C. Banks Delaying The Inevitable

  • 2015 – 2016 correction was allowed and c. banks react with various stimulus pledges
  • 2016 June post-Brexit correction was short-lived and stopped before the “true” damage has been priced in
  • Our concern is that market was stimulated to the current elevated condition that risk the same inevitable drop
  • It is perhaps c.banks interest has not been met – surprised by the Exit vote and went to panic mode to shore up global equity
  • The simple analogy is to see c.banks as a drunkard dude in the bar-levitating and enjoying the highs but soon going nowhere before the puking begins

Stages of the Global Equity Market

  • Drinking higher (Baby is the market) (Beer is the stimulus)

It has impulsive moves, irrational at times but financial media has found ways to justify the run higher despite knowing whatever it was jabbing was pure BS.

  • Drinking towards one direction

Image result for drunk phase

The market is drunk but it is heading straight for heaven but the fundamental for heading higher means it is not thinking straight after all.

  • Making sense of the inevitable results

After it peaked at its high, the process of going lower takes time.

  • Final stage of a drunkard

Image result for drunk puke

Sometimes, too much of the good stuff given by c.banks have its consequences.

The next worry is as follows:

  • if drinking is no longer fun or working – what other tools does c.banks have?
  • does c.banks have more tools after exposing itself to jump in too quickly during Brexit vote?
  • how will it react if the market pukes?

Disclaimer: NO BABY OR INDIVIDUALS WERE HURT OR DRUNK WHILE WRITING THIS ARTICLE

 

 

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