Is A Massive Stock Market Reversal Upon Us? by Brandon Smith

If the stock market continues down from here, Brandon Smith will be able to say he’s predicted it for some time. So will David Stockman, Robert Prechter, SLL, and any number of other seers. Smith says it’s the result of a plot by the globalists. Other seers, including SLL, have other explanations. Smith says: “The masses determine their economic optimism  (if they are employed) according to the Dow and the S&P and, to some extent, by official and fraudulent unemployment statistics.” Prechter argues that it’s the exact opposite: social moods of optimism and pessimism determine the Dow and the S & P. See The Socionomic Theory of Finance if you want to know more. Prechter offers a cogent explanation of markets and crowd psychology and has an overall predictive record that’s hard to beat.

From Smith at alt-market.com:

I have been saying it for years and I will say it again here — stocks are the worst possible “predictive” signal for the health of the general economy because they are an extreme trailing indicator. That is to say, when stock markets do finally crash, it is usually after years of negative signs in other more important fundamentals.

Of course, whether we alternative analysts like it or not, the fact of the matter is that the rest of the world is psychologically dependent on the behavior of stock markets. The masses determine their economic optimism  (if they are employed) according to the Dow and the S&P and, to some extent, by official and fraudulent unemployment statistics. When equities start to dive, society takes notice and suddenly becomes concerned about fiscal dangers they should have been worried about all along.

Well, it may have taken a couple months longer than I originally predicted, but it would seem so far that a moment of revelation (that slap in the face I discussed a couple weeks ago) is upon us. In less than a few days, most of the gains in global stocks for 2018 have been erased. The question is, will this end up as a “hiccup” in an otherwise spectacular bull market bubble? Or is this the inevitable death knell and the beginning of the implosion of that bubble?

After I predicted the election of Donald Trump, I also predicted that central banks would begin pulling the plug on life support for equities markets. This did in fact take place with the Fed’s continued program of interest rate increases and the reduction of their balance sheet, which effectively strangles the flow of cheap credit to banking and corporate institutions that fueled stock buybacks for years. Without this constant and ever expansionary easy fiat, there is nothing left to act as a crutch for stocks except perhaps blind faith. And blind faith in the economy always ends up being smacked down by the ugly realities of mathematics.

I believe the latest extraordinary dive in stocks is NOT a “hiccup,” but a sign that “contagion” is still a thing, and also a trailing sign of instability inherent in our fiscal system. Here are some reasons why this trend is likely to continue.

To continue reading: Is A Massive Stock Market Reversal Upon Us?

 

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One response to “Is A Massive Stock Market Reversal Upon Us? by Brandon Smith

  1. Sounds like pure Krugman to me.

    Like

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