Skeptics and bears have been purposely stymied in this cycle, for a reason. There can no longer exist such a thing as two-way price/value discovery. The demographics don't allow it. It's all momentum con job now.
"Stock prices have reached what appears to be a permanently high plateau"
- Yale Economist Irving Fisher, September 1929
There's been a lot of speculation recently as to why speculation is rampant in this era. Warren Buffett posits that speculation is endemic to humanity. Mike Shedlock rebuts Buffett, blaming fractional reserve lending and a hyperactive Fed. Charles Hugh Smith says we are all speculators now.
All food for thought. However, the true root cause of rampant speculation is rampant poverty caused by corporate economic scorched earth policy aka. standard MBA business school curriculum. Which has boxed this society in to a zero sum Ponzi scheme called the S&P 500.
The eight year zero interest rate policy emanating from 2008 was a function of extreme global deflation. Which in itself was a function of the extreme "efficiency" by which Globalization was bankrupting itself. The obvious policy response has been to double down on insolvency by recycling global surplus capital back into ever-greater supply while cannibalizing demand - jobs, industries, wages - to bolster profit margins. Stock buybacks being the net final means of propping up the casino. Companies essentially taking themselves private due to a lack of investment opportunities, caused by their own cannibalization of demand.
All due to the textbook misguided belief that somehow supply and demand can be easily separated. By oceans.
Corporations took away pensions. Took away health benefits. Took away long-term job security. And now their lackeys in Congress are strip-mining Social Security and Medicare to pay for tax-cut funded stock buybacks. And yet there are still questions as to why speculation is rampant. Speculation is rampant because while no one knows what millisecond this farce ends, when the music stops this time, there won't be any chairs left.
In the meantime, the Finance industry has a tremendous amount to gain by pumping up the casino and holding it at record highs for as long as possible, by any means possible. Which has made two-way price discovery - value discovery - a quaint memory. This con job is coming at the worst possible time from a demographic perspective. Under-funded pensions/retirement accounts are now caught between the Scylla and Charybdis of (still) low bond yields and massively over-valued Ponzi funds ten years into the longest bull market in history. Talk about speculation.
There is a MASSIVE stop loss now set below this casino compliments of passive investing using ETFs. Unlike mutual funds which make their trades at the end of the day by professional money managers. ETFs are traded by home gamers throughout the day usually via market orders. Too many gamblers - ignorant of flash crashes use trailing stop loss orders, which have a bad habit of getting executed far below the market.
These are the final consequences of "low-cost" industry commodification. A dumbfuck bubble bid up to obscene levels strictly by conning as much capital as possible into the riskiest most over-owned stocks. All to propagate the single-dimensional delusion that the status quo is A-OK. And to strip-mine those who could still be conned.
Prior to it all being repriced back to an end-of-cycle pumpkin. In one cataclysmic overnight stop loss event. That no one saw coming...
"the president is saying, 'Hey, listen guys, you are not going to make as much money in China as you used to. That game is over'"
This trade war now has Trump caught between his nationalistic base, and his own impeachment. Unfortunately, he has an itchy Twitter finger, and an ego that needs continuous affirmation. So we know he will make the right decision and put the country first.
"Our bad, our forward profit estimates are now off by a minus sign"
