So far today U.S. stocks aren't celebrating the 5-year anniversary of the bull market, which technically speaking began on March 9, 2009.
Will they rally by the end of the day, in a formal salute to moving onwards and upwards?
If not today, then how about tomorrow, or the next day, or the next day?
Chances are better than good that stocks will go a lot higher.
But without a 10% correction since 2011, stocks are increasingly vulnerable at this juncture. The truth is there's an intense Wall Street battle about to be waged between bulls and bears.
And if you don't see this big picture, you could be in for a rude awakening. Here's why.
First, I believe we're nearing the end of the first stage of what I'm calling (on the record, under the media spotlight) a generational bull market.
Eventually, global markets will all heal (but don't expect them to heal at the same time), global growth will "pop," and stock markets around the world will double in 5 to 10 years.
That's the case for a global generational bull market. It's about the human race running headlong into a bigger, brighter, better future, one that we're constantly re-making.
Too bad we're not there yet. In fact, we're far from there. Where we are now is scary.
The big bad bull run we're celebrating took off from catastrophic lows caused by a credit crisis spawned by artificially low interest rates, massive yield chasing, leverage to achieve higher returns, and financial engineering run amok.
The bounce itself was engineered by global stimulus and by artificially flattened interest rates and massive bond buying to the Nth degree by the Federal Reserve of the United States.
And that is the problem.
Global growth isn't healthy, it certainly isn't strong, and whether it's growing much at all is suspect at best.
So, the question investors are asking themselves on this anniversary is: What's next?
If the United States doesn't have "escape velocity" growth momentum (well above 3%, to a much needed 3.5% to 4% GDP growth rate), and if China slows down in 2014, which I'm betting heavily it will, and Europe just muddles along, and emerging markets in general slow and worse, what's going to move stocks into their second bull market leg higher?
More stimulus? No, the Fed is tapering. Other countries, Japan in particular, are still printing money, and it isn't working for them.
The commodity super-cycle is over. We're seeing some commodity pricing strength, but if global growth falters, the recent bounces we've seen in commodities will turn out to be nothing more than the proverbial "dead cat bounces" that end up flat as a pancake.
What's worth worrying about is disinflation and its insidious evil sister deflation.
What's to worry about when it comes to disinflation or deflation?
Well, there was nothing to worry about when the dancing duo sprang up in 2008. We were headed for global deflation, mostly of financial assets and commodities.
And that would have been a good thing. Excesses needed to be blown off the top and routed out from below the surface. It would have been extraordinarily painful for probably two to three years, maybe even four years. But after that the world would be moving onward and upward from market-clearing levels that, if allowed to find their natural equilibrium, would have flattened the rising wealth gap, empowered local entrepreneurship, and forced governments to rely on free markets to correct themselves, as opposed to the kind of intervention they chose instead.
No doubt, I'll get arguments on this point, but that's good. A free market in ideas and opinions and prospects for fixing what's wrong with what we know isn't working (unless you're the 1%... and BTW, when I say the 1% I mean people making more than $10,000,000 a year, that 1%) is something I'm all about.
You can call it my opinion, and it is, but it's also backed up by reams of history and data.
You see, we hang too much of what we think we know about deflation on the Great Depression, which wasn't caused by deflation, but was exacerbated by deflation. The truth is, deflation isn't the devil. Deflation is a market-clearing mechanism that is part of free markets correcting themselves from excesses usually caused by inequality in the distribution of capital and assets.
In 2008, global economies were growing swimmingly. It was artificially low interest rates and financial engineering excesses that led to the credit crisis.
And that all got fixed how?
By more financial engineering and more artificially squelched interest rates, made infinitely worse by the culprits of the credit crisis who manifested their greed into the Great Recession (instead of being fattened themselves, being coddled by Congress, the Fed) and were spooned massive amounts of free money, had their underwater bonds taken off their balance sheets and were generally wet-nursed back to massive profitability to tee-up the next crisis by having to leverage up wherever and whomever they can to profit on the huge economies of scale that now works against them and us.
In case you missed what that rant was about, it was about the TBTF (Too-Big-To-Fail) banks.
The excesses we faced in 2008 were financial.
And the market's huge rally since 2009 has been mostly an engineered rally based on low interest rates, and Fed manipulation of the yield curve.
Another day of reckoning, otherwise known as financial asset deflation, is coming.
And the sooner it comes, the better off we'll all be. Because if we don't get a "market-clearing" blow-off of engineered stimulus in the near future and a healthy 20% correction, the higher we go, the deeper and more painful and longer-lasting the next correction will be.
We need some disinflation in the economy, there's nothing wrong with that. And financials need to be deflated.
Then and only then will we be on track to start the next leg up in global generational bull market.
It's coming, asset deflation that is.
Former Treasury Secretary Henry Paulson is worried about Fannie Mae and Freddie Mac. And if he's worried, we ought to be worried too...
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.