"Nothing Matters Until It Collapses"

The Manic Delusion

For months and years, investors have known that geopolitical risk is growing. This entire year they've known that global growth was slowing. And in recent months they've known that the Fed was reducing liquidity and moving towards tightening. Now Ebola is spreading. But none of that has mattered. Why not? Because greed-addled investors just decided that it didn't matter and therefore they became ever-more leveraged to the status quo - via their investments, their lifestyle, their debts, their fixed cost commitments...

Social Mood in Action

This is all Elliot Wave Theory playing out in delayed fashion. This cycle is very different than anything seen in the past, because never before has there been this much artificial stimulus in the markets, which has essentially reverse engineered social mood to ever-higher and more manic levels. None of the above risks have mattered to date because investors were locked in their own happy little momentum feedback loop: ignore risk - deploy capital - push markets higher - feel euphoric - deploy more capital, rinse and repeat. Along the way of course, they were aided and abetted by Central Banks and HFT bots, ensuring that every dip was bought and market volatility was reduced to essentially non-existent. 

Today's sell-off is attributed to next week's Fed meeting and concerns around interest rates rising. To be clear, interest rates won't rise for several months, so at most the Fed will drop two words in their forward guidance i.e. "considerable time" as in interest rates will remain low for a "considerable time". You can't make this shit up. This is what the entire U.S. economy has devolved into - word parsing mumbo jumbo spewed by money printing bureaucrats. A centrally planned pseudo-economy for billunaires.

"Can The Fed Drop “Considerable Time” Without Spooking Markets?"

I don't know, can it? Suffice to say if the Fed can't do something that minor, then we have much bigger problems that are merely being papered over with newly printed money i.e. the theme of this blog. Still, lamestream media outlets ask this very question but then never step back to consider the implications of a "market" that can't stomach interest rates at .25% possibly rising to 3% over two years i.e. still lower than they've ever been after every post-WWII "recovery". In other words, we're in the Twilight Zone of hardcore dumbfucks now.

Running out of fools who have money to throw away at this thing

It's taken 27 years to reach the same level of manic delusion achieved way back in 1987, just prior to that crash. In the depths of the post-Lehman abyss no one would have believed that this manic state of gambling would abide again, much less 6 years later. My grandparents' generation was obliterated in the Depression and never touched stocks again, in their entire lives.

From Manic to Panic
As the euphoric social mood morphs to anxiety and then panic, suffice to say, that all of these issues that have been ignored to date - liquidity vs. solvency, geopolitics, Ebola, domestic riots etc. will ultimately all be viewed in their correct light, as we are just starting to see with interest rates. These issues never went away, they were merely ignored by a self-deluded public having conned themselves into believing that nothing matters until it collapses.