Wake Up Call - An In-Depth Look At The Stock Market - 12/09/13




The Wake Up Call show

Summary: The market continues to rise solely on the perception that the Fed’s easy money policy can hold stock prices up indefinitely.  Mind you, this is just a perception, nothing more. This line of thinking will prove to be no more durable than the dot-com bubble that peaked in early 2000 or the housing bubble that topped out in late 2007. Most of the previous major market peaks occurred with the P/E ratio ranging between 18 and 21 times reported cyclically-smoothed GAAP earnings, compared to a norm of 15 times and bear market lows between 7 and 10 times. The current P/E ratio is 20.6 times earnings. Optimism reigns supreme and an overwhelming number of technical indicators are calling for a massive decline here. Investment advisers were more bearish than in 25 years. The madness of the Fed’s $3.2 trillion negative balance sheet. They are truly insane. I mean that. More on last week’s monthly unemployment figures. The current state of the economy in two minutes. The latest ramping-up of consumer credit/debt. Hurricanes and global warming and other nonsense. Chimpanzees filmed exhibiting jealousy! (A lesson for us all)