CHARLES HUGH SMITH'S
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Sultans of Swap
Extend & Pretend
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"SULTANS OF SWAP"
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Current Thesis Advisory:
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Published November 2009
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"PRESERVE & PROTECT"
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OTHERS OF NOTE
CRACKS IN THE FACADE
The Manipulation Games Are Becoming Clearer for All to See
Monetary malpractice of the develped economies' central banks have distorted the pricing of risk and therefore the process of price discovery. The following chart illustrates how the Federal Reserve's policy of Quantitative Easing (QE) has produced such a distorting market effect that stock prices no longer track earnings, and haven't since 2012.
The signs of a global slowdown are obvious and now finally unquestioned by most analysts. Markets around the world are generally adjusting for this with the glaring exception of the US and Japan (QQE). These are the two biggest central bank "pushers" of liquidity.
The following international stock markets are presently below their 2014 highs, some very far below:
- Canada's TSX,
- London's FTSE,
- Germany's DAX,
- Israel's TA100,
- the Dow Jones Euro Stoxx 50,
- Emerging Markets MSEMF Index,
- the Hong Kong Hang Seng HSI Index,
- France's CAC 40 Index,
- China's Shanghai SSEC Index, and
- Australia's S&P ASX 200 Index.
The Daily Full stochastics for every one of these International stock markets are either
- Overbought or
- On a sell signal,
EARNINGS FREE FALL AS US$ CONTINUES TO STRENGTHEN
The "hockey stick" of year-end earnings is rapidly being brought down as are 2015 expectations.
WE HAVE SEEN THIS SHOW BEFORE
The market believes that as long as the central banks are printing the markets can ignore earnings. But we need to remember that QE and TAPER ended this month. The misplaced belief that the Fed "has your back" may be in for a major adjustment.
In 2007 the unquestioned belief in the housing market had the same hold on markets and hid the realities of what was occurring. The statement everyone was citing to justify higher housing prices; "They aren't making any more land are they?" suddenly went quiet! The same tell tales are showing again.
We spell out the "games being played" in the November issue of LONGWave, available to subscribers and trials now and the public in December. Sign-up for a free trail or notification for the Dember release.
NOVEMBER LONGWave - DECEMBER TRIGGER$ - AVAILABLE TO NON-SUBSCRIBER / TRIALS IN JANUARY
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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that you are encouraged to confirm the facts on your own before making important investment commitments.
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