The candidacy of Donald J. Trump has upended American politics, and, indeed, has changed the political landscape in ways our liberal and conservative elites never expected and clearly abhor. He talks like an ordinary person, for one thing – a rarity in a realm where politicians routinely speak as if they are giving a speech […]
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Investors should not be fooled by the strong performance of stocks last week. Fundamentals have not changed and still present major headwinds to a market recovery.
Oil ended the week at $29.64 per barrel (BTI crude), which is still too low to save struggling fracking companies from the junk heap. The junk bond market backed away from 10% yields but is still a disaster zone. And major hedge funds are still nursing double digit losses.
What we saw was a classic short-covering rally inside a bear market that has further to run. Readers should not let their guards down and let themselves get fooled into diving back into dangerous waters. If they do, they will drown.
The Dow Jones Industrial Average gained 418 points (2.6%) to close at 16,391.39 last week, while the S&P 500 jumped 53 points (2.8%) to 1917.78. The Nasdaq Composite Index, home to the most speculative stocks, jumped by 4% to close at 4504.43. Investors should use rallies like this to lighten their stock exposures before the market takes another leg down.
Stocks were pushed higher by more idiotic comments from European and Japanese central bankers promising to make greater efforts to destroy their currencies and create inflation. Worse, they promise to do so regardless of whether they destabilize the global financial system in the process. Markets were also treated to more remarks from a variety of Federal Reserve officials sending mixed signals about their intentions to raise interest rates further.
The sheer incompetence of central banks is reaching such epic proportions that it is only a matter of time before markets lose whatever scraps of confidence they have left in this confederacy of dunces. Japan’s economy is falling apart again, Europe’s is not behind, and despite reports to the contrary the U.S. is going nowhere. Coming after over 600 interest rate reductions and $12 trillion of QE, it is about time for the world to declare further central bank efforts dead on arrival.
Last week, Bank of America confirmed work done over the past couple of years by other firms like Societe Generale and Goldman Sachs, showing that corporate balance sheets are in terrible shape. Corporations are more leveraged today than they were in 2007 before the financial crisis.… Login or Join Now To Read More
Forecast 2016
There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back … Login or Join Now To Read More
