“NO SELLERS JUST YET!”
By Gary Kaltbaum July 18,2016
When you leave just 1% daylight between the backing of our men and women in uniform and those that would do harm, you get those that would do harm, doing harm! That is all we are going to say on this…for now!
It is earning’s season. Typically, we take a step back and wait as earnings come out. There are a ton in the next two weeks…and we mean a ton. So far, as expected, earnings are blah! But guidance had already come down markedly. Example…CSX reports earnings DOWN 16% and sales DOWN 12% but that”s good enough to send the stock up over 5%.
Do not forget the main thesis this second: the combination of the DOW and S&P breaking out of 18 months ranges combined with a gargantuan 11% cash in mutual funds and hedge funds…needs to be respected…until or unless the breakout fails. Notice how the market is ignoring all bad news this second.
The worst thing we can say is that the overall market is now overbought but overbought can continue. It is also a wee bit stretched. As we have told you, we actually white out the two days down on the Brexit and then the 4 days up. We consider it a sucking out because of scare tactics. To our eye, before the Brexit, markets were going to break out anyhow…Brexit just stalled it.
Just remember, we continue to believe this is about a gargantuan, humongous, mammoth effort on the part of central banks to keep the bubble in tact. Just when we thought they could do no more, they have added a ton of QE, went negative with rates, went more negative with rates and now the rumor of what they call “helicopter money” is now in the realm. We continue to be 1000% sure this ends badly…but do not know from what price or what time this occurs. Bubbles can last a while and go to places unfathomable.
And to answer everyone’s question…what they are doing with interest rates…IS THE BUBBLE. Imagine, people lending others at less than 0% for a long period of time. Why? What basis? How is it good you get nothing on your money when lending far out in time? The answer…IT IS A BUBBLE! Just remember…
economics 101 states when your debt skyrockets, in order to float more debt, you must pay a higher yield because investors demand a higher yield for the time and the risk. NOT ANY MORE! And of course, the other part of the bubble is the outcomes of those lower rates. We can spend a few hours on that!