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Happy Days Are Not Here Again
The Dow-Jones Industrial average closed over 17,000 today, for the first time since August. Do not misinterpret this recent rise. Happy Days are not here again.
The Fed is stymied in the near-term. It would like to raise interest rates but just the threat of that happening (or the notion that they will not do so) is enough to produce disproportionate reactions in financial asset prices. There are many who believe that a bullet has been dodged and that markets are now safe to re-enter. Maybe, but probably not. As pointed out in an earlier post:
The strength of an economy creates wealth. Without a strong economy no nation grows wealthy or stays wealthy. Asset valuations are ultimately grounded in the economy, at least in the long run. Rising employment, standards of living and financial asset prices accompany strong economies. Without these pre-requisites, long-term wealth cannot be created.
Our economy is weak, not strong. It has been exhausted by massive government and its idiotic policies. True wealth is not created or expanded under these circumstances. Wealth and the standard of living are shrinking. Wealth may be shifting hands from one group of people to another, but it is not growing. Nor can it until government is stripped of much of its size, power and regulatory excesses.
Whether markets continue to recover (appear to recover is more proper) is anyone’s guess. A hyperinflation, should it occur before a hyper-deflation could push the Dow over 20,000, but would the rise only reflect a deterioration in purchasing power? A hyper-deflation could push the Dow below 10,000, a likely unthinkable level for too many market participants. Were it possible to neutralize inflation/deflation, I suspect the chances of going below 14,000 from here are greater than the chances of crossing 20,000. If monetary effects on asset prices could be neutralized, that is a bet I would willingly make.
In today’s world, neutralization of inflation-deflation is impossible. Government has every incentive to continue to inflate financial asset prices as it is the only thing left that they can fake. Their ability to engineer an economic recovery ended a few years ago. The only question is whether they can continue to create financial asset inflation as their smoke and mirrors cover.
Happy days are not here again, regardless of what happens with the stock market. We are perched on the precipice of an economic collapse.
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Nowhere now to go but down.
The only thing you need to remember...
http://financialinvestmentplanner.com/UserFiles/1929crash.jpg
http://financialinvestmentplanner.com/UserFiles/sp500_1929crash.jpg
The markets were great...till they weren't......
Obama will not finish his second term!
http://motivationdose.com/is-america-babylon/
Maybe not but there is quite a bit of shark jumping going on these days.
I've been saying that since Dow 14,000...then Dow 15,000...then Dow 16,000...
DavidC
Just think, if the DOW goes to 7,000 ZH can finally say they were right.
This is news? You could have posted this same article on the same date for the past decade or more
I'm feeling a gold breakout.
:)
Rub some dirt on it.
The traders are tapping their toes: https://youtu.be/E4fFR-4QnbE
EconomicNoise.com is clearly a RAYCISS website!
i've used the term "potemkin village" to a few. They haven't a clue as to what it is. I think it's one of Russia's best ideas.
All I know is my teeth have never been whiter, and the garden is turning out 2 pound carrots.
Wake me up after president Trump
What ever do you mean Happy Days are not here Ritchy Cunningham. I fixing to put the trigger to your idiotic camera on a stick short for a smooth double since July. Im HAPPY Happy. Can't wait for you to IPO an even MOAR stupid idea, managed by even BIGGER idiots. Keep em comin..
The strength of an economy creates wealth. Without a strong economy no nation grows wealthy or stays wealthy. Asset valuations are ultimately grounded in the economy, at least in the long run...
BULLSHIT. the fed creates wealth and gives it to their buds. asset valuations are set by the fed. they are in it for the long haul. they will own it all eventually and they will still be doing it long after we're all dead.
Err, the Fed creates coupons that it hands out to their cronies can be exchanged for wealth while requiring the rest of us all to pay interest, forever.
The reasons are pretty clear for the ponzi short squeeze we're seeing right now.
First of all the $usd is selling off due to the Fed. dovishness, and uncertainty around earnings, U.S. politics and the debt ceiling debacle.
It's also being rumored that the BoJ is going to expand their QE at the end of October and that the ECB isn't far behind. The softer $usd has also contributed to the squeeze in commodities, [not demand].
I also think a lot of Corps. know that their earnings are going to be shitty, so they're starting buybacks early, and not observing the "Blackout" period as closely before earnings, knowing there's not as much conflict in doing so. Plus they have the dovish Fed. holding rates down and reducing their borrowing costs for longer.
In any case, there's a lot of front running going on, and any additional easing by central banks other than the Fed. are going to send the $usd soaring.
Smashing down the majority for the few will have it's consequences.
Cheaper labor (overseas and arbitraged in the US with H1Bs) leads to a crushed consumer and higher asset prices.
Where have we seen this before? Remeber when housing became unaffordable compared to incomes?
Hey, PhD Fed bozos, think about what going on here. You have created an even larger failure yet again.
All is going according to plan. "G-d's work" an' all, y'know...
"The only question is whether they can continue to create financial asset inflation as their smoke and mirrors cover."
Stocks and asset inflation is their only game while the little people get chew-up by their QE cogs. Higher tuition, food, rent while unemployment and wages falter.
This is so 2007. Anyone who said the economic fundamentals were lousy and a crash was looming was dismissed as a doom merchant and then look what happened.
I'm fully short RUT via TZA at 50 DMA, hoping for a move back toward the 20 DMA by 2 or so (though probably won't make it the whole way), stop not far above day's high
Horizontal "stasis" algos fully in control thus far, could be related to next week's OPEX epiry (?)
GL...I'd love to see it as at this rate with the bullshit strike pinning, rolls are not going to yield me jack in the way of additional premium for next week. This is a total bullshit Friday...you can see the unloading going on but jack shit for pin action
Cracked open a beer five minutes ago...saved the roll orders for easy entry into the close, this boring day can't be over with too soon...hopefully by then I will have a few empties to show for which is more than what I walked away with this week from this ponzi pump
Last two Fridays I missed big moves by stopping early, but this has the look of OPEX horizontal algos, my only hope is a late break down from the incredible windfall profits of the past week for longs, otherwise I'll end up flat.
It's been the kind of week where you couldn't leave the screen for a minute, given the bizarre dragonfly action. Ah well, probably means next week or after OPEX we'll see easy days. Have a nice weekend, this week may have been the worst of the year for post-open trading. I FEEL LIKE POSTING IN ALL-CAPS LIKE SOME, SCREAMING ABOUT MANIPULATION, but after all, we RUT traders are too civilized for that, aren't we? :)
Ha...thats why I CRACKED OPEN A BEER...sorry ;)
Have a good weekend...I hope you get your breakdown (mine too), the pesimist in me thinks they push it one more week, but I'm not playing for that...too far too fast, but I'm sure that's what evey trader out there is saying
Got out exactly even for the week.
You know I'm a Keltner guy (obviously) and TNA has almost never failed to tag a Daily K-top when it's so near, ~73, so perhaps that's a good spot for re-shorters, given it's enough above the 50DMA to cause pain for smaller players.
Have a look around the world to see what has happened to the global consumer base:
1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
Contrary to popular belief supply doesn’t create its own demand.
As noted above: All is going according to plan. "G-d's work" an' all, y'know...
All mirages dissipate. The barren unproductive desert provides no relief.
What are you talking about ZH? Everything is beautiful!
just ask your tv.
https://youtu.be/nXzxkp8OxgQ
In 1940, Fred Clark published a book "Magnificent Delusion." Nothing new under the sun today. It's a virus some folks still catch.
Is anybody else wondering what would have happened to the major indexes today (which so far have been flat to down) if the CB's and their cronies had not driven Apple up by 2% on no news?
All day you could just watch the volume and pricing action on Apple pick up, as they tried to prop up the markets.
Maybe we should check the Swiss Central Bank's balance sheet again.
These cabalists better watch out, because we are on to you, and your tools are not working any more.
Also I see where Alcoa is trading down over 5% on its miss. Next week should get interesting.
Oh Tyler! Don't be silly! We're in the best times ever!
We're in the money/Let's lend it spend it keep it roooolong right along!
https://www.youtube.com/watch?v=UJOjTNuuEVw
According to my research, markets move in cycles, of which the table of 7 days (5 trading days) plays an important role. For example, when the 21, 35, 42, 63 day cycle line up, it’s Time to get ready for a change in trend (S&P500).
http://tripstrading.com/2015/10/09/sp500-how-cycles-take-their-time/
Today, OCT 8, points at a 7, 21, 42, 119 and 154 day cycle (TripsTrading Cycle Model, TTCM).
Tomorrow and Saturday represent a Bradley Model Date, OCT 9 and 10. According to the Bradley Model: October 9-10 – On these two Days there are very strong turns in both the Middle Terms and Declinations, and this could result in an especially strong turn.
If the total cycle lasts 63 days, the decline will last till OCT 26. The 1850 -30 Price Target is based on the Negative Reversal of SEP 30.
So the cycles seem lined up to change the short term trend.