We've arrived. We're exactly in the middle between here and there.
The problem with being here is the "there" part.
I'm talking about where the markets are and where they're going next. Is "there" backwards or forwards? Are we coming or going from here?
Before I give you my own forecast, and recommendation, let me say this about that…
Here are the two best forecasts I've ever heard:
- "It will fluctuate," which was what J.P. Morgan famously answered when asked what the market would do, and
- "I cannot forecast to you the action… It is a riddle, wrapped in a mystery, inside an enigma," which is what Winston Churchill famously said, not about the market, but about Russia. (The full first line is, "I cannot forecast to you the action of Russia.") But you get the picture.
American markets are touching their highs. It's as if everything is clear and sunny. It's as if forecasting is as simple as looking out the window and calling out what you see.
It's clear and sunny. Haven't you looked outside? If only it was that easy…
But when you do look outside, let's say, through a window, you only see in one direction. The question can then be asked, is the weather you're looking at coming or going, or is it here to stay?
America, and indeed the global financial markets, came to the precipice of a cliff and barely caught their balance before plummeting into an abyss so deep and black that no one knows where it would have taken us. But my guess is to Hell.
The rope that held us from going over was stimulus, massive stimulus.
That stimulus was never mopped up. It's been left out there like water on everything after the fire has been doused; and there's more coming.
The Federal Reserve, which isn't playing just 18 holes, but seems like it's playing a marathon round of swinging hard and gently, but constantly swinging, is teeing up another ball with some little marking that reads QEsquared, or something like that.
Here's my guess on what the Fed is going to do…