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Don’t believe your lying eyes!

October 31, 2014

Here is today’s headline:

Stocks charge toward new highs after Bank of Japan’s ‘QE’

For just the 16th time in 114 years the Dow is set to reverse from 6 percent down to back in the black in one month.

It seems remarkable that we actually started to have a moment of clarity and perspective a couple of weeks ago when a few economists began to ask the question, “What if the Fed does not know what they are doing by adding so much liquidity into the markets?” The markets began to tumble in response to those questions; so what did the Fed do? They hinted that maybe they needed to do QE4.

And now with the master of all monetary easing — the Bank of Japan announcing more QE — the market is all smiles and ready again to set new highs. Remarkable! We had a moment of clarity by asking the right questions and doubting the central bank policies around the world and then we turn around and accept that more of what they were doing wrong is the solution!?!?

It’s called supply side monetary policy — or liquidity! More of it will ultimately prove to only dig a bigger whole. I guess Wall Street has figured out that it is safer to try to keep digging down rather than attempting to climb out. They hope the reports of molten lava at the center of the earth are greatly exaggerated.

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