Last weekend we received a mailer from the city water department. Long Beach has returned to water rationing. Turf and landscape irrigation is only allowed on Monday, Thursday, and Saturday…before 9am or after 4pm.
No doubt, it’s hot and dry. What’s more, the “big one” – where the San Andreas Fault separates the Pacific plate from the North American plate once and for all – is just around the corner. You can almost feel it.
Something big is going on, indeed. Here in the Golden State the Santa Ana winds have arrived early. On Wednesday, the outer expanse of the Los Angeles Basin, where the lower foothills of the Cajon Pass rise to the high desert, went up in a giant blaze.
Before long, a wafting plume of dark gray smoke blanketed the expansive landscape from the San Gabriel Mountains to the Pacific Ocean. The ominous aura was broken in the evening with an effervescent sunset. We looked and listened…
Perhaps the gods were trying to tell us something. “Get Out!” they warned. So we thought we’d pass along the warning to you…Get Out!
Something Unnatural
For example, “The Dow Jones industrial average closed at a new record high Wednesday as stocks rose after the Fed continued its measured tapering program and cut another $10 billion from its monthly stimulus payments,” reported USA Today.
“The Dow is now positive for the year after rising 45.47 points, or 0.3 percent, to 16,580.84. It was the Dow’s first record close of the year, beating its previous all-time high of 16,576.66 set on December 31.”
Many people see a new high as a buy indicator. Stocks are going up. It’s now a good time to buy, they reason.
But, alas, the time to buy was years ago. Back when stocks were still cheap. Now, with stocks being expensive, it’s time to sell. For there’s something about a new stock market record high that causes us alarm.
Moreover, that alarm sounds greater when the record high is hit at the very moment Fed credit is being removed. Like a heat wave and a foothill wildfire in early spring…something unnatural is going on. Obviously, we have some questions…and some answers…
How to Prepare Now for the Greatest Show on Earth
Has the economy returned to stable footing? Not that we can tell. In fact, first quarter GDP growth laid a near goose egg…the economy expanded at a 0.1 percent annual rate.
Can Fed credit, which was responsible for boosting stocks over the last five years, be removed while the stock market inflates? Absolutely not. That would be like going on a diet and getting fatter.
Should you ‘sell in May and go away’? Without question…yes. This could be the smartest financial decision you make all year.
Clearly, the final melt up before the next big meltdown is coming to an end. Even the technical traders are seeing a looming correction. “I’m going to be completely clear here,” said Richard Ross, global technical strategist at Auerback Grayson. “I’m quite bearish and I think the market’s going significantly lower.”
So why not sell out and perfect your grin? You’ll have plenty to calmly smirk about as the market conflagrates into a giant blaze.
Fire up the popcorn maker and pour a giant glass of soda pop. The Fed. The Treasury. The President. Wall Street. They’ll all be flapping about like circus performers before long. Prepare now for the greatest show on earth.
Sincerely,
MN Gordon
for Economic Prism
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