Sheep To The Slaughter

Wednesday, February 18, 2015
By Paul Martin

Andrew Hoffman
February 18, 2015

Let’s start with a pair of pictures; which, when viewed together, describe exactly how Central banking gone wild has destroyed capital markets. Certainly, for a generation; and if the worse-case scenario ultimately unfolds, permanently. On the left is the Baltic Dry Index, from its inception in 1985 through today. Actually, the 556 price pictured on the chart – representing an all-time low – is a week old; as this morning, it is down an additional 7%, to 516. For those not aware of what the Baltic Dry Index measures, it is the broadest global measure of seaborne trade activity, incorporating both the volume and price of shipping. To its right is the oxymoronically titled “Investors’ Intelligence” survey, depicting the amount of equity investors that are bearish on the market. As you can see, it is not only at its all-time low, but well below the “bearishness level” of historic equity tops in 1987, 2000, and 2008. In other words, the implicit “puts” serial money printers and market manipulators like Greenspan, Bernanke, Yellen, Draghi, and Abe – to name a few -have so dumbed down investors, they no longer believes anything can dampen equity valuations.

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