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The Fed Will Have Few Tools Available When the Next Collapse Hits
For several months we’ve noted that the US equity market was entering a kind of mania that was indicative of a top forming.
In particular we noted:
1) Investors piling into stock-based mutual funds at a pace not seen since the Tech Bubble.
2) Margin debt (debt investors take on to buy stocks) at a record high.
3) Market leaders (Tesla, Netflix, etc.) showing clear signals of investor rotation.
4) Corporate profit margins at record highs and primed to fall.
5) Market breadth shrinking (meaning fewer stocks participating in the rally).
6) The VIX (a measure of investor sentiment) dropping to levels of complacency not seen since 2007.
7) Investor bullishness hitting record highs and investor bearishness hitting record lows.
8) Investment legends either returning capital to investors (Icahn, Klarman) or sitting on mountains of cash (Buffett).
In simple terms, the bull market of the last five years finally went into mania mode as retail investors stopped worrying about income (investing in bonds) and drank the Fed’s Kool-Aid: bought stocks.
Note, in particular, that the blow off/ mania component of the rally occurred when retail investors began to pile into stocks (as is always the case with tops).
Whether this is just A top, or THE top, remains to be seen.
Let’s see what history has to tell us about manic tops.
In 2007, we had A top followed by a sizable correction… then THE top hit.
Many of the macro drivers in 2007 are in place today (housing bubbling away from median incomes, richly priced equity valuations, excessive leverage in the financial system, etc.).
However, a key difference is that in 2007, the Fed had engaged in several money pumps to the tune of several hundred billion dollars and had only just begun cutting interest rates.
Today, the Fed has spent over $3 TRILLLON and kept interest rates at zero for some five years. Monetary policy will not be nearly as flexible should the markets form a MAJOR top today.
This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.
This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Best Regards
Phoenix Capital Research
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The Fed does'nt need a tool.
Only needs enough ropes to hang themselves.
These past comparisons are silly. Chart analysis is 100% based on human psychology. The current bubble has nothing to do with psychology and everything to do with money printing. It doesn't matter if real life investors would sell at point X because it's a double top or whatever. The central bank is still buying, so it will still rise or stay steady.
October = kaboom
Da tings not lookin' so good in da aconomy, and one time in the 2007 da stawk mawket liney that goes up and down went down then up and then down, and I'm really tinkin' dat if u just giv summa you money to Phoenix Capital Research dat tings be a lot better for you dis time.
They will collapse it when every grandpa, grandma, grandkids and their kids are fully invested. Remember, it's a zero sum game.
Collapse collapse collaps ka-lapse.
I'd sure like to jump off this ultra slow evolution of a train wreck, but I don't know of anywhere on the planet thats practical.
Oh well, another day another article on the coming kalapse.
The Fed has been superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop. The Fed must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect.
To make matters worse little has been done to address our structural problems and make America more competitive, this will massively thwart growth going forward. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...
And they will have very very very little good luck.
Zero for 5 years.... you can 8 more at zero buying a new GM. Thats 13 and climbing
Do people actually PAY for this sort of 'information'?
We could'a made a fortune selling BS. If we had only known.
NAW!
The FED has LOTS of tools!
MRAPS and AH-64 Apaches and M-16's and night-vision stuff and Sound Cannons and ALL KINDS of FREE SHIT for the REAL 'FREE SHIT ARMY' (now deployed at police stations around the CONUS) are awaiting the command to ACTIVATE.
All that shit they have been printing electronically has to get spent SOMEWHERE (with the usual 'strings attached' clauses). If the local LEO's don't put this military equipment for free (Ref: Pentagon 1033 agreement) in to use within one calendar year, they have to give up their new toys. It ain't 'one-adam-twelve' that is happening.
The FED has LOTS of 'useful tools', now.
YO: 'Phoenix Capital': You don't really think that 'charts and graphs' can stop the phiz, do you?
We had a top.
Then THE top.
Now SP is topless. What a shame...
But first Japan, the EU and Russia will collapse AND THEN...
I mean you really can't make this shit up. That's how I know it's real. It defies even my imagination....
I am reliably informed that EVERYBODY working at the Fed is a tool. They will never run out of them.