Are we reaching the end of the road? |
A few weeks later the crash risk was up to 98%. Then a dramatic
preholiday uptick in investor sentiment. America’s collective
unconscious tired of negativity after a Halloween headline: “Economic
guillotine dead ahead.” A week later, 2014 became the “Year of the
Boom.” Bank of America’s chief strategist screamed: “Bet on the bulls
now.” The Great Gatsby spirit was celebrating the holidays“
Even old
grumpy Dr. Doom, celeb economist Nouriel Roubini, began humming a happy
tune all over television: “A global recovery is going to occur, get into
equities.”
What really happened? Fed politics. Short-term, Larry Summers withdrew
as a candidate for the Fed chairman’s job. Dark cloud lifted as Janet
Yellen become the pick. Wall Street cheered, Bernanke’s easy-money
printing presses would not screw up their year-end bonuses. Plus Main
Street was mentally exhausted, tired of the bad news, relentless
political drama. We needed a holiday break.
By Thanksgiving, “irrational exuberance” was accelerating in full
holiday tilt: Headline: “Shiller’s hot P/Es will power a roaring bull
till 2017,” and 2014 got branded the “Katy Perry market!” A week later, a
Thanksgiving headline added: “10 reasons to be a bull in 2014.”
But long term? What’s really ahead for America in 2014? Warning,
something bigger is hiding in the deep shadows of our collective brain.
At a recent lunch with an old friend, one of the world’s more successful
commodities traders, he confirmed that “something” was dead ahead. But
not just another brief statistical shift in sentiment. Not a medium-term
volatility shift. America, the world, are in a historic transition, a
paradigm shift, a mysterious upheaval that few will grasp till it moves
further along.
Read more: New doomsday poll: 99.9% risk of 2014 crash - Paul B. Farrell - MarketWatch