Contrary Indicators

If we expected low interest rates to pull us out of recession, we were wrong. Low interest rates normally indicate recovery, but this time it is especially contrary.

Equities continued to get support on the tail of the Great Recession despite negative, technical sentiment. Earnings have been at record levels, thanks to the Fed and fiscal stimulus, while the economy has continued to trend deflationary. At this point, the technicals are so contrary it's not clear what a positive signal is.

Considering most of what supports prices for all asset classes is technically negative (inflation and unemployment), contrary indicators will also signal recovery. The predictors will be contrary to the normal indicators touted by professional, market analysts, and for small investors this is not a favorable buy-and-hold environment.

Ivy-League MBA's are skilled at luring investors in and then scaring them out at a loss, and it does not matter what the technicals look like. For them, the only technical is what your position is, and the only reason they can do this is because capital is too consolidated to be a free market (it is not favorable for buy-and-hold investing but high-frequency manipulation that arbitrages a large, consolidated, risk proportion).

As equity prices, for example, were moving up, each unit up was really, to the contrary, pricing-in the deflationary risk (like I have been telling you for the last three months). We have not been emerging from recessionary risk, but submerging into it. This is the way Ivy-League, Wall Street professionals work. They are not there to invest your money and share the wealth, they are there to take your money and make it look like an act of God (bad luck). Luck (uncertainty) has nothing to do with it. If it were, they would not be doing it.

Both politically and economically we see a complicated conflation of contrary variables being structured to instill confidence. Playing a game of confidence is what criminals do, and no one is better at it than Wall Street, Ivy-League professionals with the support of Ivy-League politicians considered to be the best and the brightest. Predictive utility requires an elitist, not a pluralist, analytical model.

Using an elitist model, we see the best and the brightest leading us into recession rather than out. Did we not have an Ivy-League graduate use anti-recession rhetoric to win the White House and then, along with his party in the majority, spend a lot of time not doing it?

The fiscal stimulus was not a strong positive. It indicated recovery in name only because it borrowed from the treasury without reversing the regressive tax program...and here we are with an increasing demand for debt against declining revenues. What an absolutely terrible, Ivy-League job!

If that's not enough, then we have the new House majority telling us that more of the same will cure the problem. What? That's like saying the best way to avoid driving off the cliff is to just gun it! Politically and economically, the indicators could not be more contrary.