Market Tops In! Why Buy-The-Dippers Can’t Get It Up
I am sure some chart reader can explain the S&P 500’s laborious struggle since September 2——the day it crossed the 2000 barrier—-as a classic “wall of worry”. But that event occurred nearly seven months ago and the market has dipped 15 times since then and has actually plunged six times (by more than 3%). And all it had to show for its exertions going into today’s opening was a 50 point or 2.5% gain. In this bull market, that’s a rounding error.
So we have arrived at a precarious place. After the Fed has spent six-years inflating a new and even more stupendous financial bubble—-the third this century—-the market top is in. And after five-and-one-half years of so-called recovery from the recession’s end in June 2009, the bottom is now falling out of the economy—-both abroad and here, too.
In that context, a new form of danger arises. The Keynesian pettifoggers at the Fed have painted themselves into an epochal corner. After 78 months of ZIRP they have no idea about how and why they got here; and now, mired deep in the lunacy of free money, they are clueless about where they are going next.
But here’s the thing. During its long descent into ZIRP, consensus at the Fed came from the Easy Button. Once they got to the zero bound in December 2008, it was always possible to find one more reason for delaying the day of interest rate normalization and to persuade any reluctant members of the FOMC that the economy had not quite emerged from its slump, even if “escape velocity” into full employment was just around the corner.
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