Cheap Fed Money Has Fueled Three Asset Bubbles In a Row
According to the Bank for International Settlements (BIS), current policies are "retarding" reforms:
"The "borrowed time" central banks have created with ultra-low interest rates following the collapse of Lehman Brothers in 2008 has not been well used".Here is how that borrowed time was not well used:
> Another $7 trillion of U.S. debt was added ($100k/household)
> $33 trillion of global debt was added (pg. 7)
> The total number of global billionaires increased by 27% as global poverty increased
> Global Central Banks artificially inflated the largest liquidity-driven asset bubble in history, with no comparison to the amount of leverage now in the financial system
> Wall Street was given a free pass for the events of 2008, assuring a repeat
> Wages declined across the developed world as millions more jobs were outsourced
> Corporate profits were outsourced to the highest level in U.S. history
> European debt markets were artificially levitated by carry-trades while debt and unemployment exploded
> New housing bubbles were created across the developed world
> Politicians worldwide were given a free pass to do nothing other than talk and campaign constantly
> The Dow was artificially inflated to a new high to keep the Idiocracy distracted while being bent over the log
> Financial market volatility was artificially dampened making risk management impossible
> Zero interest rates forced pensioners to amplify their investment risks
> Investors were lulled into an overwhelming state of complacency, yet again
> Four more Davos Summits, while the world's poor slid further into the abyss...
On the other side of a much deadlier collapse, the Idiocracy will re-awaken from its narcoleptic Kardashian-watching food coma only to realize that what remained of their wealth, income, and employment prospects after 2008, has been sold off in the meantime - replaced only by a massive invoice for amounts due...doh !
Johnson & Johnson has a very good track record for being the stock that peaks the latest in each economic cycle...(even better than Walmart). To put another way, when J&J rolls over, the market listens. And it's not every day that 100+ year-old slow growth consumer non-cyclical firms go parabolic - just another clue that the Idiocracy is ignoring...
S&P 500 - Let it all ride one more time - third time "lucky"...
This rally is now almost identical in timespan as the prior one i.e. roughly 4 and half years...
Junk Stocks Going Parabolic - Last seen at the top in Y2K
Here is another garbage stock (LQMT) that gained 400% in one week on a mere 50x normal volume. It's a good thing it went up, since it was only 6 cents away from zero. I haven't seen this kind of speculative action since Y2K, and we all remember how that worked out...
This one is even better - 1000% gain (from the lows) in 3 weeks
"the company was contacted by the NYSE about the unusual activity in its shares"..."
"there was no specific news to account for the parabolic rise" - thanks Bernankenstein !!!
A Party of One
Currently, only U.S. stocks are making new highs. All other global stock markets and asset classes have already stalled out at lower highs. So the question at hand is whether or not the U.S. market, sustained by miniscule volume and deteriorating fundamentals, can hold up the rest of the world. Or, will the most heavily manipulated market in human history finally succumb to the downside pressures...
Major Cracks In the Dow Facade
Even within the U.S. stock market there are now massive divergences, as we see in the following charts:
The Biggest Headfake In World History
Below we see total volume (blue line) for the past 10 years (50 day moving average). During the 2007 rally, volume rose as one would expect. In this even more ephemeral rally, driven by Fed liquidity and HFT bots, volume has been falling the entire time:
The Rot That Lies Beneath
This is a 50 day moving average of advancing-declining stocks. This current lagged divergence in the A/D line (now falling) relative to a rising market, is the biggest I can find in the past decade...
Hindenburg Omens
As we see, the Dow and S&P are near new highs, but the number of stocks making new highs continues to contract as the number of stocks making new lows is increasing:
Who is left to buy?
Irrefutable proof of the massively overbought nature of the market
Below is the 200 DMA of the Trin (Trading Index). The Trin rises whenever down volume exceeds up volume and it falls whenever up volume exceeds down volume.
There have been no major sell-offs for almost two years...
There have been no major sell-offs for almost two years...
