Francis says...The clock strikes 13

The chase by Frances Horodelski:

Has the clock struck 13 and are there Eastern Promises? That is where we start today, stealing from two market pundits who are much more eloquent than me.

First, has the clock struck 13. This refers to all things insane which could refer to markets generally - but specifically for me to the intra-dayreversals that we have seen of late. You just think you're going down the right highway - and whack the hairpin turn in the road makes your head spin. Abroadening top? Or a "knock, knock, knocking" on heaven's door before the big run to even bigger highs? Even bullish sentiment indicators are insane withthe Investors Intelligence bulls at a worrisome 55.8% level while the American Association of Individual Investors are at sub-30% levels. Crazy.

Second, Eastern Promises can refer to Mario Draghi who has promised more than he has given and the market still slathers at his words. Arate cut seems more than promise from his words yesterday but the promise of bond buying remains out there (although legal and other hurdles need to besurpassed first). Or another eastern promise (further east of course) is Mr. Putin's promise to be conciliatory but troops don't back downand the referendum goes ahead. Be careful out there.

But let's head back to the news. Economically, we had Chinese inflation numbers coming in well below expectations (it used to be theChinese were worried about runaway inflation - today's number came in sub-2%, a developed market level). The street is focused on the low levels of ironore as delivered into China which is at the lowest level since September 2013 and down 23% in the past year. A negative signal for global growth? Manufacturing in the UKhowever showing strength. The big story for us is Canada's jobs number. The estimate was quite healthy given thebig leap in jobs we saw in March – but it didn’t turn out that way as the economy actually shed 28,900 jobs according to Statistics Canada.

http://www.bnn.ca/Blogs/2014/05/9/The-clock-strikes-13.aspx

10 peaking megabubbles signal impending stock crash Commentary: Fed-driven rally is about to end badly

 “the bull market may come to an end any time,” warns Jeremy Grantham, founder of the $117 billion GMO investment giant. An unpredictable collapse. Risky valuations, 10 bubbles peaking, and black swan megatrends: The bull “could be derailed by disappointing global growth, profits sagging as deficits are cut, a Russian miscalculation, or, perhaps most dangerous and likely, an extreme Chinese slowdown.”

Yes, Grantham’s hedging his near-term: Betting the S&P 500 could rally past 2,250 before the 2016 presidential election, “depending on what new ammunition the Fed can dig up.” But then, a black swan will ignite “around the election or soon after, the market bubble will burst” and “revert to its trend value, around half of its peak or worse.”

Yes half. The S&P 500 will collapse to about 1,125. This Fed-driven rally “will end badly.” Repeating the dot-com losses of 2000-2003. Repeating Wall Street’s $10 trillion losses in 2007-2009.

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