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The Clear Definitive Sign That We Are In a Stock Market Bubble
The markets are moving higher this morning as we had not one but two Central Bank interventions on Friday: 1) a surprise interest rate cut from China’s Central Bank and 2) ECB President Mario Draghi implying that he might buy sovereign bonds.
The simplest rendering of the markets today is that the Central Banks are in a race to devalue their currencies. The current winners in this scheme are Japan, which recently increased its QE program and the ECB, which has cut interest rates to negative (meaning you get charged to keep your money in Euros in a European bank).
In contrast, the US Federal Reserve has recently ended its QE programs. And the US Dollar is yielding 0.25%. All of this is US Dollar positive… which is, generally speaking, negative for commodities.
Stocks are in their own world as they have been since early 2013. The longer-term trendline for this bull market is around 1400. But we’ve been going near vertical for two years now.
We all know this is a stock market bubble. You cannot have the market drop 7% and then rally an even larger 10% in less than month based solely on a single non-voting Fed President’s comments and NOT be in a bubble.
We all know HOW this will end (the bubble will burst), but the question is WHEN it will end. In that regard, no one knows the answer. But when even a stock market cheerleader like Warren Buffett is sitting on record amounts of cash you know that there are few opportunities to find value.
Take note and prepare.
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In addition to manipulation by the government-financial complex other forces are converging to further expand this bubble and disconnect Wall Street from the American economy. Why American equities continue to rise is very important, more is at force here than the usual causes which might include a pre-election and post-election rally. This is more than the continuation of a double down and let it ride mentality that has been ratcheting the market higher while reenforced by media hype.
Most analysts agree that money from countries with weakening currencies is flowing out of the troubled areas and the U.S. is receiving most of the benefit. The Japanese as well as many Chinese and Europeans know with so much money floating around and few safe harbors America is becoming the most comfortable option for temporary investing their money. More on why this should be viewed as a sign of massive instability rather than a reason to celebrate in the article below.
http://brucewilds.blogspot.com/2014/11/why-american-equities-are-rising.html
But, but, I saw, so, so, many cars @ the mall today.
sure it's not the (I thought) impossible recovery?
The crash will be truly epic!
Yes, the crash was epic. It's already happened and continues to take place in the brokerage accounts of whoever follows these doomsday misinformation sites.
Traditionally studies have shown years ending in 5 (2015) are massive bull years as opposed to 7's which are bears (6's are topping out flat years).. so you may have longer to wait and Fed Plunge protection will keep on trucking for now.
This time is different!
/sarc
Alice in Wonderland makes perfect sense now....
NEVER UNDERESTIMATE THE REPLACEMENT POWER OF THE STOCK MARKET IN AN MONEY-PRINTING FRENZY. THINK ZIMBABWE.