Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Dow 19,20,21….Faster, Faster!

Stock-Markets / Stock Market 2017 Mar 03, 2017 - 03:40 AM GMT

By: Doug_Wakefield

Stock-Markets

Aren’t you glad that the Dow leaped to 21,000 today. I mean, just three weeks ago its low for the day was 20,015. In fact, on November 22, 2016 the Dow crossed 19,000 for the first time.

Yet why the hurry to get in now? The 8 year US “QE assisted” bull market has yet to see a 20% decline since 2008. In fact, since the Feb 11, 2017 low, the S&P 500 hasn’t had a weekly decline (Fri to Fri close) of even 2.5%. Even based on Goldman Sachs’ recent research we know the S&P 500 has not seen a 1% decline over the last 96 days, a feat only topped 3 times since 1980, none since 2000.


I know, we continue to hear as Americans we can spend and borrow trillions – temporarily of course – from other nations to spend on our infrastructure and military since foreign nations have shown no limit to their appetite for our treasuries.

[Source – Foreigners Are Dumping Treasuries as Never Before, Wolf Street, 12/15/16]

As investors and traders we have forgotten the historical and fundamental reality that if borrowing costs rise across the world this impacts cash-flows from governments to businesses to consumers which ultimately affects stock prices.

[Source – 30Y Yields Spike Tops 3% As March Rate Hike Odds Spike Above 80%, ZH, March 1 ‘17]

With historical examples of the consequences of bubbles removed, it doesn’t matter how we explain the quick gains. Experience is the only thing that matters. It is better to keep thinking of the “certainty” of more winnings from the bubble than the severe changes from former bubbles.

The fundamental myth that central banks must continue to foster, is that bubbles are hard to spot and debt fueled booms do not lead to debt crisis busts. Yet even the central bankers bank warned the global public of what we are facing as we start March 2017 when the Dow reached 17,000 in the summer of 2014. 

An organization representing the world's main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.

“The temptation to postpone adjustment can prove irresistible, especially when times are good and financial booms sprinkle the fairy dust of illusory riches,” the report said. “The consequence is a growth model that relies on too much debt, both private and public, and which over time sows the seeds of its own demise.” [Central Bankers, Worried About Bubbles, Rebuke Markets, NY Times, 6/29/14]

Will we read in the future, “Central bankers warned of finance excess, illusory riches, and trusting in too much debt before the global financial bubble collapsed”? Should someone inform the President of the Federal Reserve of Minneapolis, Neel Kashkari, that his recent statement that “we are keeping our eyes open for asset prices to try and look for signs of bubbles” reveal he needs to read the plethora of warnings in global banking reports for more than two years now? Maybe after this 13 month stock bull he should talk with former President of the Federal Reserve of Dallas, Richard Fisher who stated in January 2016, “We front- loaded an enormous stock rally”?

So when is enough, enough? When will more and more central bankers admit that THEY have and continue to be the root cause of a system that “relies on too much debt” and short-termism? When will the industry and public at large admit we have been here before, only with far less debt?

Time To Plan for The End of a Bubble?

Best Minds Inc has a new website and blog. Check out www.bestmindsinc.com for free blog and paid research newsletter. 2017 will bring significant opportunities and significant losses.

Doug Wakefield

President
Best Minds Inc. a Registered Investment Advisor
1104 Indian Ridge
Denton, Texas 76205
http://www.bestmindsinc.com/
doug@bestmindsinc.com
Phone - (940) 591 - 3000

Best Minds, Inc is a registered investment advisor that looks to the best minds in the world of finance and economics to seek a direction for our clients. To be a true advocate to our clients, we have found it necessary to go well beyond the norms in financial planning today. We are avid readers. In our study of the markets, we research general history, financial and economic history, fundamental and technical analysis, and mass and individual psychology

Doug Wakefield Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in