DISTORTIONS IN THE MARKETS WILL BECOME EVEN MORE EXTREME

By Gregory Mannarino Traderschoice.net
Despite the current economic freefall, the S&P 500 is now only 3 percent off from a new record high. Just last week we got the worst miss regarding job creation ever for the previous month. Crude oil, which is the LIFEBLOOD OF THE MILITARY INDUSTRIAL COMPLEX is surging. Debts and deficits are at new record highs and the Federal Reserve continues to deliberately fuel surging inflation.
Amidst all of this, we are witnessing the largest and fastest wealth transfer in the history of the world—with an entire class of people, the middle class, moving closer to extinction. Moreover, as a percentage of GDP the US economy is cratering at its fastest pace on record.
Today world markets are being deliberately distorted, there is no real price discovery mechanism behind them whatsoever—and central banks are running the entire show.
The mechanism of suppressed rates and vast asset purchases by central banks have stripped out ANY AND ALL remnants of a free market and are responsible for massive distortions across the entire spectrum of asset classes.
What we can expect moving forward is simple—a continued expansion of global debt on an unprecedented scale, and this expansion will continue to distort the markets.
So, what does this mean? We can expect that the stock market will continue higher. The stock market will continue to move farther and farther away from reality as the debt hyper-bubble continues to grow—it is ballooning debt fueling the markets via suppressed rates.
This mechanism of rate suppression by the Federal Reserve is hitting the citizenry hard, by not allowing them to earn anything even remotely close to a real rate of return on their interest earning accounts—it is GRAND THEFT on an epic scale. Moreover, surging inflation is making it increasingly harder for average people to make ends meet.
Make no mistake about it, all of this is BY DESIGN.
Today is in many ways the golden age for the rich and well off, meanwhile for everyone else not so much.
Yes, there will be a moment in time which will come without warning, when global stock markets will crater on a scale which I believe very few people are prepared for. This will finish the end game which has been set in motion over a century ago by central banks to one day own it all, to be the lender and buyer of last resort, to be THE One World Government.
What can we do to stay on the right side of this?
The answer to that is this—stay hedged. In this kind of environment, one should be in the market owning large cap stocks that pay a dividend—make these companies pay you to own their stock.
Physical gold and silver also need to be in your investment portfolio. People should own stocks in a risk-on environment and stay hedged by owning risk-off assets, as in physical gold and silver.
By holding both risk-on and risk-off assets at the same time one should have little fear from being exposed to the market, and can capitalize on it no matter which way it goes.

Comments (2)

MARKETS ARE WILD
Stock Markets are going to experience greater volatility going forward, due to debt, currency fluctuations and assorted central bank meddling. Better stock-up on your Dramamine soon for coming motion sickness.

October 15, 2021 Craig Bradley

SCARY MARKETS FOR HALLOWEEN ?
I think we are at the end of a long boom cycle fueled by easy money ( credit = money) and low interest consumer loans of all kinds for the last 12 years or so. Consequently, household debt balances, sans mortgages, is at an all-time high. Yes, 47% of all consumers carry a credit card balance for a year at a time, then spend more. (My late brother used to do this and he resented it when I suggested he pay it down). Like the Federal government, some consumers have no intention of ever getting out of debt. Well, they should read the “tea leaves” because when, not IF, interest rates rise by even a few percentage points, then debtors off all kinds will find themselves in a deep hole without a ladder.
Of course, the Federal government is the biggest debtor on the planet and its for this precise reason the FED is keeping interest rates repressed for so long. Beware, its not going to last that much longer and when the tide goes-out, a lot of consumers will go bottoms-up. In addition, small (indebted) businesses will go bust and unemployment will go way up. So, the next recession is going to be especially painful for many. Some suggest a long period of very low economic growth and inflation will result in a kind of drawn-out Depression.
I think we will see a change in behavior away from the cult of luxury and bling and back to the basics of life out of pure necessity. Thus, spending patterns will likely be changing. Watch the T.V. ads for a indication of this trend change. A noticeable decline in economic activity and markets is just starting to be detectable. Next year, The Biden Administration is probably going to collapse. Things could become pretty rough by 2024 (crime and theft increases). Biden will be out and a new crackdown at various levels will ensue and the pendulum swings from one extreme back to another and on-and-on (Political whiplash).
The top is close to occurring for the past year. After it tops-out, the decent is always steep and fast. A true multi-year bear market happens so fast nobody can get out as there are no bids. Stocks gap down, just as the gaped-up during the boom or bull phase of the market. Nobody can exactly time any market. Its always a guess. Investment managers and fund managers are always all-in at the tops. Could the market keep going-up for 9 more months and then crash? Easily, as markets are like that; they fool nearly everybody. Those with some cash at the next market cycle bottom will make a lot of money. Buy low, sell high. Its easier to spot a relative low than a high in my experience. Patience pays-off for individuals who can wait-it-out.
For the record, some market analysts have described the last 233 years of market history as one huge “Grand Supercycle”. Of course, we get some horrific corrections along the way, as was the case in 1929 or 1973. If we do get a market collapse like we last had two generations ago in 1929, then most all investors will get hosed. That would be a permanent economic change back to austerity and NO FRILLS.
I also foresee many government layoffs coming at the State and City (local) level in that event. Higher interest rates would make it harder to hide big budget deficits by just borrowing more money and rolling-over existing debt, while never actually paying it off. Its even conceivable that government debt (bonds) could actually default some day. Of course, it would never be called a “default”, but rather, duration or maturity would simply be unilaterally extended. ( A ten year bond becomes a 40-year bond and the creditors keep collecting the same low coupon rate for decades). There would probably be few buyers of newly issued govt. debt, at least at today’s at low rates, I predict.
In addition, these would be the exact conditions in-which public employee pension funds would likely be forced to reduce their “promised” benefits. Recent court decisions have already laid the groundwork for pension cuts. A “promise” from the government is not a contract and therefore, legally unenforceable. This has been the case with Social Security Cash Benefits. The rules can and will be unilaterally changed again. So, I see this coming eventually regardless. Just wait until millions of public sector workers and public school teachers find-out their income just went down, permanently. This is the stuff of Depressions. It will be scary if it happens to play-out this way in the future.

October 18, 2021 Craig Bradley

DISTORTIONS IN THE MARKETS WILL BECOME EVEN MORE EXTREME

Related

Comments are closed.