I don’t mind telling you that I tend to tune everybody out in favor of the market. That includes mainstream Wall Street types, perma-bulls, perma-bears, speed freaks & momos, doom & gloomers and heavily armed bearded men writing on laptops in little Unibomber shacks.
It also includes the Mises Institute, which I have linked at this very website. I tune out smart people (oh, how many smart people I’ve had to tune out over the years) and dummies alike. It’s the only way to manage a market. At least it’s the only way for me to manage a market, depending instead on my own indicators and when needed, bullshit detector.
But anyway, this morning Mises by way of the MSM tells us why the stock market is very bullish but will get bearish at some hazy future point of saturated bonds at zero percent interest.
Okay, so a ‘hard money’ Austrian economist is on board the melt-up. Is this “Crack-Up-Boom” talk?
Thorsten Polleit, the chief economist at Swiss metals trader Degussa, explains why he thinks an economic boom will continue, with stock prices also strong.
“As long as there is still room for pushing the market interest rate down further, the chances are reasonably good that the boom continues, and that the bust will be adjourned into the future. As per the charts below, current market interest rates in the U.S. have not reached rock bottom yet. Corporate and mortgage credit costs in particular still have some way to go before hitting zero,” he writes in an article for the Alabama libertarian think tank, the Mises Institute.
“The decline in market interest rates is only one factor among many others which explain why stock prices have gone up in recent years. But it is a significant factor, and it contributes to the build-up of a price bubble,” he says.
To be sure, Polleit expects a very hard landing. “The severity of the crisis that must be expected to unfold at some point in the future — at the latest when all market interest rates have been pushed onto the zero line and investment returns have become negligible — is driven to ever-higher levels. This is something we do know from the Austrian business cycle theory. But it is certainly not enough to come up with a reliable forecast,” he says.
So basically what he is saying is that we can circle the drain for an indeterminate amount of time with “great again” America following much of the rest of the world to the zero bound or lower before this massive expression of greed that has been cooked up over decades, and which should but probably will not (because the offenders hide behind official policies that the general public does not even begin to understand) be punishable by prison time, ends. Pfffttt…
It’s why I’ve hit you over the head with this periodically for the last decade at least.
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