Friday, July 29, 2016

Charles Hugh Smith Thinks 
The Market Is Like A Car Flying Off A Cliff
& The Wile E. Coyote Moment Is Just Ahead
"The stock market thinks it's solidly on pavement, but in reality it's like a car flying off a cliff: the Wiley E. Coyote moment is just ahead. There's nothing but air beneath the stock market .. what is driving this expansion other than a delusional belief that profits will magically reverse and log massive gains in the second half of 2016? .. The stock market is hitting new highs for what reason? The typical answer is: more central bank stimulus is on the way, the Fed/ BoJ /Bank of China/ European Central Bank have our back, etc. .. But the reality is obvious to all: the returns on central bank stimulus have declined to near-zero. Trillions in additional stimulus are needed to just keep the delusional markets from experiencing gravity."
- Charles Hugh Smith*
link here to the reference


Anonymous said...

Fears grow over Wall St's appetite for securities-based lending

"No one is sure how big the total market is. The Federal Reserve does not keep tabs on SBLs & neither does Finra,

Anonymous said...

In theory at least, unless you can imagine interest rates going substantially higher the stock market does NOT represent the dreadful risk that is portrayed.

There are two aspects to stock evaluation. One is prospective earnings and the resulting dividend streams. The other is the rate at which those dividends are discounted ... in theory at least to perpetuity. My point is that as the discount rate approaches zero (from positive numbers), the present value of those divided streams heads off to infinity.

I suppose one could argue that central bankers have created infinite wealth with their antics. Obviously that makes about as much sense as the thinking of the bankers themselves; but the thought was there ..... THEIR THOUGHT !

It is pretty obvious by now that the Europeans (in particular) have about as much understanding of economics and finance as they do about Islam and its sureptitous agenda of world domination (by all means possible ... including the elimination of those who resisting it).