The FED: A Bunch Of Buffoons Or Highly Intelligent Ponzi Operators

I have discussed this in the past, but my curiosity remains. Here is the latest "conundrum", the FED can't figure out why inflation is decelerating.

Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong.

Minutes from the July 25-26 Federal Open Market Committee meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth.

The central bank has missed its 2 percent price goal for most of the past five years. Still, a majority of FOMC participants favor further rate increases. The July minutes showedan intensifying debate over whether that is the right policy response.

“These minutes to me were troubling,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York. “They don’t have their confidence in their policy decisions; and they don’t have confidence that they can provide the right kind of guidance.”

Well, there is really nothing mysterious about any of this. Even a retarded buffoon can figure this one out. Let alone a Harvard Economist. 

When you flood the financial system with unlimited credit at zero interest rates everything is performing at its peak. For the time being and artificially, of course. However, when everyone is in debt up to their eyeballs, as is the case today, velocity of money slows down and inflation disappears. That is prior to turning into an outright deflationary collapse or debt liquidation.

The second point is, the inflation they are so blatantly unable to find is on clear display in the stock market. How else can you explain Shiller's P/E Ratio at an all time high. Higher than 1929 and arguably 2000 if we adjust for tech earnings distortions. That's where all of that "FREE MONEY" went. Straight to speculation.

My view remains, they are either cretins for not understanding this or they do. In which case they are knowingly running the biggest Ponzi scheme in the history of humanity.

Once thing is certain, scary times ahead. 

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

The Father Of Ponzi Finance, Alan Greenspan, Doesn’t See A Bubble In Stocks

At Shiller's Adjusted S&P P/E Ratio of 30, mind you, arguably the highest  valuation level in history if we adjust for 2000 tech distortions. Understandably, he didn't see one in either 2000 or 2007, but let's save that for later.

He does see a massive bubble in the bond market that is bound to implode. What he talks about is both complicated and in our view rather foolish. Let's explore.

Greenspan Sees No Stock Excess, Warns of Bond Market Bubble

“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

Fair enough and we agree. At the same time we wold like to point out that the above distortion is caused entirely by the FED and the policies Alan Greenspan himself developed. Take artificially suppressed interest rates away and the market will find its equilibrium at much higher yields.

“The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy -- to a stagflation not seen since the 1970s. That is not good for asset prices.”

Again, we agree. At the same time, the idiots at the FED have proven to be suicidal in terms of our long-term economic trajectory. Make no mistake, they will be bold enough to go all in one more time. Whether or not they will be successful is a different question.

Stocks, in particular, will suffer with bonds, as surging real interest rates will challenge one of the few remaining valuation cases that looks more gently upon U.S. equity prices, Greenspan argues. While hardly universally accepted, the theory underpinning his view, known as the Fed Model, holds that as long as bonds are rallying faster than stocks, investors are justified in sticking with the less-inflated asset.

Bingo. Bulls have been arguing for some time that today's low interest rates justify almost infinite valuations. We have argued in the past that is historically incorrect. Yet, the theory sticks.

To quickly summarize, Alan Greenspan believes that today's low interest rates justify today's insane valuation levels. Yet, that will not be the case in the future as bond yields surge higher. When that happens, and only then, the stock market will re-price.

And perhaps he is right.

At the same time, the above is not set in stone. For instance, it can be a powerful stock market decline that gets the ball rolling on yields. Regardless of what the FED does. And not the other way around.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Weekly Stock Market Update & Forecast – July 29th, 2017

- State of the Market Address:

  • The Dow remains well above 21,000.
  • Shiller's Adjusted S&P P/E ratio is now at 30.23  Arguably the highest level in history (if we adjust for 2000 distortions) and now above 1929 top of 29.55.
  • Weekly RSI at 76.00  - overbought. Daily RSI is at 68.55 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,850 today (on weekly).
  • Weekly Stochastics at 96.00- overbought. Daily at 96.95 -overbought.
  • NYSE McClellan Oscillator is at +1. Neutral.
  • Volatility measures VIX/VXX are once again sitting at or near their historic lows. Commercial VIX long interest increased somewhat. Now at 90K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has decreased slightly during the week. For now, the Dow is 5X, the S&P is at 3X, Russell 2000 is at 1.5X and the Nasdaq is at 2X short. That is a substantial short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year.

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market.If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Daily Stock Market Update & Forecast – July 27th, 2017 – Elliott Wave Edition

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year.

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market.If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Daily Stock Market Update & Forecast – July 19th, 2017

- State of the Market Address:

  • The Dow remains well above 21,000.
  • Shiller's Adjusted S&P P/E ratio is now at 30.28  Arguably the highest level in history (if we adjust for 2000 distortions) and now above 1929 top of 29.55.
  • Weekly RSI at 75.39  - overbought. Daily RSI is at 63.68 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,750 today (on weekly).
  • Weekly Stochastics at 93.65 - overbought. Daily at 85.28 -overbought.
  • NYSE McClellan Oscillator is at +20. Neutral.
  • Volatility measures VIX/VXX are once again sitting at or near their historic lows. Commercial VIX long interest remains the same. Now at 70K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has decreased slightly during the week. For now, the Dow is 6X, the S&P is at 3X, Russell 2000 is at 2X and the Nasdaq is at 2X short. That is a substantial short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Daily Stock Market Update & Forecast – July 18th, 2017 – Elliott Wave Edition

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year.

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market.If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Weekly Stock Market Update & Forecast – July 14th, 2017

State of the Market Address:

  • The Dow remains well above 21,000.
  • Shiller's Adjusted S&P P/E ratio is now at 30.10  Arguably the highest level in history (if we adjust for 2000 distortions) and now above 1929 top of 29.55.
  • Weekly RSI at 75.35  - overbought. Daily RSI is at 65.39 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,750 today (on weekly).
  • Weekly Stochastics at 90 - overbought. Daily at 90-overbought.
  • NYSE McClellan Oscillator is at +30. Neutral.
  • Volatility measures VIX/VXX are once again sitting at or near their historic lows. Commercial VIX long interest remains the same. Now at 70K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has decreased slightly during the week. For now, the Dow is 6X, the S&P is at 3X, Russell 2000 is at 2X and the Nasdaq is at 2X short. That is a substantial short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year.

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market.If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Is Janet Yellen An Evil/Mad Genius Or A Giant Ponzi Scheme Operator???

Let's explore.....

Earlier in the week Janet Yellen proceeded to suggest something incredible

“Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will.” 

The above leads me to an abrupt conclusion. Janet Yellen is either a complete idiot who is way out of touch with reality or she is actually a mad genius trying to fool the entire planet.

The statement above would be more appropriate if we were sitting at a bottom of a valuation range or in the final stages of a crisis. For example, 1914 or 1949 or 1982. At that time stocks were selling at P/E ratios of 6-8 and even lower.

Quite the opposite is true today. We are sitting at all time high valuation levels. In last week's update I have argued.....

Downright Crazy Valuations: 

When we look at today's valuations the picture is even scarier. Earlier in the week Shiller's P/E Ratio on the S&P has pushed above 30 (median 15-16) for the first time ever. Especially if we adjust for the lack of earnings in the index during the tech bubble. 

Allow me to rephrase that. The stock market today is selling at the highest valuation level in human history. Higher than 1929, 1937, 1966, 1972, 1987, 2000 and 2007.

Most importantly, most of the stock market's gains since 2009 bottom came from multiple expansion, not economic/earnings growth. And that was mostly due to the FED pumping trillions of dollars into the economy in the form of zero interest rates and QE.

Everyone knows this.

Let me put it this way. While Janet Yellen claims that we operate in a much more stable system and that we will never see another Financial Crisis in our lifetime, the exact opposite is true.

The picture at the top of this article is rather accurate. Janet Yellen has created a massive bomb that is ready to go off at any point now. When it does, it will make the financial crisis of 2007-2009 look like child's play in comparison. And if history is any guide, the FED won't be able to do a single thing to stop it - they are nearly out of ammo.

So, unless Janet Yellen is getting ready to die from printing too much by the end of the year, her statement is an outright lie. In that case you decide if she is an outright delusional liar or much smarter than your average market bear.

Here is a much more detailed technical view on the subject matter. Strangely enough, they come to the same conclusion.

Yes, Ms. Yellen…There Will Be Another Financial Crisis

Ms. Yellen is wrong about the next financial crisis. The only question is the timing and magnitude of its occurrence?

Make no mistake, an absolute bloodbath in equity markets is steaming our way. The only remaining question is...... WHEN? If you would like to find out exactly when the sell-off will start, based on our mathematical and timing work, please CLICK HERE

Daily Stock Market Update & Forecast – June 29th, 2017 – Elliott Wave Edition

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year.

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market.If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Why A Market Crash Is Now Imminent – The Gap Between Economic Reality And Bullish Perception Is At A Record High

It can be argued that, Tulip or Bitcoin manias aside, the overall stock market and the US Economy are so out of sync with reality that upcoming crash will make 2007-2009 look pale in comparison.

What is happening here?

Let's start with the following chart. The chart is rather self explanatory and it doesn't take long to figure out what or who is behind today's stock market bubble. While everything is crashing, due to Ponzi Finance of QE expansion losing velocity, central bankers around the world are keeping the party going, at least for the time being, by buying everything hand over fist.

Downright Crazy Valuations: 

When we look at today's valuations the picture is even scarier. Earlier in the week Shiller's P/E Ratio on the S&P has pushed above 30 (median 15-16) for the first time ever. Especially if we adjust for the lack of earnings in the index during the tech bubble. 

Allow me to rephrase that. The stock market today is selling at the highest valuation level in human history. Higher than 1929, 1937, 1966, 1972, 1987, 2000 and 2007.

Now, most bulls would argue that today's valuation are justified by low interest rates. Not so fast there.......

While there is much to debate about the current level of interest rates and future stock market returns, it is clear is the 30-year decline in rates did not mitigate two extremely nasty bear markets since 1998, just as falling rates did not mitigate the crash in 1929 and the subsequent depression.

Do low-interest rates justify high valuations?

History suggests not. It is likely a trap which will once again leave investors with the four “B’s” following the next recession – Beaten, Battered, Bruised and Broke.

Take that Warren Buffett

Incredibly Bullish Sentiment

Open any financial media outlet today and you will be greeted with the following nonsense.

Please note something of significant importance here. People are now making "sure bet" prediction about highly speculative bets. In other words, shoe shine boys are now sure "this thing" is going higher.

Scary similarities between President Hoover 1928 election/market and Mr. Trump. 

On November 6th, 1928 Republican Herbert Hoover won the US Presidency. The stock market took off like crazy after Mr. President has offered the moon. Instead, what he delievered was a trade war that deepened the great depression. Trump, Trade Wars, And The Traumatic Example Of The 1930s. Sounds familiar?

Who said history doesn't repeat itself. That is to say, replace Hoover with Trump and we have ourselves a perfect match.

Growth - What Growth? 

Now, I would be the first one to admit that today's valuation levels can be justified if the US went on some sort of an economic or earnings growth spurt. Yet, as I have argued here On Friday The S&P Hit Its Highest Valuation Level In HISTORY – Find Out What Happens Next, that is nearly impossible. And I am not the only one who thinks that way. Consider this......

Don't fight the FED. 

Finally, most bullish investors today will dismiss all of the above based on a simple premise. The FED will backstop any correction and/or flood the system with money in case of an emergency.

Perhaps they will and that might even work. At the same time, consider the following data point

But I think that if your investment mantra is “don’t fight the Fed”, you now must have a short bias to both the U.S. equity and bond markets, not the long bias that you’ve been so well trained and so well rewarded to maintain over the past eight years. This is a sea change in how to navigate a policy-driven market, and it’s a sea change I expect to last for years.

Make no mistake, an absolute bloodbath in equity markets is steaming our way. The only remaining question is...... when? If you would like to find out exactly when this sell-off will start, based on our mathematical and timing work, please Click Here.