With the dollar moving higher and bonds heading lower, today one of the greats in the business sent King World News warning that we are now confronting lunacy on a daily basis, plus a bonus Q&A that includes gold.
By Bill Fleckenstein President Of Fleckenstein Capital
June 1 (King World News) – Overnight bond markets were nearly all weaker, with Greece and Portugal leading the charge. Equity markets, however, pretty much ignored that and the same form held true here, as the early going saw stocks slightly higher, while bonds were lower. The market tried to build on the initial gains, but that rally fizzled and the indices closed just marginally higher.
Away from stocks, green paper was kind of on fire today while, as noted, fixed income was weaker (with the long end getting hammered). Oil lost a couple of percent and the metals were flat.
The Silence Is Deadening
There continues not to be a whole heck of a lot to say about the lunacy that we confront on a daily basis. Friday will bring the latest nonfarm payroll report and we'll see if the data is capable of moving markets. Expectations are for a couple of hundred thousand jobs to be created.
However, even if the number is on the soft side, the bulls are so confident of a second half recovery, we may have to get more months off the calendar before they are ready to give up on that notion — although anything is possible given the craziness of the environment.
Included below are two questions and answers from today's Q&A with Bill Fleckenstein. The questions are from his subscribers and they get to read Fleckenstein's answers every day.
Bonus Q&A
Question: The economic data has been so bad lately even I am shocked. Given where expectations have been, amazing that gold is not trading at infinity with stocks at zero and bonds halted.
Answer from Fleck: "I couldn't agree more, this is just madness, but the LBO (leveraged buyout) action in acquiring companies is very, very late cycle action, we are near the end."
Question: NYSE margin debt rose $30.7b m/o/m in April which was a 6.5% gain from March. That is the biggest one month increase on an absolute and percentage basis since January 2013.
As a percent of US nominal GDP, it is now at 2.85%, matching the level seen in March 2000. As noteworthy this may be to some, it says nothing about where stocks go from here in the short term as higher stock prices always bring margin debt with it (or vice versa).
It does however reflect the certain enticement of cheap money to speculate.
Answer from Fleck: …and it will matter on the way down 🙂
Question: Hi Bill,
I was wondering if you could let me know if my thought process on this is in the right direction?
I know that the economic numbers coming out right now are disappointing. Aren't they actually worse or much worse? I've read sites such as shadowstats which show that the government has changed the way inflation is calculated and how the related GDP figures are calculated so many times over the years to make things look better.
Because of this, I don't understand how other analysts can point to economic growth as a reason for the market rising when those figures have been changed/manipulated so much over the years.
Thanks in advance for your insight.
Answer from Fleck: "The data is weak (though maybe not as bad as Shadowstats thinks). People have become delusional. You are witnessing the madness of crowds, they want to believe it is all ok. They will become critical and skeptical again, we just don't know when. Money printing has inspired many fantasies." ***To subscribe to Bill Fleckenstein's fascinating Daily Thoughts CLICK HERE.
KWN has now released the extraordinary audio interview where Michael Pento discusses the coming global financial collapse as well as what investors can do to protect themselves and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
KWN has now released the fantastic audio interview where Dr. Roberts discusses one of the greatest periods of crisis that the world has ever seen, gold, silver, and the dangerous events taking place around the globe and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Richard Russell – The Truth Behind The Government Propaganda, Lies And Manipulations CLICK HERE.
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The audio interviews with Michael Pento, Dr. Paul Craig Roberts, Gerald Celente, Eric Sprott, Robert Arnott, David Stockman, Chris Powell, Andrew Maguire, Rick Rule, Bill Fleckenstein, John Mauldin, Egon von Greyerz, James Turk, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf, John Embry and Rick Santelli are available now and you can listen to them by CLICKING HERE.
