Last play for the Cheerleaders

CNBC brought out their perennial bulls this morning with all kinds of explanations for why the stock market is acting so well. I do have to admit that the five day average for the S&P, at this moment at 9:45 CDT, is strangely strong at 3047 for being at an extreme 3040 sell point.

One has to keep things in perspective however. If one takes an indepth look at the chart showing the performance of assets versus financials since the January 26, 2018 Fracture date, you see that the overall deflationary trend in assets has been dominant. It is true that FED actions have saved the paper side versus the real side but that is about to change.

What is important is that since the end of the 2000 to 2018 18.6 year macro cycle, which ended on October 8, 2018 we have seen extreme attempts by the FED and now the Treasury also, to try and save the day. The result is kind of a drawn out stair step situation. Assets are a mixed bag, Commodities basically collapsed, while stocks have had a number of second lives, nevertheless, deflation is taking hold.

As we have mentioned before, the last stage of this knee jerk reaction to the end of the Macro cycle will be a blow-off rally in GOLD and Bonds. That is starting in Gold now, and will catch hold in Bonds when stocks prices implode.