It’s all greed’s fault!

By 12/08/2021News

Gold  1752,635

EURUSD   1,1743

DJIA  35383,50

OIL.WTI  69,285

DAX  15848,50

The US stock market continues to post new all-time highs. The bears are constantly trying to short them. And they keep closing positions at a loss. When will it all finally end?

S&P 500

S&P 500

That is, when will the market start to react to fundamental and technical factors? For example, will it start paying attention to the extremely inflated P/E? The correct answer would be this. Irrationality can last much longer than you have enough money by shorting the trend. You may think you are right, but the market is not interested in your opinion at all. The S&P 500 has not fallen by 5% for more than half a year. And all smaller declines are quickly redeemed, leading to new highs. Yes, we can see that a very large bubble is being inflated. Its scale is approaching what we saw in 2000, before the dot-com crash.
But there is a significant difference. The 2008-2009 crisis taught the US government and the Fed how to “solve all problems”. All it takes is printing and handing out a bunch of unsecured money. If that is not enough, no problem. You can also print money and buy assets off the market, which in a normal market economy shouldn’t be worth anything at all. We are talking about companies that only avoided bankruptcy thanks to the US Federal Reserve.
There was no such help in 2000. And the massive drop in stock indices, especially the Nasdaq, was the logical result of the bubble bursting.
Now at every sneeze, the White House announces new programs to help people and businesses. And the Fed is talking about easing monetary policy.
And what is the problem? Americans love it. People get cheques from the government. And companies don’t have to stress too much, they will still get help, even if they perform worse than their competitors.
Of course, it’s bad enough that inflation is accelerating. But there is a huge plus for the American government. What is the upside? We will talk about that in one of our next newsletters.

08.00 UK Q2 GDP
11.00 EU industrial production in June
14.30 Initial weekly jobless claims in USA

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