The cowardly dithering in the Eccles Building is sucking Wall Street punters into a vortex. And it promises to be the mother of all bubble implosions.
There is no other possible outcome for a stock market that is trading atreported earnings in the teeth of an enormous headwinds ever accumulated.
The intensifying global deflation/recession lapping upon these shores gets more ominous by the day. Yet that’s only the half of it.
When you take an unvarnished look at the domestic economy, the real recessionary skunk in the woodpile becomes apparent. Yet the casino is falsely capitalizing earnings as if recessions have been outlawed and the nirvana of Keynesian full-employment has become a permanent condition, world without end.
Today’s bubble vision meme that all is well because the Fed judges the economy to be strong enough to absorb 1% money market rates sometime next year is just a manifestation of that permanent full employment delusion. After all, earnings always collapse during a recession—–so implicitly there is not one in sight as far as the eye can see.
Then again, why would anyone credit the Fed’s insight into the future or even its grasp of the present? In its April minutes, for example, it noted that the world financial dangers that caused it to pause in March have now eased.
No, they haven’t. As detailed below, the only thing that changed is that China went through another flash bubble in the commodity space that is already done and gone.
In fact, the Fed has never, ever anticipated a recession——even when we were in month 118 of the 1990s technology and dot-com bubble.
Likewise, it had no clue that the housing collapse was coming and was shocked by the September 2008 Wall Street meltdown. And now it has had to revise sharply lower every single GDP forecast it has made in the years since the crisis........