Strategist and market bear, Albert Edwards, has urged Americans to enjoy their vacations while they last, warning that overconfidence in rising wages may be presenting a huge threat to the market.
Mr. Edwards has flagged waning wage growth as the root of America’s imminent market crash, highlighting an ‘out of wack’ relationship between inflation and unemployment. With approximately 63% of American households planning a vacation within the following 6-months, Mr. Edwards has warned that over-confidence in a wage growth that is yet to emerge could have disastrous impacts.
“I know US consumer confidence has been booming on the back of a surging equity market, but cheap money has also prompted the consumer to book holidays galore,” Mr. Edwards began. “When the bubble bursts, households will be mighty pissed that it’s not just their wealth that evaporates in front of their eyes but their ability to vacation like never before.”
While many consider the rhetoric of Mr. Edwards as inflammatory and unnecessary, his warning has been echoed across Wall Street, with Daniel Pinto, the head of JPMorgan’s dominant investment bank, sharing similar concerns over the sudden pick-up of inflation.
If conditions in the market are as tenuous as Mr. Edwards and Mr. Pinto suggest, complacency and overconfidence should be heeded.
Source: Business Insider