Morning Perspective

Two of the largest companies in the world have rallied over 5% after reporting earnings, and yet this was not enough to help push the stock market to a new fresh all time high.  Are we witnessing, perhaps, some exhaustion?

Small caps have muddles around for three years now, not able to break out or break down.

The largest company in the world could not hold above long term trendline resistance and closed yesterdays session just below it.

and what a great read this morning.. to think Brexit was just another excuse for the Central Banks to up the ante on their Asset price Ponzi scheme.

Some great lines from the piece include:

  • The world's governments are seizing on the flimsy excuse of Brexit to prime pump their economies, hoping to stretch the ageing global cycle for a little longer
  • Brexit was always a hoax for world markets. The financial cycle will end as it always has in peacetime over the last century: when the Fed tightens.
  • debt is a mirage in a world of helicopter money.
  • Sooner or later, this surge of liquidity will lead to flickerings of inflation in the US, and then to the time-honoured inflationary take-off as the labour market tightens, at which point the markets will react and the global asset rally will short-circuit.

All these years of Central Bank assistance has numbed the market to the fact that a lot of the gains we are seeing have been built upon the back of debt that would have never been issued or acquired without artificially and historically low interest rates.

Which is all great when interest rates remain at these historic low levels.  But if the market ever does start pricing in a return to anything less than the current abnormal interest rate environment asset prices will correct to that 'new normal'. The when, where, and how of which no one quite knows.  Money for nothing and your asset price manipulation for free only sounds good on MTV.

See you in the chat room.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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