in 1970s and 2007-2009 pic.twitter.com/MawkNTlbA0

— Liz Ann Sonders (@LizAnnSonders) October 20, 2023

Current situation:

1. Stocks falling like a recession is coming

2. Home prices rising like there's no recession

3. Bonds falling like the Fed is raising rates

4. Gold rising like the Fed is cutting rates

5. Oil prices rising like a major war is coming

6. Tech stocks rising…

— The Kobeissi Letter (@KobeissiLetter) October 20, 2023

Stocks May Plunge Further With The Fed Facing Policy Challenges

Summary

• The Fed is uncertain about how far rates may need to rise, how long they may need to stay high, or where the longer-run rate may be.
• If data stays strong and signs of inflation return, more rate hikes are likely, while signs of slowing may not lead to quick rate cuts.
• The Treasury yield curve is normalizing, indicating that rates at the back of the curve may still need to rise further to reflect Fed monetary policy.

How likely is a 1987-style stock-market crash today? Likelier than you’d think.

Thirty-six years ago, on Oct. 19, 1987, the U.S. stock market suffered its worst crash ever. That day, the Dow Jones Industrial Average DJIA lost 22.6%.

The good news is that the odds are extremely low that U.S. stocks in the next several months will experience a comparable single-session decline.

The bad news is that those odds aren’t zero. Though the odds on any given day are low, chances are high that a drop of such magnitude will take place someday. Investors need to take those odds into account as they devise portfolio strategies, either on their own or with a financial adviser’s help.

We know the odds of a crash because researchers several years ago derived a formula that successfully predicts the average frequency of stock market crashes over long periods of time.

According to that formula, there’s a one-in-five chance that over the next 30 years the U.S. market will see another 22.6% one-day drop.

Black Monday still worst day in Dow’s history. But here are some that came close.

Corporate Bankruptcies – next shoe…