Markets Frothing — Topping in Progress?

Here are a few headlines about market forecasts and markets action showing how exuberance, irrationality, and "over-condidence" in what is called a "textbook market behaviour" is. Markets are made to fool 95% of the people 95% of the time. Whoever believes in a textbook market behaviour is a fool or an academic — or, very often, an academic fool!
  1. BofA Sees Fed Assets Surpassing $5 Trillion By End Of 2014... Leading To $3350 Gold And $190 Crude 
  2. Platinum Has Longest Rally in 25 Years; Gold Gains on QE3
  3. Canadian Dollar Rises to 13-Month High as Fed Spurs Risk Demand
  4. Forth consecutive month of gains for the S&P500, which closes at 6 percent of its all time high.
Here are some quotes:
(Bloomberg) 2012-09-14 — Platinum rose, capping the longest rally in 25 years, after the Federal Reserve took steps to bolster the U.S. economy and as strikes halted output at mines in South Africa, the world’s largest producer. Gold advanced.
The Fed yesterday said it will expand its holdings of long- term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing. Workers at a Lonmin Plc mine and nearby operations of Anglo American Platinum Ltd., the biggest producer, are holding protests over pay.

“Today’s rally can be attributed partly to the easing announced yesterday,” Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said in a telephone interview. “The fundamentals remain supportive.”
(Bloomberg) 2012- 09-14 — Canada’s dollar strengthened to a more than 13-month high against its U.S. counterpart as stimulus measures by the Federal Reserve spurred global demand for higher returning assets such as stocks and commodities.
The dollar gained for a third week versus the greenback and rallied against 11 of its 16 most-traded peers as investors bought the currencies of commodity producing nations including Canada on a bet global economic growth will accelerate. Crude oil, the nation’s biggest export, climbed above $100 yesterday for the first time since May. Statistics Canada will release data on Sept. 17 showing whether international investors added Canadian securities in July.
“The Canadian dollar is up quite a lot after the Fed decision and its complete textbook currency behavior,” Eric Lascelles, chief economist at Toronto-based Royal Bank of Canada Global Asset Management said in a phone interview. “With quantitative easing, the U.S. dollar weakens, commodity prices strengthen and both those things are like catnip for the Canadian dollar.”
NEW YORK, Sept 14 (Reuters) - U.S. stocks pared gains but were up for the fourth straight day on Friday on the Federal Reserve's aggressive new plan to stimulate the economy.

Apple Inc and Exxon Mobil, the two largest U.S. companies by market value, reached new highs, and the small-cap Russell 2000 index neared a record peak.

Equities are in the midst of a run-up in which the S&P 500 has posted gains for four consecutive months, fueled by the actions of Europe's and the United States' central banks to keep interest rates low and stimulate their struggling economies.

1 comment:

Anonymous said...

thanks for the updates - keep posting - I find it very interesting what you find on whats happening in the markets - I find it kind of unreal what is happening and wonders what the consensus view will be in 30-40 years from now on how governments are handling the problems. Seems that the dont fight the central banks are consensus and so far they have been right.