Today the Euro is on the cusp of breaking critical support. Draghi will likely see this as a success (he wants inflation). More likely, it will bring in another round of the EU Crisis (the same line was hit when Greece imploded in 2010 and when Spain imploded in 2012).
There is a saying that you don’t ring bells at the top. It’s not really true. Every time the market forms a major peak, at least in the last 15 years, there are usually a preponderance of signs of excessive speculation and leverage.
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.
Remember, Oil is closely linked to the global economy. What does it say about the true state of affairs that oil is back at levels last seen in 2009-2010… while stocks are at new all time highs?
It’s amazing to watch, particularly when you consider that it is now public information that Draghi actually didn’t have a plan when he first claimed this and is effectively making up policy on the fly.
This process is not over, not by a long shot. As anyone who invested during the Peso crisis or Asian crisis can tell you, when carry trades blow up, the volatility can be EXTREME.
Whenever investors themselves begin to comprehend that the Fed is now more leveraged than many of the investment banks were when they went bust in 2008, the end game will begin.
$8 trillion in QE spent by Central Banks failed to generate any sustained GDP growth or jobs. So what did the Central Banks do? They stopped talking about growth and began talking about “inflation.”
