Monday, July 10, 2017

The Jedi Mind Trick Is Ending

Central Banks have a unique ability to inflict the maximum pain possible on speculators. Because every dunce knows that cutting off liquidity at peak valuations is the secret to ensuring financial stability. They've decided to implode their bubble before their bubble implodes...

October 16, 2016:

The world’s biggest central banks are bulking up their balance sheets this year at the fastest pace since 2011’s European debt crisis to boost lackluster economic recoveries with asset purchases that are supporting stock and bond prices.

Fast forward to two weeks ago...

June 25th, 2017:

“Leading indicators of financial distress point to financial booms that in a number of economies look qualitatively similar to those that preceded the great financial crash.”

June 28, 2017:

"...the Bank of International Settlements (BIS) this week urged policymakers to disregard the potential market turbulence, including high debt levels, and press ahead with rate rises."

Three years ago, in 2014, Janet Yellen warned about Biotech and Social Media valuations, however, leading sector Biotech continued to rise and peaked with the overall market right when the Fed was on the verge of tightening in 2015:

July 2014:

Vertical blue line is July 2015:

Last week:

Of course, Social Media is the leading sector this time around right as the entire world is about to tighten.

"Tightening monetary policy at peak valuations is the best way to ensure financial stability"