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""""
Ben Bernanke has created the mother of all bubbles.
Today, the S&P 500 is sitting a full 30% above its
200-weekly moving average. We have NOT been
this overextended above this line at any point in
the last 10 years.
Indeed, if you compare where the S&P 500 is relative
to this line, we're even MORE overbought that we were
going into the 2007 peak at the top of the housing bubble.
We all know how bubbles end: BADLY.
This time will be no different. The last time a major bubble
of these proportions burst, we fell to break through this line
in a matter of weeks.
We then plunged into one of the worst market Crashes of
all time.
By today's metrics, this would mean the S&P 500 falling
to 1,300 then eventually plummeting to new lows.
This is not doom and gloom. This is a fact. The Fed
has created an even bigger bubble than the 2007 one.
The time to prepare for this is not once the collapse
begins, but NOW, while stocks are still rallying.
Stocks take their time moving up, but when they
crash it happens VERY quickly.
With that in mind, I've already urged my ( advisory)
clients to start prepping. We've opened six
targetted trades to profit from the stock bubble bursting.
""""
Back on July 17, the New York Fed, which as always operates based on the decisions and inputs of its Primary Dealer superiors, asked the Dealer community for their thoughts on the Taper, specifically when and how much. The survey has come back and the PD community has spoken. The answer: Taper is announced, and begins, September with the first reduction in monthly purchases of $15 billion ($10Bn cut in TSY purchases, $5BN cut in MBS), eventually tapering to nothing in June 2014 when the Dealers believe QE formally ends.
The breakdown of the forecasts by percentile:
While several dealers noted that recent FOMC communications have influenced their expected path of asset purchases, several others highlighted that economic data will continue to determine the timing of reductions in purchase pace. Several dealers noted their expectation that pace reductions would occur at meetings followed by press conferences and the release of quarterly projections. Several dealers noted future reductions in the pace of each Treasury and MBS purchases are likely to be evenly split between both asset classes. Several dealers noted the possibility of reducing Treasury purchases at a faster pace than MBS purchases to provide support for the housing market, while several others suggested MBS purchases would see relatively larger declines due to possible market functioning issues in the MBS market.