| | | Hi RtS,
It is more than just the Fed reversing its ZIRP.
It is the unbefore seen level of fiscal spending by our government.
This recent reconciliation bill is the proof.
They truly believe unbridled spending is OK by government, just print more money. Buy those votes and our power is into eternity.
The Fed has only tools and mandates. It is not the treasury that prints.
If this economy keeps running due to the so far never seen before heights of fiscal stimulus, crude will launch thru the roof. Interest rates will follow the one two punch of fiscal stimuli's and an energy spike.
Every recession has followed an energy spike, except two since 1950. During those non recessionary periods energy more than doubled before the Fed was forced to hike rates even more and then a recession was imposed by the fed with very high rates.
An out of control Congress and its record fiscal stimulus is what stalls the needed recession, then an out sized energy spike does the Fed's work for it.
We'll have an inflationary spike like seldom seen in history. This economy will be bulletproof, and then energy costs on EVERYTHING will relentlessly drag us down into a big long and ugly great recession.
When that cranks out high interest rates for all sovereign currencies, the bond vigilantes will have their day in the sun.
We'll all want to be in cash and out of most, if not all stocks by then.
That's how I see it coming down.
The final distribution top will take time to weigh down the market with market maker short shares created with nothing but thin air, because they can at no expense.
Their only survival will be being short more than they are long in their inventory to run their "creating liquidity business".
Then margin calls and forced selling will make them ultra wealthy, because they are more short than long.
Great stocks will sell for less than their cash per share is. THAT IS HOW LOW A VALUATION CAN BE!
I believe we are a ways from that. As long as money from TSLA, AMZN, META rotates into another sector the market continues its top distribution. Energy sector is the proof this market carries on. Past sectors will tease new highs, but the market gets heavier as every sector distributes in a topping action.
Watch for EUPHORIA of inflation. Fear it when the fast price mark-up only happens in stocks that are tertiary (less than 10-15 bucks) - the sign and personality of a third wave.
We're not there yet.
Guard greed from bubbling in your blood.
End of rant.
Bob |
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