Transcendental Market Truths:
The Market:
The amazing similarities between this topping market and the topping market in 2007 continue to grow. Currently, the market is being buoyed by news releases from the Europeans who are supposedly "rescuing" Greece from its "debt problems". Similar news items appeared in early 2007 about Bear Stearns "rescuing" its failing hedge funds. That's an exact parallel because it was the toxic debt which was pulling many hedge funds and their bankers down in early 2007. Right now, I'm seeing a lot of unrealistic statements from the Europeans about pledging money to Greece. The numbers, though, just don't add up (they promised 45 Billion Euros and Greece says it really needs 80 Billion Euros). And, there is a great deal of uncertainty whether the German electorate actually will agree to transfer this money to Greece. Further, there is some degree of worry that the Greek citizens will go along with the austerity measures being proposed. All in all, there is huge uncertainty about the situation, not to mention Portugal, Spain and the other PIGS in the midst of debt deflation.
Apple is another one of those parallels. In 2007 they had just introduced the iPhone; today, they just introduced the iPad. Moreover, money flow is diverging very bearishly in regard to Apple's stock..
It looks like the parallels will disappear not in a good way, but in a very bad way. The government bailout of the banks essentially drained the government of the capacity to bail them or the economy out again.
EUR/USD:
The Euro got a boost from the latest central banker announcements, but rallies in the Euro are opportunities to get positioned short that currency. The way things look, a year from now the European union may be losing members right and left. There was a good article on this subject by Yves Smith:
nakedcapitalism.com
Bottom Line:
If Obama thinks that pumping money into stocks is going to keep this economy inflated, he's simply one of the biggest fools who ever lived. |
