Back in September when all this Repo madness was reaching a 'tipping point' , I mused at the time it may trigger the FED to re-start QE to re-lube the markets.
And while not openly stating QE4 was underway, the FED, through its new 'Not QE' QE is indeed expanding the balance sheet once again. And guess what? Equities are hitting new record highs on a weekly basis. go figure....
While those fear mongerers in September were trying to convince everyone the world was finally going to come to an end for the 254th time since 2009, the market was telling you otherwise.
If this repo nonsense was really more than what it is - you would have been hearing about it AFTER the S&P500 had already fallen 25% for absolutely no reason.. yet here we are percentage points away from record highs. Price > Headlines pic.twitter.com/AoeOOUtZC0
— UPBOptionMil (@UPBOptionMil) September 21, 2019
Yes we know why the market is heading higher.
Low interest rates and Central Banks hell bent on keeping asset prices high. We don't have to like what the FED is doing to be long. The uber bears, while wrong about the market every day since 2009, are right about how insane the Central Banks are these days. I agree, more QE, cutting interest rates, Negative interest rates = insane. However let's not be blind to what is going on here. Money = cheap. If it was the other way around stocks would likely be moving in the other direction.
If the economy was doing well, but interest rates were high and Central banks were sucking money out of the financial system... what would stock prices be doing?
Exactly.
Here we are at record highs and the Federal reserve has been CUTTING interest rates and RESTARTED its asset inflation protection program. Europe is doing so well they have made their rates more negative, and have increased their asset price inflation programs as well. Yet somehow this is bearish for stocks?
I don't think any of us like that fact that honest savers have been bent over a barrel the last 10 years to keep this financial system from collapsing. Those who worked 30-40 years to live off a respectable savings rate have gotten the shaft. I've been saying that for almost 10 years now.
But it doesnt mean the market is a short. Just because we dislike the actions of the Central Bankers doesn't mean the market is ready to collapse.
"This market is heading higher for the exact reasons why those widely followed incessant bearish pundits have been screaming sell the last 10 years"
Indeed it is.
The Pandora's box is open. There is no putting this beast back in the box. I agree with those uber bears. A day of reckoning is coming. The Central bankers at some point will lose control. However that time is not now. Actually the case could be made that the Central Bankers are more in control than ever before!
What a dream scenario for the Central Bankers. Low, stagnant, inflation. Muted wages. Slow growth. It might not sound like a recipe for more gains into 2020, but just imagine if the economy starts to take off again all the while inflation remains under 2%, and the Central Banks keep their feet on the gas pedal.... oh my....
I'll leave you with this... and mind you I wrote this earlier this year while zerohedge and those widely followed bearish pundits were touting imminent market disaster and a stock market that was set sharply decline....
"What if it's not 2000, 2007, 1929, 1987 but November 2011 or January 2016 or even.. gasp.. March 2009 instead"
What if it's not 2000, 2007, 1929, 1987 but November 2011 or January 2016 or even.. gasp.. March 2009 instead
— UPBOptionMil (@UPBOptionMil) October 26, 2019