To understand today's zero interest rate Faustian Bargain for investors, we have to go back to Hugh Hendry:
"There are times when an investor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully"
It all makes perfect sense in the context of managing other people's money.
Y2K featured epic stock market risk. 2008 featured epic bond market risk. This is Y2K x 2008. With summer's low volume and the stock buyback earnings blackout in full force, now is the lowest liquidity period of the entire year...
Weekend risk is epic. Gamblers are clearly on vacation from reality.
Right on time, a Hindenburg Omen yesterday on both the NYSE and Nasdaq. Another one shaping up today, TBD. The HO means significant new highs and lows at the same time, as the bifurcated market reaches its zenith.
The casino fell Monday to Thursday morning. staged a three wave rally through today's open. And just now closed at the lows of the week.
Any questions?
[In a zero interest rate world ]
"To generate the type of returns the pension fund or insurer needs, the manager will need to reduce the amount of bonds to the lowest possible level and invest the rest in stocks. The reason, again, is TINA - there is no alternative asset that can deliver the returns they need."
Proof of the TINA market can be found in the fact that large-cap stocks are enjoying the largest gains in the bull market."
This chart shows the IBD 50, the fastest growing companies in the U.S. The ones growing profits, not the profitless IPO junk being pumped and dumped by Wall Street.
As we see, the left and right shoulders are perfectly symmetrical.
In no way confirming the S&P's latest new highs:
History's most valuable company "beat" manufactured expectations. The stock opened at the highs and is trading at the lows of the day.
Reversal of fortune
The G20 truce ended this week. China Tech broke the trend line and backtested it today. REITs are getting hammered.
European stocks are at three week lows due to a miss by software giant SAP.
The German Dax. Look out below:
Larry Fink CEO of the world's largest money management firm with Joe Kernen
Dumb and Dumber
"U.S. equities will lead because...“we deserve it"
"Shortly before Fink’s CNBC appearance, BlackRock reported quarterly earnings that missed estimates, as investment advisory and securities lending revenue fell"
