Last night’s Presidential Debate was…well, unique. Instead of debating policies about the economy, budgets, foreign issues, etc. the main discourse revolved around who is scummier. Pretty sad state of affairs. What is even sadder is that we the people created this train wreck whether we want to admit it or not. Although most folks would say it is the other side’s fault. Frankly lack of accountability is one of the main reasons we have arrived here.
The battle between the Bulls and the Bears is somewhat similar. Instead of debating the earnings power and balance sheet health of public companies, we are discussing the next move of which Central Bank, or a deal a cartel manufactured, or what country can degrade their currency the most/quickest. Please tell me the New Normal is not the Forever Normal. How long can dysfunction be normal?
That leaves the current equity market in another tight, indecisive trading range. I thought the break in early September would bring more volatility, but all we did was drift back towards the highs and continue the dithering. A resolute break of the range in collective fashion should be revealing…probably? The S&P 500 and the EuroTop 100 depict this scenario clearly.
Mohamed El-Erian, Chief Economic Advisor for Allianz, summed up the potential danger the world’s Central Banks are putting us in. He also thought the Fed should have hiked rates a few weeks ago. At some point the easy money will have little/no effect and will not stop a potential market meltdown, Mr. El-Erian thinks we may be close to that tipping point. These are a couple of short videos regarding his insights worth watching.