With the Dow hovering near the 21,000 level, the U.S. dollar rallying, gold weakening, and Bitcoin going parabolic, we are now only months away from the end of this insanity in major markets.
By Bill Fleckenstein President Of Fleckenstein Capital
May 9 (King World News) – The early going saw the indices slightly green, with the Nasdaq leading the charge as the heavily weighted big-cap momentum stocks within powered the rally. By midafternoon, when I had to leave, the Dow and S&P were slightly red (the latter tried to make a new high, but fell back), while the Nasdaq remained a little higher. Please check the box score to see how the day ended…
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Away from stocks, green paper was quite strong, oil lost 1%, fixed income was weak, and the metals lost 0.75% each.
This Won’t Hertz a Bit
One interesting data point that caught my eye was Hertz, which last night lost at beat-the-number. I bring that up because the company specifically noted that its residuals on used cars were weak because the used car market has softened a fair amount. That has ramifications for auto sales, as they had been strong until recently, and of course have been the epicenter of ridiculous subprime financing.
If car sales are slowing then that says something about the economy, and will also be a big problem for semiconductor products once sanity breaks out. Thus, it is a data point worth thinking about for down the road when it is finally time to get short and buy puts.
That’s Quite the Coin Toss
On a totally unrelated subject, I also noticed that Bitcoin was in the process of going parabolic. Using the parabolic count that was shared with me in the past by some friends who used to work at Tudor, if in fact this is a parabolic move, then it would be roughly day seven (they tend to run for about 21 days).
I’m not sure what the consequences of a massive blow-off in Bitcoin would be — and perhaps it means nothing in the big scheme of things — but it may be worth keeping an eye on, if for no other reason than from an educational standpoint.
Included below are three questions and answers from the Q&A’s with Bill Fleckenstein.
Real World Inflation
Question: I’m frequently told that there’s no inflation, but almost everywhere you go to eat, outside of a McDonalds or equivalent, it’s $10/person minimum. I’m talking places like Jimmy Johns, where it seems the pricing is changing every month. And I’ve seen 3 price changes at Dickeys in the last 12 months. I don’t live in a big city, so there’s probably people chuckling at that, but it just seems to me that it wasn’t that long ago that you could get by on $5 to $7. Am I nuts?
Answer from Fleck: “Nope, inflation psychology is shockingly complacent. The CPI is a farce.”
Question: A quick question regarding AEM – I am accustomed to overreactions to slightly weak earnings reports by precious metals companies, especially in this environment. But how to react when a company has blowout earnings instead? Should I discount that positive news as well, or is there something (besides beating the number by a lot) in AEM’s report that justifies the 10 percent stock price increase?
Answer from Fleck: “It had been beaten up, so it popped extra hard. The quarterly report was great.”
“We Are Close. A Matter Of Months.”
Question: PM prices just go from bad to worse. Today in particular. Stocks at record highs. Since 2011 we have endured this. What is going to turn the tide, Bill? Do you have any idea? It seems like the banksters and Fed are in full control. Even more now than ever.
Answer from Fleck: “Please, whining won’t change anything. The confidence in central bank policies and QE has created the level of prices in everything, and, at the margin, the current euphoria for stocks reduces people’s perceived need for gold. But you shouldn’t equate stocks and gold, as they are two totally different assets. I have stated many times what will end this: exhaustion. That is the only thing that ends manias. Japan, our stock bubble, the real estate bubble (not to mention 1929, tulip bulbs, etc). Your level of despair, and other recent signs, all happen near the end. We are close. A matter of months, IMO.”
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