Negativity has been replaced by positivity, any sense of caution has been thrown to the wind, bullishness is pervasive and bears look like idiots. In short: All the conditions one wants to see if one is interested in a market fade or at least in getting some protection.
“In the ruin of all collapsed booms is to be found the work of men who bought property at prices they knew perfectly well were fictitious, but who were willing to pay such prices simply because they knew that some still greater fool could be depended on to take the property off their hands and leave them with a profit.” - Chicago Tribune, April 1890. Nothing... ever... changes.
Those expecting a major weakening in the USD to push oil higher shouldn't hold their breath awaiting this outcome. Maybe the USD will weaken 20%, but why would it do so when every other central bank is weakening its currency? Wouldn't it make much more sense to drain wealth and geopolitical leverage from oil exporters?
Meet ForexChile, the largest purveyor of leveraged contracts for difference in Chile and the subject of a scathing Bloomberg report which outlines how unsuspecting retail investors end up 100X leveraged on derivatives they sometimes do not understand.
There are things going on with the financial markets currently that seem just a bit "out of balance." For example, asset prices are rising against a backdrop of global weakness, deflationary pressures and rising valuations. More importantly, there is a rising divergence between sentiment and hard data. While weather can't be blamed yet, it will likely be the main "excuse" in the months ahead as early record snowfall is already impacting economic production. However, it isn't just the manufacturing data that seems "out of whack."
"The market has been dodging boomerangs, not bullets, and they are likely to come back harder for it." Importantly, rich valuations here cannot be “justified” by appeals to current interest rates or profit margins unless that justification carries with it the assumption that both zero interest rate policy and cyclically-elevated profit margins will be sustained for decades, coupled with the assumption that economic growth will proceed at historically normal rates.
Investing in oneself and enterprises one actively controls may now be the only legitimate deployment of capital that qualifies as an investment in the traditional sense - that is, capital isn't being risked in rigged gambling halls and Ponzi schemes.