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Pastimes : Current Events
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From: The1Stockman7/16/2014 3:44:50 PM
   of 1811
 
I find it interesting that BoA would even comment on this issue, they've been pro market for as long as I can remember, so what's going on?

Summer melt-up to be followed by autumn correction says Bank of America
16 July 2014



Bank of America is warning its clients that the summer melt-up in equity markets is going to be followed by an autumn correction. The wonder is that nobody wants to leave this party early.

The BoA is in good company. The Bank for International Settlements says markets are now in a euphoric stage with Tobin’s Q-measure of the S&P 500 showing a more dramatic overvaluation than in 2007.

What recovery?
Wall Street continues to cling to the notion of a US economic recovery despite the 2.9 per cent slump in GDP in the first quarter. The latest data shows the post-winter rebound in car sales also petered out last month.

US unemployment data is a sham with the headline indicator not showing a huge growth in part-time employment and the massive number of full-time jobs lost. Meanwhile, wages are stagnant and food and energy costs are going up. These are facts not market hype.

Stocks and gold fall because Dr. Yellen is supposed to end QE this autumn and interest rates are going up. If that actually happens it is surely the end of the rally for stocks but what if it does not?

That would signal a very weak economy and more money printing in progress. Eventually that will produce inflation, not an economic recovery. That’s bad for stocks too. But it’s good news for gold and silver.

S&P at 5,000?
If the S&P at 2,000 is the euphoric side of the pendulum then consider what the normal metric for depression in the other direction would mean: 5,000 perhaps?

Even Dr. Yellen has gotten the overvaluation of social media and biotech in her sights. But the wider market is the far more scary prospect.

Will Wall Street now start to get further bouts of the jitters before the real plunge in October? Could gold and silver benefit? The end of this road is now in sight.
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