Burnout of the Bernanke Legacy
As deflation ignites, Japan and its Abe, is chasing the last idea that didn’t work, Bernanke’s legacy of QE’s. The only thing that I can say, is you should probably be long the dollar and the long bond as the fallacy of funny money liquid stock market assets implodes.
We all hear the saying “history never repeats but often rhymes”. Here we go again, look at the major prior top in the S&P, July 16, 2007 to October 11, 2007, the market had a drop of 12 % while making the top during this period, then made a new high by 20 points, and then started the long swoon down into March 2009. Using these points in the current market, 30 points up in the S&P gives a 2049 level as the bulls target for now.
Our Computer models remain long, while my fundamentally based short positions are back in the red. Who said this was easy.
Deflation is the major economic force, it is slow and relentless and will take major structural change to stop its move, and sadly that means a blowout deflationary bust that will force governments to look at real new directions. The current mid-term elections will not change anything. Obama has let the old line Democrats run his economic agenda. Republicans don’t have anything that works in the long run, trickle down is just a stepping stone to disaster. The independents are only independent because they don’t have a clue. That leaves a big open window for some fresh ideas and new people down the road.