The End of Dow 18,000; Bailouts
No Longer Extended June 30 ‘15
Doug Wakefield
Eurogroup
Says Greece Bailout Program Will Not Be Extended And Will Expire on June 30,
ABC News, June 27, 2015
Greece Debt Crisis: Banks
to Remain Shut All Week, BBC, June 29, 2015
Greece
Confirms It Will Default On Its IMF Payments, Financial Post, June 30 ‘15
“We
have to admitted we are powerless over alcohol, that our lives are
unmanageable” – First Step in Alcoholics Anonymous 12 Steps
The
World Is Defenseless Against The Next Financial Crisis, Warns BIS, The
Telegraph, June 28 ‘15
“Interest rates have
never been so low for so long. They are low in nominal and real
(inflation-adjusted) terms and low against any benchmark.
Between December 2014
and end-May 2015, on average around $2 trillion in global long-term sovereign
debt, much of it issued by euro area sovereigns, was trading at negative
yields…. Such yields are unprecedented. Policy rates are even lower than at the
peak of the Great Financial Crisis in both nominal and real terms. And in real
terms they have now been negative for even longer than during the Great
Inflation of the 1970s….
The economies hit by a
balance sheet recession are still struggling to return to healthy expansion… There is something deeply troubling when the
unthinkable threatens to become routine.” – Bank of International
Settlements 85th Annual Report, June 28, 2015, pg 5
Since the fall of 2011,
the world of investors has been lead to believe that there is nothing to really
be scared about regarding REAL world risks that have been rising due to the
expansion of the largest amounts of debt and intervention by central banks on
record.
In October 2011, we read
headlines like In
the Absence of a Credible Plan we will have a Global Financial Meltdown in Two
to Three Weeks, [states] IMF Advisor (Oct 6 ‘11), only to watch stocks
rally until we read, S&P
500 Extends Best Month Since ’74, Euro Rises on Debt Accord(Oct 27 ’11).
In
the summer of 2012, headlines confidently attested, Mario
Draghi Pledges To Do “Whatever It Takes” To Save the Euro (July 26 ’12) and
two months later Bernanke kicked off QE III as we read, Fed
Seeking to Create Wealth, Not Just Cut Rates (Sept 12 ’12). Stocks rose,
continuing to convince investors that central bankers had their back. No need
to worry about that nasty word, “risk”.
Now
sure, there were those scary headlines like Spain
Reports Record Capital Flight (July 31 ’12), and What
If There’s No Deal On Fiscal Cliff (Dec 30 ’12) that could have made you
think something in the real world that could impact the “happy view” from
financial markets, but as we continued to view scary headlines through the lens
of rising stock prices, there was no need to fear. The “markets” had spoken,
and they were not scared of anything.
Whether
it was headlines like Obama:
Syria Chemical Attack to the World (Aug 30 ’13), or More
Than 800,000 Federal Workers Are Furloughed (Oct 1 ’13), or Fed
to Start Unwinding Its Stimulus Next Money (Dec 18 ’13), stocks continued
to rebound after slight pull backs, giving the public the impression that
nothing from the world of political, geopolitical, or financial risk, could
ever impact the ever rising ride to higher heights.
Me
worry? No chance.
So
as we came into last Friday, with headlines across the financial world focused
on the REAL problems in Greece, and the constant on again, off again deals
between Greece and the Troika, my article last Friday, contained the chart
below of the Dow.
Now
I ask you, after almost 7 months at this all time high, and this coming on the
heels of the Federal Reserve shutting down QE III at the end of last October,
followed by US stocks moving up faster and larger than the rise into the final
top of 2000 and 20007 to reach the December 5, 2014 “all time high”…. if this
week was to continue the illusion of “real problems have no relationship to
rising stock prices”, then this past weekend we could have been presented a
headline like, “Deal to Kick the Can Down the Road Just Signed by Greece and
the Troika”.
But
that did not happen. At the close of markets yesterday, central planning
politicians and bankers presented investors worldwide with the view of scary
headlines can mean heavy losses, especially if there starting point is from
mountaintops instead of valleys.
So
now every investor, advisor, and money manager has a choice. Continue hoping
and praying for more debt schemes, more algorithm spoofing, and more news
rhetoric to kick off the next FOMO (fear of missing out), or returning one by
one to the fact that REAL debt has REAL consequences when the price of assets
have brought us to view things from the top of the world.
Goldman:
The Stock Market in 2015 Will Be…Meh,
Business Insider, Nov 20 ‘14
“Goldman
Sachs equity strategist David Kostin is out with his 2015 outlook for the
S&P 500.
Kostin's
price target: 2,100.”
The Dow 18,000 stall
has lasted for 7 months. It has never happened before. The period we lived
through between October 2011 and July 2015 which took trillions in debt to
create, has left an enormous drag on the global economy with debt yields at the
lowest in history.
At
some point, there will be hard evidence to the public that others have been
pulling out money ahead of them, and that planning an exit at the last moment
is not wise. As I have stated before,
history will reshape our plans, not the other way around.
$140
Billion Bond Fund Goes To Cash As It “Braces For Bond-Market Collapse”,
Zero Hedge, June 22, 2015
Gross
Says Hold Cash, “Prepare for Nightmare Selling”, Zero Hedge, June 30 ‘15
Being a Contrarian, Remembering History
The
big shift from longs to shorts and shorts to longs continues moving toward away
from previous trends, and toward future ones.
Click here to start the next
six months reading the newsletters, reports, and group emails as we move
into the second half of 2015.
On a Personal Note
Check out Living2024. It is my personal blog, not business. I wanted to have a place to write some deeper stories about where this entire drama seems to be taking us all. Check out my latest post, The Unlimited Mammon Master.
Doug
Wakefield
President
Best Minds Inc. a Registered Investment
Advisor
1104
Indian Ridge
Denton,
Texas 76205
Phone
- (940) 591 - 3000
Best Minds, Inc is a registered investment advisor that looks to the best minds in the world of finance and economics to seek a direction for our clients. To be a true advocate to our clients, we have found it necessary to go well beyond the norms in financial planning today. We are avid readers. In our study of the markets, we research general history, financial and economic history, fundamental and technical analysis, and mass and individual psychology