Boy...The Mr. Market is strong. Strong Like Bull!
Every day to the really and clearly informed, the macro gets worse, but stock index futures are higher. Now you may say the economy is getting better, housing is getting better, retail sales are getting better, and so on. There is always truth in any vast conspiracy to keep people uninformed and stupid. Yes, there is evidence that proves some of these illusions, but the fact remains, without government support, the economy, housing, retail sales, and the consumer would be in the morgue, with its toe already tagged. The only evidence needed to support this claim I have is this:
The only part of the economy where the government cant interfere is employment. They cant make employers stop laying off workers. They cant make them hire workers. They cant themselves find jobs for all of the unemployed. So its not surprising to anyone that this is the only thing that is not getting better. Employment is the biggest piece in the economy, you cant get GDP going again in the positive direction without real positive trends in employment. We have yet to see a sliver of this as of yet.
Bernanke says the recession is over. To this I say - Who Cares!
tradersutra.blogspot.com/2009/09/bernanke-speaks-who-cares.html
Bernanke and the Federal Reserve have a mandate to promote and foster maximum sustainable employment and price stability. There is no such mandate for housing, retail sales, construction spending, and the like. Where is Employment headed? This is what I wanted to hear. He had nothing good to say about jobs. If you can say anything positive about whats important - shut up! Any talk of recession ending is completely useless if a subsequent job recovery is not apparent.
The Three Headed Bernanke-Geithner-Obama Hydra have succeeded in getting sentiment turned around big time. That and the endless printing of liquidity is whats driving equities higher.
Their theory that sentiment leads the economy is so ass backwards that its numbing even to discuss. But they have succeeded here in the short term.
What I am seeing at the moment is many many market participants, traders, and investors have just become resolute to the fact that we are just grinding higher for no reason at all. Let me get in on it. I keep reading many well though out, well researched, and well written bearish articles about the market. Let me say most of what I read is negative, not because I am negative, its just the only stuff out there. Except for CNBC of course, which thinks we are in a new multi-generational bull market. The market is theory/opinion agnostic. It will always zig when everyone is zagging, and this is the fuel that is pushing prices higher. The market doesn't want to here anything negative, after all its completely liquidity driven.
Most serious traders I speak to, tell me the following:
"I know what you are saying, but there is too much liquidity out there. Its not going in the bank at 0% interest. It has to go somewhere, and equities is that place."
I agree, even though I am negative on 90% of the economy, I believe that equities are in the 7Th inning of its current rally. Its getting late, but a push to 10200 on the DOW or 1120 on the SPX is almost a given from what I see is going on. What I see is indiscriminate destruction of all negative strategies. Short players have been forced to cover their bets across the board in all asset classes. Take a look at Natural Gas, there is no reason for Nat Gas to rise some 60% in 2 weeks! There is simply no fundamental reason other then short covering. Natural Gas for very good reasons was a heavily shorted market coming into Labor Day, with massive positive sentiment, you see the result.
Wall Street has gotten away with the biggest scam in the history of mankind. Market participants have figured this out and the only way for them to participate as well is to take prices higher. Join in on the action. The ultimate casino mentality is back.
Most participants have become resolute to the fact that the Banks and Wall Street totally looted America and that government will continue to print money and pump liquidity so that more taxpayer money can be used to socialize losses. In this current environment, investors have stopped thinking and acting rationally and are just hitting the buy bottom, totally oblivious to the facts.
We may be in the 7Th inning, 8Th inning, 9Th inning, or maybe in extra innings, but it looks to me that investors have their rally caps on sideways at the moment.
Its the ultimate heard mentality. These types of markets always end badly, but when is the question to ask, not if.
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