Submitted by Lance Roberts via RealInvestmentAdvice.com,
Is The Bull Market Back, Or Is It A Trap?
I wish I had a more definitive answer for you this week, but the market is standing at the proverbial “crossroads” of bull and bear.
Several weeks ago, Morgan Stanley's Adam Parker was comparing rally chasers to cockroaches (not so much due to their outward appearance or intellectual capacity but because of their desire to survive no matter where the next market nuke will blow up). Today, in his Sunday Note, the Morgan Stanley strategist appears to have a mini breakdown while slamming faux "original thinkers" who pretend to be contrarians, while merely perpetuating the status quo, and are "indistinguishable from consensus." To wit:
The Fed has backed itself into a corner.
For seven years now we’ve been told the US is in a recovery. However, if this were the case, the Fed would have started raising rates years ago (likely in 2012). No other recovery on record saw the Fed maintaining ZIRP for so long.
There is simply no factually credible argument for why rates should be ZIRP if the economy is expanding. You cannot have claims of a “recovery” or expansion while ZIRP is in place. ZIRP is meant to be an emergency policy meant to pull the economy out of a severe recession, NOT a long-term program.
With commodity currencies (AUD and CAD) dumping, Yen strength (risk-on carry unwinds en masse), Saudi stocks tumbling, and hedge fund spec crude longs near record highs, it is no surprise that the opening prints in WTI Crude are ugly after Doha's disappointing climax. Erasing all of last week's hype hope, WTI printed with a $38 handle (June), $37 Handle (May) and is unable to bounce for now. Dow futures -100.
May crashed most in 7 months...
June plunged...
Dow futures are down around 100 points for now...
With everyone from ivory tower academics to sin-street hookers proclaiming the need for and benefits of a "war on cash" to save the world from criminals and tax-evaders (oh yeah and to stop NIRP-driven savers from hording cash and crushing central planners' dreams), it is perhaps shocking that Bundesbank board member Carl-Ludwig Thiele warned at an event this week that the attempt to abolish and criminalize cash is out of line with freedom. He said that citizens should continue to decide how and in what form they want to use their money.