Hey! Remember the 1929-1930 bull market?
You know, the one that followed the 1929 crash?
when the Dow Industrials soared by 48%?
from 198.69 on 11/13/29 to 294.07 on 4/17/30?
then proceeded to collapse by 86% to 41.22 by 7/8/32?
Good times.
Be careful out there. pic.twitter.com/PG5Te18QPX
— John P. Hussman (@hussmanjp) July 16, 2020
Guest Post by Andy Xie
The markets are celebrating the pending agreement between China and the United States to end the trade war. This follows the US Federal Reserve signalling a pause in raising interest rates.
The euphoria is bringing the bulls out of hiding. Unfortunately, this is likely to be a dead cat bounce. A global slowdown is in full swing and with it, an earnings recession. Even if another major financial crisis could be averted, the debt binge of the past decade would take a long time to digest.
The change in the Fed’s policy posture is probably more important than a resolution to the trade war. Trump was raging that increased interest rates had crashed the market, and the falling market threatened to trigger another debt crisis.
On October 2 the BLS reported absolutely atrocious employment data, with virtually no job growth other than the phantom jobs added by the fantastically wrong Birth/Death adjustment for all those new businesses springing up around the country. The MSM couldn’t even spin it in a positive manner, as the previous two months of lies were adjusted significantly downward. What a shocker. At the beginning of that day the Dow stood at 16,250 and had been in a downward trend for a couple months as the global economy has been clearly weakening. The immediate rational reaction to the horrible news was a 250 point plunge down to the 16,000 level. But by the end of the day the market had finished up over 200 points, as this terrible news was immediately interpreted as good news for the market, because the Federal Reserve will never ever increase interest rates again.
Over the next three weeks, the economic data has continued to deteriorate, corporate earnings have been crashing, and both Europe and China are experiencing continuing and deepening economic declines. The big swinging dicks on Wall Street have programmed their HFT computers to buy, buy, buy. The worse the data, the bigger the gains. The market has soared by 1,600 points since the low on October 2. A 10% surge based upon lousy economic info, as the economy is either in recession or headed into recession, is irrational, ridiculous, and warped, just like our financial system. This is what happens when crony capitalism takes root like a foul weed and is bankrolled by a central bank that cares only for Wall Street, while throwing Main Street under the bus.
Continue reading “THE WORSE THINGS GET FOR YOU, THE BETTER THEY GET FOR WALL STREET”
The CNBC bubble headed bimbos and brainless stock touting twits will be in ecstasy today as the ever predictable rebound is under way. The market will soar by over 500 points at the opening as the excuse of the day is China’s desperate interest rate cut to try and stem their downward spiraling economy and markets. The Wall Street captured boob tube brigade will tell their almost non-existent viewership that all is well. The terrifying plunge is in the past. The economy is great. Housing is strong. Stocks are now a bargain. It’s the best time to buy.
Now for some factoids. Six of the ten largest point gains in the history of the stock market occurred between September 2008 and March 2009. That’s right. During one of the greatest market collapses in history, the market soared by 5% to 11% in one day, six times. Here are the data points:
2008-10-13: +936.42
2008-10-28: +889.35
2008-11-13: +552.59
2009-03-23: +497.48
2008-11-21: +494.13
2008-09-30: +485.21
Do you think these factoids will be shared with the public today on the stock bubble networks? Not a chance.
The mindset of the arrogant clueless investor is that by the end of today they will have recovered over 50% of their losses incurred in the last week. Even if they think the economy is headed into recession, they will hold on hoping they can recover 100% of their losses before selling. If they are really dumb and trained like a monkey to BTFD, they will buy some Apple, Netflix, Amazon and Tesla today. Buying the dip has worked for the last six years. It will surely work this time.