Are stocks and bonds getting ready for an implosion or a revolution? (Part 1 of 2.)
WASHINGTON, April 22, 2016 – Friday is another one of those trading days we fail to comprehend. Happy talk abounds on investing websites, save for the always gloomily contrarian ZeroHedge and a few others that are too silly to take note of.
Yet, like Thursday, this market wants to go down. As of 1 p.m. EDT, it’s doing just that, albeit on low volume (again) and rather unconvincingly. Will we get some kind of “stick save” at the close by the Plunge Protection Team (PPT)? Jury’s out as we write this.
We just mentioned ZeroHedge, whose substantial investment-oriented content is often so convincingly negative that you’re ready to slit your wrists after reading a random few pieces that catch your eye.
One ZH piece, available today, will give you a better idea, perhaps, as to why the Maven remains so boringly nervous about stocks even as the market seems eager at times to levitate. The article in question is entitled “Albert Edwards Finally Blows Up: ‘I’m Not Really Sure how Much More Of This I Can Take.”
The Maven will quote some of this material at length, something he usually avoids, preferring instead to offer his own brilliant commentary. However, this article is good stuff we can’t improve upon save for occasional editorial explanations of terms as noted in square brackets. (Bold text is as it appears in the original.)
Pseudonymous author “Tyler Durden” begins his article with this preamble:
“Earlier this week we described the personal come to non-GAAP [Generally Accepted Accounting Principles] Jesus moment of trading commentator Richard Breslow, who confessed in no uncertain terms that he has had it with endless central banking intervention: “a portfolio built to only withstand stress thanks to central bank intervention is one destined to blow-up spectacularly. The embedded flaw in this new logic is that central banks give investors perfect foresight. And nothing can go wrong… You don’t need to be a Taleb [a Lebanese-American statistician and former trader] or Mandelbrot [the late Polish-French-American math whiz who essentially created fractal geometry] to calculate that we have been having once in a hundred year events on a regular basis for the last thirty years.
“Today it is another famous skeptic, SocGen’s [French megabank Société Générale] Albert Edwards who has had enough and says he feels “utterly depressed” because he has not “one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result. The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!”
Short version: both the author and Albert Edwards are convinced the endless economic fiddling by central banks around the world must eventually collapse in on itself. The rising stock markets and America’s much-vaunted “return to prosperity” are all mirages, figments of the Fed’s and the ECB’s “moral suasion” geared toward helping to keep their current government masters in power. No real working person has benefited at all from some eight years of financial finagling whose aim is to cover up the obvious. When they finally figure it out, there will be hell to pay.
Next: The windup, pitch and final inning of some depressing economic analysis.Click here for reuse options!
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