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Irrational exuberance


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Problems? What problems? No problems. Indices don't lie, do they. Recession? What recession? Greatest comeback in history? Evolution without the revolution and don't worry about the fundamentals, it's the Fund-a-Mentals that power this recovery. Not professing to be super intelligent, am still struggling to deal with the irational exuberance exhibited by the equity indices around the world. From the perspective of a humble Crude Oil day trader (Brent), none of it makes any real sense. It's as if logic has been bypassed for a carefree attitude " it'll be alright and if it wont the Fed will pay for it" which seems to underscore market movements over the last 2 months. With Oil it has been simple, no demand= lower price (Russo/Saudi pishing contest excepted, which served to lower prices more). Where Oil is approaching an inflection point at $50 for Brent (probably less), it would appear equities passed that point in April and see no end to the bull run, new all time highs? Yes please? What about fundamentals? P/E ratio's? Debt? It appears questions like that are about as welcome as a potent **** in a lift. It's all ok as the Fed will pay, by giving out free money or less than zero rate loans without the necessary caveat of actually paying it back. Not to mention buying as many junk bunds as the market can issue. Grrreat!

So why then all the fuss in the first place? Remember Covid 19? Very contagious virus, more deaths than Malaria or any US war since 1942-45? Obviously, that is not important anymore as the recovery is on, the economy recovered and there will be a successfull working vaccine by September, wont there? So definitely nothing to worry about or duly concern anyone. Better forget about it? Stop being a party pooper! Enough of the negative vibes?

As for the UK, why all the concern about Brexit? I mean the BoE will pay for it, just like the Fed. Wont it? Europe will cave in to Boris's demands as it must, wont it? It surely will not damage the UK economy if there were no deal, now would there? Again, I am being a party pooper and shining the light of tricky questions in places it certainly is not welcome. 

So where is all this irrational exuberance coming from? Frankly, I feel I have missed out.  Still when hard numbers and data actually appear and the data can be analysed properly in the cold light of day maybe things will be different. As it is, the markets are sure there will be no second wave of infections and if there is, it is nothing to be concerned about. No country is manipulating the death rate to suit it's political leaders, that much is also true, surely. All nations are prepared for a resurgence in the R rate. It is nothing to worry about.

Maybe I should put my head back in the sand and pretend it is all fine and rosey and just the same as last year, nay, better than last year. Just look at the indices, it must be.

 

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Its a bubble like back in 1999-2000

growing bigger and bigger for every time its close to implode by new stimulus from centralbanks

and this time is no different, all this trillions they are pumping into the market will make the bubble the mother of all bubbles

Should be interesting to see what happens next? inflation? rapid climat change when consumption picks up?

But no worry only ride this bull all the way up and never mind of the problems ahead

This bankster says it all

"He described the Fed’s massive stimulus to boost the economy as “water that fills every crevice,” lifting up asset prices."

https://www.marketwatch.com/story/jp-morgans-jamie-dimon-you-could-see-a-fairly-rapid-recovery-2020-05-27

🤑

 

"

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Agree with Kodiak, Elle and Dmedin... this is a bubble. A really, really, big bubble and the solution seems to be: patch it and keep on inflating!  Oil price is being pushed up by the same bubble makers, would not take much for the asset to reset according to actual demand as opposed to inferred demand. There is a whole lot (like really lots and lots and lots) of stored oil and distillates out there. The anticipated return of air travel has failed to materialise and is very unlikely to until mid 2021 (barring the short sweet summer hiatus). That's 17% of normal oil demand right there. Not to mention travel to and from airports.  Thereby suggesting where the price is ($42.95), is where it approximately should be, though <$38.50 would be a more accurate current representation, methinks. 

Also, agree the way to go is follow the trends and get in and out quickly. Don't be greedy and don't be afraid to take a loss from time to time, when necessary.

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Dmedin - Wasn't that Louis XV? Still true though - whatever happened to Louis XVI. Storm the Bastille! On the point of bubble, one says you should buy when it makes you puke, a variant of the fearful/greedy/cautious.

Personally, buying today scares the corona out of me - so contrarian to buy? Saying this is a bubble and the rally can't continue is hardly the contrarian view.

That said - I do love that the Gods of Capital are getting their shorts squeezed by retail investors - matter of time before FED needs to drive the market down to help out their buddies

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