tag:blogger.com,1999:blog-947237681666122369.post974154731302793954..comments2024-03-25T08:04:19.119-10:00Comments on Pretzel Logic's Market Charts and Analysis: SPX Update: December Means It's Time to Start Throwing "Santa Rally" in the Title...PretzelLogichttp://www.blogger.com/profile/11613859771824863784noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-947237681666122369.post-20478645757677610752012-12-03T16:00:24.890-10:002012-12-03T16:00:24.890-10:00 The Fed Should Be Tightening Now (if it followed ... The Fed Should Be Tightening Now (if it followed its own rules)<br /><br />http://www.zerohedge.com/news/taylor-rule-says-fed-should-be-tightening-now<br /><br />The<br /> Fed continues to fight the tape, not allowing markets to conduct any <br />rational or efficient price discovery. (As irrational as markets can be,<br /> the Fed is only making it worse.) While the Fed holds more Treasuries <br />and MBS than prudent, its actions induce the rest of the market to <br />likewise hold more fixed income and more stocks than prudent (and many <br />also hold more precious metals, gems, commodities, real estate, artwork, firearms,<br /> or even consumer staples and shelf-stable food storage since they cannot trust the Fed to stop <br />inflating the currency.) <br /><br />The Fed's actions has led to a <br />pervasively overbought market, in which even assets that should not be <br />correlated (such as fixed income and stocks and commodities and real <br />estate) are being overbought together. But unlike healthy bull markets, <br />in which traders are bullish on both the market and the economy, the <br />economy is stagnant or contracting. <br />http://globaleconomicanalysis.blogspot.com/2012/12/ism-manufacturing-in-contraction-expect.html<br />http://globaleconomicanalysis.blogspot.com/2012/11/ecri-sticks-with-recession-call_29.html<br /><br /> assets are bought not out of hope <br />but out fear that the currency will become worthless because of <br />irrational monetary policy. But as the economy stalls and contracts, <br />even fear of inflation will not be able to sustain such lofty overbought<br /> levels on financial markets. the reality of economic decline must <br />overrule the fear of coincident monetary collapse. The economic data <br />clearly shows that no bull market trend based on recovery is justified. <br />And the economic reality will show that no bull market based on fear is <br />sustainable. Investment can only come from profits and wages; drawing down savings out of fear of devaluation is not sustainable.david christophhttp://twitter.com/dchrist81noreply@blogger.com