Only One Thing

That you need to keep in mind at this point…

And that is by any measure, the stock market is grossly overvalued. You can look at earnings vs price, GDP vs Market Capitalization, etc, all show the same thing.

What that means in a practical sense, is, we are all riding the bomb and things have gotten so extended that no one knows what to key on in terms of a forecast. And to bear that view out, here is what the NY Fed said yesterday in terms of their GDP forecast model:

We will continue to throw out pieces of our research in terms of market and price data to provide a little bit of insight, but here on the day of the September FED meeting the door is wide open.

The Hiding Place:

First, here is our chart of the investor “Hiding area” the FANG stocks divided by the 10 year interest rate. This chart allows us to see when interest rates are affecting the hiding area. As we have mentioned this relationship recently has traded between 5.13 and 4.40.

We view a close under 4.27 as significant, it hasn’t happened yet. If this occurs it will be important as the speculative crowd is loaded up for another wave higher on the Fang stocks after this FED meeting where everyone is expecting all talk and no immediate action.

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