Just like last year and the year before and the year before and the year before, the markets are faced with a major crisis of the Economic System. And just like in the past four years, markets sold off to a varying degree. As the crisis grew, the market response became more muted and responded negatively from higher levels.
This time, during what appears to be the potential for a complete default of the European Banking and Sovereign funding regime, the SPX dropped by 150 points or about 10% from its yearly highs over a period of about 8 weeks. It was the smallest and shortest pullback of the entire Credit Crisis. This time, like the last times, the Central Bank Policy Response rumors and proposals were enough to snap the markets back to near their previous highs. Markets have made back 60% of the entire loss in less than 2 weeks. It is the shortest and fastest snapback of the entire Credit Crisis.
As I have postulated over the past year, and is now seemingly common knowledge, is that Central Banks have been spending copious amounts of Capital to train market participants that the stock market is the only real evaluative measure of economic confidence and keeping it “inflated” is Job #1. Considering that we are one good QE rally away from testing all time market highs, I would say that the Central Bankers and their Policy Response have been successful.
There are no more ”Black Swans” as they have been made extinct by the expectation of unlimited digi-money creation and locked in the closed loop of the financial/investor system. There can be no inflation nor deflation. Earnings matter not. The System and the Game must survive at all costs, even if it means destroying the savings of the world. But in this world, people don’t matter, only institutions and their Balance Sheets. Political leaders are expendable and are in fact easily replaceable.
The Central Bank Corpratocracy is the 21st Century version of the 1960′s Military Industrial Complex.
With this information and realization by ”investors”, there will no longer be major selloffs because everyone knows it will be greeted with Policy Response. What this means is that markets will remain ”elevated” but may now begin a period of going nowhere that could last for years.
31 Responses to Your Training is Complete
Curious as to what % you are invested now.
I’m usually 50% invested generally because of retirment accounts and my desire to own cheap, beaten down and unloved stocks.
Did you buy idcc in the 22′s?
Not that cheap. I bought several times and my cost is near 29.
But don’t you think just as everyone has become dependent on the Fed and central banks globally, that is when easing will become ineffective of a floor on risk assets?
Of course. But from where and when I cannot yet say.
It was just yesterday that I promised myself to consider and respect all points of view.
But then you subjected my eyes and good senses to this nugget: “…there will no longer be major selloffs…”
I know you’re trying to help people. But please stay away from children, the elderly, pets, and other living thing that might need assistance or education. Because you, sir, are a fucking retard.
Take all of your money. Convert it to Rice Krispies. Hide it in your basement. It’s your only chance of making it through the next ten years.
You obviously don’t know me or my work….
And the word “Retard” is no longer acceptable vernacular.
Your “work”. Oh my fucking God…another “delicate genius” (credit to Seinfeld).
If the end result of your work is “…there will no longer be major selloffs…”, then you’re spinning your wheels.
You’d be better off trading in your books and theories for hand lotion and tissues. At least that way you’d get something out of it. And I’m sure you can work up a good one as you fantasize about being the genius who figured out that major stock market cycles were dead.
Your ignorance and lack of perspective is more offensive than any word or profanity. You fucking Retard.
You have made me laugh out loud.
I used to get angry when wrong, when I was a Freshman Strategist.
Remember, according to Dr. Bernanke; “It’s all Transitory”.
As soon as the problems are solved, sometime in the year 2020-2030, we’ll have a nice overdue sell off.
Thanks for your perspective.
Dare I say: projecting?
So then what happens when the bond bubble begins to deflate? It will. One day? Maybe? Please?
WE ARE JAPAN and you know what that means for yields.
By the way “WE ARE JAPAN” actually IS a worthy idea. And if USA circa 2012 is Japan circa 1990ish, we’re in trouble.
The Similarities: Aging population? Check. Insane National Debt? Check. Attempts by govt to hold up equity prices? Check. Etc etc.
The Big Difference: The world still loves the US dollar. Even with all the bullshit US & Fed policy over the past few years, the dollar still hasn’t been completely decimated (vs. other currencies).
Not sure how it plays out.
Okay, maybe you’re only half a Fucking Retard.
FYI: I wrote and said that “We Are Japan” in the year 2006.
and BTW–you’ve just affirmed my analysis. thanks!
And have you noticed that I haven’t cursed or called you names? That is because we are Gentlemen here.
You get a pass for this first interchange but it stops here.
Give me a link to the 2006 article. Not a challenge. I want to read it.
USA simply cant’ allow treas yields to go up, look at what a 100bps move in our cost of capital would affect cash flows relative to tax revenue. simply can not be allowed considering we have 30%+ of our debt in 1-2 year bonds that need to be rolled over.
do you think their is a concerted effort to undo the dollar as the world currency? i do.
Well, we know for a fact that China and Japan are creating agreements that allow them to trade in their own currencies, rather than USD. We know that Middle Eastern nations, particularly Iran, are now accepting gold and non-USD currency in exchange for oil. And there’s other examples of “new” non-USD global trade out there.
So, yes, there are several efforts underway that are cutting into the USD’s role as the world currency. That’s fact, not opinion.
That said, I don’t think there is a “Master Plan” for replacing the the USD with a specific single currency or basket. My guess is that it’ll just happen incrementally over time.
life liberty and the pursuit of jappyness
I think I’m turning Japanese.
i really think so…
I do not have the time nor inclination to find the numerous times I have mentioned those worlds. Nor do I have anything to prove to you.
You are now trying my patience.
Come on, man. I’m seriously interested in reading it. I’d really appreciate it.
“How and when do we get out of this secular bear market?” There’s big coin to be made for those who get it right. And “Are we Japan?” needs to be considered first.
Come on. I apologize (even though you’re dead wrong about no-more-major-selloffs). I’m sorry. I will modify my behavior. I will make my mommy proud. I will make YOUR mommy proud. Really.
You may as well ask “Why are we Here?”
So glad you just discovered IBC….
hey scotty,never thought your blog to be one for jagoff’s.
WOW that was some funny shit !!!
good post Scott.
btw you may want to clarify “major sell off”. To me that means seeing ’09 low types of moves. That other donkey probably means any sell off.
Great job dealing with the unwashed. Hat off to you sir. That fucker would have not lasted a minute in my house. You are a Distinguished gentleman, indeed.
I think it has been longer then a year? I stumbled on to Ibank Coin in 2010 I believe..Anyway, you know I am one that believes that Central Banks hit a tipping point, this liquidity boom/bust started it appears during Regan’s time period..I am just learning the bust point
Whats our next move from here? Do you still trade MCP? Is that one ripe for a ripper?