They say “don’t fight the Fed.”
This has been especially true from an equities investment perspective since the Crash.
The question now though is how much fight is left in the Fed.
Ultimately, the current QE programs will fail. I think most likely through a large devaluation in the emerging market currencies. We have already seen all the members of the BRICS family devalue, except for the only one that really matters, China. Increasingly policy making activity by Chinese authorities, including a recent policy of promoting margin trading by domestic investors to create a bull market in stocks, strikes me as particularly desperate…
…I am increasingly finding it easier to short, particularly in the US markets. Having dodged and parried so many blows from Central Bank QE programs, the market is seemingly failing to break higher. Breadth is narrowing in the US stock market, and credit spreads widening. Economic data, with the exception of jobs, which is a lagging indicator, indicate the US economy is peaking. To me it looks like the US and China might go into recession at the same time. For this reason I have been adding continually to the short book since the beginning of the year. The market looks tired and weak.