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Headlines Galore!

May 29, 2013
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Financial pundits were all giddy yesterday morning. Caution over this stock market bull run is now officially thrown to the wind. Central banks of the world have once again indicated that they will come to the rescue. For a moment, we were almost brought back to reality in “Taper” discussions — that is, discussions about how the central banks will begin tapering all their accommodative policy, ZIRP, QE, stimulus, etc, etc, etc.

The moment of clarity and reality has apparently come and gone. To ask how we might end this liquidity experiment may threaten to shut down the party. Remember the motto, “In central banks we trust!” Our central bankers do not actually follow through with the question, “what is the exit strategy?” Instead, our bankers direct our attention to the “improving” economy (seemingly measured solely by the stock market) and say to us, “Oh you of little faith, do you doubt the power of the master magicians? See and believe!”

Here are just a few of this week’s headlines:

Did You Just Miss Another Buying Opportunity?

Last week I suggested that the Nikkei plunge might be met with financial commentators telling us to “buy the dip.” Silly me; that is so 2008. Now the financial experts are telling us that we already missed the opportunity to buy in on the dip.

Largest Gains for Home Prices in 7 Years, Forget Bubble Talk for Now

This is great news, since we are investing in homes, but I am convinced that the only way this is not yet another bubble is if instead we are in the beginning of extremely high inflation. So “forget the bubble talk” they say. God forbid we should be analytical about home price inflation that compares with the home price inflation that occurred during the last real estate bubble. Oh, that’s right — no one could see that one coming either!

Tiffany Beats! Economic Bears Are Running Out of Excuses

Those of us who are cautious about this liquidity-fed investment market where all investment categories can only go up, forever and ever, are now put to shame because luxury retailer, Tiffany’s, beats expectations. Sounds like perfect logic to me. Stocks, like real estate, like bonds, like commodities all go up… until they don’t…

You bears (‘naysayers’) have no excuses! Shame on you for doubting!

Stocks Jump on Home Prices, Confidence: Dow Extends Record Tuesday Win Streak

It is 20 Tuesdays of straight wins for equities. What that means is you can be assured that you will be a winner if you invest on Tuesdays; no need to even think about it.

Consumer confidence at 5-year high

Look, even the consumer (that would be you and me) is so sure this grand experiment by our central bankers is certain to turn out just fine that we can regain the confidence to go back into a debt orgy of spending. That, after all, is the total purpose of Bernanke’s experiment. The financial/economic experts have been telling us it is all good, what else do you want?!

Remember, you are reading the “Economic Contrarian.” I did not pick that title by accident. I picked it as a result of observing that when opinions, investing and confidence seem lopsided (in either direction), inevitably we experience some type of unexpected surprise. We have a nature of wanting to believe; some might call it optimism. Optimism is a good thing, in fact it is essential, and even as doubtful as I may be about monetary and economic policy, I am a very optimistic individual in general. But it is our optimism that some might view as a tool to manipulate the overarching opinion about the economy. To succeed in this endeavor may lead individuals to make decisions that separate them from their accumulated wealth (aka hard-earned savings). The question we should all ask is this: Do our current economic conditions merit record-setting investment markets? Since I cannot conclude that they do, I need to determine why everything is going up. And that is where I come to the conclusion that the current investment complex is largely a product of massive amounts of unprecedented liquidity. The Grand Experiment!

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