The BIS Quarterly Report dated June 2013 is proof from the horse's mouth that financial markets are totally insane. Saying markets are under central bankers' monetary easing spell may be the understatement of the year. The graphs on page 2 show stock markets rising and bond yields falling. The graphs on page 3 show economic surprises getting more negative, growth forecasts falling, and commodity prices dropping. Knowledgeable practitioners are thus getting pessimistic while know-nothing investors are getting more optimistic. This divergence of market sentiment from economic reality cannot continue forever. Read between the lines of that BIS report for amusement. They hint on page 9 that Europe-wide contagion was narrowly avoided in the Cyprus bank meltdown once Eurocrats backed down from the proposed one-off levy on insured deposits. My blog readers knew about that when it was happening thanks to my extreme genius.
I shake my head in a sorrowful stupor at the people who manage money professionally in this environment. Some investors are starting to wake up but it takes a lot to rouse even so-called smart money. Investors in SAC Capital are reportedly preparing massive redemptions. Not every investor gets a wake-up call in the form of SEC investigations. That's one reason why most investors are sound asleep. Another reason is that so many money managers are just plain stupid. Portfolio managers and their supporting analysts are paid to understand basic trend data. They either don't understand it (too stupid), can't admit what's really happening (too cowardly), or don't want to upset clients with bad news (too dishonest). I don't have those problems and that's why I won't ever be hired as a portfolio manager.
Insane media shills continue to jump on the bull market bandwagon. It's a fun ride until the wagon goes over a cliff at eighty miles an hour. The weightless feeling in freefall is very short. The pain from impact at the bottom lasts a lifetime. Anyone going along with this joy ride is trusting central bankers at the wheel to steer correctly. The central bankers have the gas pedal to the floor. Go watch the last scene in "Thelma and Louise" if you need a good image.
