The title is the understatement of the year, so far. The media has no clue what is happening. This is far more than some simple Central Bank manipulation. BTW–the G20 meets this week.
Are you worried about housing, jobs, earnings. PHHHT.
Lay people are clueless to events or to their meaning. In fact, most financial professionals are mostly sitting on their asses, watching is semi-disbelief, but they’ll believe when the market indices fall 10% in a few days.
Japan’s massive QE is sending shockwaves throughout the financial AND real world. China wants DPRK to blast Japan into the ocean, but Japan may be doing that to itself.
A trade war is deflationary. A stalled world economy is deflationary. Print all the money in the world and asset prices may skyrocket, but there will be far fewer buyers for anything ‘real’.
The American public won’t realize what’s going on until it is too late. It will be covered as “just a correction”. Or maybe we are truly isolated and I’m just overdramatic…
I love this article. It shows how you MUST adapt to the changing market conditions. As I’ve been saying, throw away everything you know or think you know. In this case, free money overwhelms everything.
|WSJ BLOG: Technicians Frustrated: Stocks Surge Despite ‘Sell’ Signals|
(This story has been posted on The Wall Street Journal Online’s Market Beat blog at http://blogs.wsj.com/marketbeat.)
By Tomi Kilgore
I just have some “glass half empty” thoughts today. Remember, I believe nothing and nobody. Everyone lies to keep markets higher at any and all cost.
“Bitcoin?” Relegated to the “Trillion Dollar Coin” junk heap. Any other stupid ideas? I’m sure there will be. There always is.
North Korea? They have nothing to lose and they will attack something with real bullets. Someone will call it “Transitory or Isolated”. Probably Bernanke.
Cyprus? They need two days of American POMO. Confiscating money from passive accounts will be widespread in Europe soon. That’s why all the capital is here in the good old U.S of A.
China? Don’t worry about them. They know not to deflate the bubble all the way. BTW–their equity markets “suck”.
Japan? What does a trillion Yen equal in Dollars? Does it matter?
Walmart? Nobody wants to work there, nor do anything else for minimum wage. The only jobs available are either minimum wage that nobody wants or highly specialized that few are qualified for.
Housing? Its recovery is a sham. Every mortgage is still sold to FNMA, etc. Stabilization perhaps. And its ancilliary stocks are wildly overvalued.
Healthcare, Utilities and other defensives? The wimp way to equity exposure. But what the wimps don’t know is that that they are also wildly overpriced.
Small Cap stocks? They have been the speculative leadership and they are now seeing a good deal of profit taking. It is deserved and overdue.
Industrials and metals? Nobody needs them because there is no industrial growth. Someone knows this is fact.
Transportation stocks? Just a function of mega-trend-following “investment”. They will all disappoint, like FDX, but it won’t matter to their stocks.
Look, it is April and your 401k money is due. Like every year previous since 2009, new money must pay the yearly high. The only difference is that this year we have free money every day with no end in sight. Expect a fade, as there are negative technical signs everywhere. Would a 30-50 point SPX pullback scare anyone? I doubt it. The Costanza market remains alive and well.
Screw the depositors? What a fantastic way to grab some passive capital! It is the opening of Pandora’s Box. But that is just the tip of the iceberg.
This “Cyprus thing” is just a teeny tiny little bailout. Europe is a giant mess, again and their economies are “death”. But the ECB will buy all Sovereign debt issuance so they can continue to fund their profligate spending.
Our markets? They don’t care about anything except free money. Sure, we can ruminate about fundamentals, but who really cares? Everyone knows the score. Anyone spouting on about anything other than $85 billion per month is just fooling with you.
All new money coming in for retirement account must buy stocks at record highs. Then maybe they’ll be a correction or maybe we’ll just move sideways. But down markets are not in the cards until one year before Obama is no longer President. And it has nothing to do with Bernanke because whoever comes next will be even more Dovish. And a bigger liar.
I suspect we’ll be at Dow 15k by April’s option expiration. Continue to enjoy it while you can.
Back in the heady days of 1999, when the Biz-media was occasionally truthful & transparent, I used to be invited on TV to talk about current market events. One of my favorite places to go was the old Bloomberg building on Park Avenue because they had the best snacks.
One day in late 1999 I made an appearance when the Nasdaq was up multitudinous points. It was the greatest Bull market in history yet it went against every fundamental and technical indicator and analysis conceived of to that date.
Being the young hotshot that I was, my analysis was simple; “Set aside everything you think you know and ‘date’ almost any Internet-frenzy technology stock you are able to afford. Date them because they are fun and satisfying and wildly profitable. But don’t, under any circumstances, marry them. Any of them. Because one day reality will matter.”
The market conditions went against everything I knew, yet I was forced to participate in order to make money for clients, keep up with performance and stay relevant. It was the epitome of adapting to the changing market condition and it worked for a period of time.
But right after that interview I made my way to the snack bar to take a few things with me back to the office, and who came sprinting up? Bloomberg himself. Realize this was way before he was His Honor, the Mayor.
He didn’t look at me, just began furiously dishing some fresh fruit into his plate and muttering just loud enough for me to hear; “Those fuckers think they are doing something, accomplishing something. Those fucking assholes think they are creating value. Then he raised his voice and said THEY AREN’T CREATING SHIT! THEY ARE GONNA DESTROY THE MARKETS! Then he spun his heels and walked away.
He was, of course, absolutely correct.
Today the situation is similar. Not exactly alike, but similar. Back then the markets had innovation in both technology and Wall Street coming together to bring about a significant increase in value. It was carried very far, until it broke, spectacularly.
Now the market is powering higher without a pause. But there is no value being created as far as I can see. There is simply a giant plan to pump as many dollars, Euros, Yen, etc. into public markets as possible in order to cover up the reality of overwhelming debt and deflation. Throw good money after bad in order to make the bad money good.
Policy-makers three-pronged goals are; 1. to keep asset prices levitated in order to propagate the “Wealth Effect that will encourage spending and hiring 2. To fund the governments Treasury issuance to cover deficit spending and 3. To help banks liquefy by buying their non-performing assets and investments. We are now in year four of this plan and most of it is working. This has been the most successful government program since the Marshall Plan right after we won WWII.
Knowing the policy and plan and thinking that it is, “The Royal Scam”, as I’ve been known to call it, doesn’t mean that I’m bearish or I’ve missed it. Many have adapted to the changing market condition even though it is a patently manipulated one. I don’t know how or when it will end but as you know, the policy is clear, free money goes a long way to fixing almost all financial problems.
There is no value being created except for shareholders and the government. And as the Fed Chairman says, it is all just transitory. Just like in the past.
I beg you to “get it while you can” and enjoy the fun and festivities. I won’t even begin to speculate on when and how it breaks. But reality eventually wins.