Salient to Investors:

David Stockman writes:

  • Expect a central banker to soon herald that more monetary heroin is coming, triggering a market rally and pronouncements that its “correction” is over. It will take time for the market to lose its unwarranted faith in central bank omnipotence. However, money will now be made by selling the rips and no longer by buying the dips.
  • This time is different because the 50-day and 200-day moving averages have been decisively breached, the great global credit boom is fracturing, and central banks are powerless to reverse the downward deflationary spiral.
  • The Fed is out of ammunition and is powerless to reverse the global deflation and stop a US recession in the next year or two. Any reversion to QE would unleash monetary hell and signal that the last 6 years of radical monetary policy have failed, except for feeding Wall Street speculators with free money for carry trades.
  • China’s PBOC has shot its wad and is struggling to prevent a massive outflow of flight capital and the internal deflation of its giant credit bubble.
  • The ECB’s bond buying campaign has left most of Europe mired in its long-standing socialism.
  • Media recognition is growing that the great global deflation is well underway.

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