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Explaining the inexplicable-it’s pros and its risks-the relentless bull mkt. in stocks

Posted by Richard640 @ 14:04 on April 15, 2018  

VERY VIP PONZI UPDATE= Hugh Hendry on the eve of 2015, informing us that China GDP was imploding, an event that would soon ignite a powerful stock rally in China=He called this of course “the power of imagined realities”

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Sunday, April 15, 2018

It’s Time For Global Shanghai Surprise

Shanghai surprise is the term I used back in 2015 to describe gamblers bidding up their own assets while pretending to be wealthy. In other words, it’s rented prosperity – the only kind that can abide in a pseudo-economy having a surfeit of capital at the expense of real demand. Therefore, surplus capital was recycled back into the economy as debt, to give the illusion of income. Now currently, every global risk asset class has been bid up, which is why no one is yelling fire in the crowded theater. No one wants the party to end…

“The good news is that mankind clearly has the ability to suspend rational judgment long and often”

Good news, if you’re Bernie Madoff. The quote above was attributatble to erstwhile hedge fund manager Hugh Hendry on the eve of 2015, informing us that China GDP was imploding, an event that would soon ignite a powerful stock rally in China, I have to admit I was a tad skeptical at the time. He called this of course “the power of imagined realities”. And he was right, in spades. Within months the Shanghai composite was vertical and soon day-trading housewives were pouring their life savings into Chinese small caps. They went straight up, and straight down. Moreover, it was a harbinger of a global risk bubble that was about to implode. Fast forward to today, and the signature imagined reality of this era is/was Bitcoin. 

Here we see Chinese small caps (red) circa 2015, and Bitcoin (blue) circa now. Identical. Biotech (grey) lagged a bit and then went risk off. Gamblers then sought the safe haven of big cap tech (lower pane), and then that imploded. 

http://ponziworld.blogspot.com

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.