“The market does what it should do, just not always when.” – Jesse Livermore
Irrational market exuberance hits its zenith after Doha talks fail as oil prices rise, instead of fall, because of minor Kuwait oil strike, then stay up after the strike fails within a day, then rise more when Saudis promise to retaliate with more production and stay up when Russians promise to retailiate with still more production.
The “bullish case” is currently built primarily on “hope.” Hope the economy will improve in the second half of the year; Hope that earnings will improve in the second half of the year; Hope that oil prices will trade higher even as supply remains elevated; Hope the Fed will not raise interest rates this year; Hope that global Central Banks will “keep on keepin’ on.” Hope that the US Dollar doesn’t rise; Hope that interest rates remain low; Hope that high-yield credit markets remain stable.
So what do you do? Play the short-term chase the market game or the longer-term wealth devastation game. The choice is yours to make, the consequences will be for all to share. “I will tell you my secret: I never buy at the bottom and I always sell too soon.” – Baron Nathan Rothschild
“The typical investor has usually gathered a good deal of half-truths, misconceptions, and just plain bunk about successful investing.” With the month of April winding up the seasonally strong time of the year, earnings season just ahead and economic growth weak, the risks to the downside far outweigh “hope” of higher prices. Or, is “bad news” still the bear market deterrent?
With volume declining on the rally as short-covering fades, the thrust of Central Bank actions now behind us, the focus will once again turn to the economic and fundamental data. From that standpoint, the “bears” remain firm in the commitments. With profit margins and earnings on the decline, economic data weak and interest rates hovering near lows, there is little support for an ongoing bull rally.
China "Disappears" A Dozen People For Plotting Coup: "There's No Excuse For Taking Away My Parents And Brother"Submitted by Tyler Durden on 03/26/2016 11:02 -0400
Wen said his parents told him by phone earlier this month that the authorities promised to stop harassing them if Wen disclosed to the government who wrote the letter and how it was published. In other words: "Just tell us who we should shoot and we'll give you your family back"...
With April wrapping up the seasonally strong period of the year, the seasonal adjustment boost to economic data coming to an end, and earnings growth remaining elusive – the summer months could prove to be problematic.
"The Fed has a history of tricking it self into believing the economy is stronger than it really is - something that has happened a lot during this recovery. And there is reason to believe it is doing so again. If that’s the case, the Fed could be living in denial about its ability to raise interest rates... ‘The road we’re on is coming to an end,'”
The standoff between the “bulls” and “bears” continued this week as prices struggled to rise. The “bulls” continue to “hope” that the recent turmoil that started at the beginning of this year has come to an end. The “bears” continue to point out silly things like an ongoing earnings recession, weakening economic data, and deteriorating technicals to make their case. Silly “bears”.
The time to buy the dip, however, has passed: “I am bearish. There are just wiggles and jiggles in the markets.“
This week’s reading list is a collection of articles from people who have been “getting it right” for the last few years. While they are often dismissed by the media because they disagree with “mainstream thinking,” it is quite apparent they had a better grasp of the issues in the end.
Bring On "The Toilet Paper Rebellion": "Public Patience" With Venezuela's Socialist Paradise Wears Dangerously ThinSubmitted by Tyler Durden on 02/23/2016 20:21 -0400
"So far, Venezuelan society has been patient, but will this continue to be the case?"
That didn’t take much. After a three-day rally, the media is back into “bullish” mode suggesting the bottom is likely in and by the end of this year, it’s all going to be just fine. Unfortunately, history suggests that after such a long unabated expansion risks are substantially higher than it has been previously. Furthermore, as I have repeated often in these missives, in an economy that is driven primarily based on consumption, and such consumption is already weak, it doesn’t take much to “flip the switch.”
"More monetary stimulus, wherever it is in the world, isn’t the answer for a global economy still trying to find a new growth path. Pay attention to bonds and ignore the sirens of the stock market."