The Next Two Years in the Financial Asset Markets - Emperadores en Fuego

As Ozzie Osbourne says, "All Aboard!" lol

The good news is that it will not be as straight down as this.

Joe Saluzzi gave a very good description of the character of this market today on Bloomberg.

Keep your hands and head inside the train at all times.

Don't worry. Trust in Ben and Tim.

And meanwhile in the Mideast...

Note:  Most people think of stocks as the be all and end all of dollar financial assets.  In the case of a burst of inflation or a hyperinflation, the equity market will soar for a time, although its gains will be illusory. So stocks are an insurance but not so much as you might expect if that is the outcome.  Try not to get in front of it, as phony as you might think it may be. But the stock market is of much less consequence as compared to the bonds and currency markets.   It is the three card monte to the bond and currency numbers rackets. The stock markets are the pretty lights and buildings that the tourists stare at while the carnies pick their pockets.



"Higher and Higher. What Could Go Wrong?"

 


"What a Beautiful View At the Top. We're the King of the World."





"Who Could Have Foreseen This?  Remain Calm.  All Is Well."



"Mommy!"

And if the Fed should make a mistake, the efficient electronic trading markets are designed to be self-correcting.

US Budget Expenditures - CBO Long Term Outlook

Obviously one can question their growth assumptions, and therefore tax revenue assumptions.

However bear in mind that this chart is for the expenditures as a percentage of GDP, and is therefore tied to the growth.

Personally I would think that they would lowball the interest payments, which are not so tied to the CPI as COLA increases in things like Social Security.  Bondholders are not as captive an audience as your old people.  

But as I always say, until the financial system is reformed and the economy is brought back into balance, nothing will 'work,'  whatever combination of austerity, stimulation, growth, and tax changes it may include.  This discussion is the misdirection and distraction, the financial magician's tools, from the actual transfers of wealth being conducted, those transfers being a nice way of saying 'looting.' 

The US resembles post Soviet Russia just prior to its currency collapse and the rise of the oligarchs who sought to monopolize productive assets which they bought with paper and financial manipulation.    Communism died, and it ended in oligarchy.  Democracy is dying, and it too will end in oligarchy, unless something is done to change the outcome. 

SP 500 and NDX March Futures Daily Charts

As a reminder this is an option expiration week in US equity markets.

Volumes remain thin.

A friend Lee Adler thinks that the sale of the NYSE to the Deutsche Bourse could mark a top in equities. And he might be right. He cites some precedents for this sort of deal capping a big run in stocks.

As I mentioned yesterday I believe that US equities are now in bubble territory and vulnerable to a 5 to 10 percent pullback. However, with Uncle Thug plying its favorite Banks with paper, I would not wish to get out in front of this. Still, it would be typical to see something start around an option expiration.