Don’t stop thinkin about tomorrow….

Don’t stop, it’ll soon be here…

I should post a video of the Fleetwood Mack classic, but I’m not as cool as the President’s supporters who hijacked this song to help them get elected. Do you think they’ll use it again?

The commentary of “too much liquidity” is reaching a fevered pitch. The hard asset frenzy is reaching a fevered pitch. The Fed’s Jawboning is reaching a fevered pitch. The incredulity of the market’s inability to correct is reaching a fevered pitch.

All of this capital creation (no pun intended) is keeping the dollar low. Interestingly, there has been no DXY breakdown. Yet the breathtaking rise in PM’s is blamed on the dollars weakness. But PM’s rise is a red herring, it is meaningless in the overall economic theme. It is now simply running based on momentum-based asset allocation. The industrial world uses some gold and silver, but not nearly as much as you’d think. They are a surrogate store of value that the FED and Central Banks no longer care about. Sure they’ve tried to keep the prices down over the years because they have feared the perception of inflation. Now we have massive, demand destroying inflation in all the things people use and the FED no longer cares. Why? Because they’ve created the inflation. They want inflation. They need inflation and they hide behind their statistics that everyone knows is a fantasy-based fabrication. They simply Jawbone that inflation is not there, it is “transitory” or can be controlled. Balderdash.

Many market observers ask the next logical question of why. Why would they follow policies that destroy demand and keep pumping the monetary aggregates. Because, as I’ve said before, as long as the prices of financial assets is inflated, perhaps, maybe, confidence will come back and real spending can spontaneously commence, and not just the made-up, green-shoots kind.

The reality is that they have no choice but to continue spewing those falsehoods because their entire policy depends on it. In this totally messed up economic world, they have no choice but to try and buy confidence with everything they have. Plus major banks are in much worse shape than you can imagine. Sure, they are being stuffed with billions. But if that stops, can they keep the balls in the air?  Not a chance.

Why do market participants believe? Because they are reinforced by market action. Just follow the trend is the mantra. But when the situation gets as lopsided as it is now,  investors need to think past the daily trend. They must think about the security and safety of their principal.  

The stock market is living in the low volume fantasy world of computer generated buying and selling. The individual investor is out of the picture other than his/her retirement account. And the contribution to those accounts are what is fueling the momentum trade right now, just like at this time last year. You must get your money into the brokerage account before April 15. And money managers must get your money to work as soon as it comes in. That is what is pushing the insanity, especially in metals, at this time.

But nobody wants to talk about risk to earnings and the demand destruction coming from the constant push higher in everything financial/commodity-related except real estate. What will happen, of course, is that when someone important and meaningful eventually tells you the truth, the market will finally react and everyone who bought any inflated asset will quickly be underwater. Do you think you can sell before the stampede? Have you noticed how thin the market is? The longer the fantasy lingers the worse the outcome. Sure, you can buy a stock that goes up 20% in a week because it happens frequently nowadays. If you do, please sell it because the warped and twisted capitalist system and markets will confiscate your money and you may be surprised when it happens. Then again, you may not be.

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