It is unclear which aphorism best describes the latest note from Guggenheim's Scott Minerd:
- What goes up must come down
- The bigger they are, the harder they fall.
He is referring to what happens to every "bull market", even the most patently rigged and manipulated ones such as the current one on the back of the Fed's central planning and global central banks' financial engineering, following what is now nearly 1000 days without a 10% correction.
The Bigger they Come the Harder they Fall
The S&P500 has now gone nearly 800 days since a correction of more than 10 percent – the “meaningful” level for many analysts. The more extended the market becomes, the larger the eventual decline may be. Over the last 50 years, the longer the time between market corrections, the steeper the drop once the correction does occur.
In his famous speech, [former Fed Chairman William McChesney] Martin preceded his punch bowl comment by saying, on behalf of the Fed, “…precautionary action to prevent inflationary excesses is bound to have some onerous effects…” The flipside -- a lack of precautionary action by the Fed -- will have its own set of consequences in time. It is very difficult to say when exactly these will happen, but near-term indicators suggest the hangover won’t hit while you’re relaxing at the beach this summer.
Unless it does of course.
But for now, just pretend the nearly 200% move higher from the 666 lows is real and keep kicking the can, because as even the Fed has admitted, once the selling finally begins, not even the Fed will be able to stop it.