An interesting thing happened on the way towards the market collapse a few weeks ago where instead of following the course of broken support levels after the Brexit event, equities turned and soared to new all-time highs. And in fact, stocks went so high, so fast that they even accomplished something only seen 12 times in the last 100 years.
Seven straight days of new all time highs on the Dow.
The primary reason for this titanic shift, especially after nearly all market analysts predicted financial turmoil in the aftermath of the Brexit vote, was of course the implied rhetoric from central banks of new stimulus programs that would work to ensure equities wouldn't drop off a cliff.
And during the summer months when the central banks knew there would be limited trading from most investors, it was quite easy to drop a dime on the media using their rhetoric for new 'helicopter money' programs (the reason behind Bernanke's supposedly going to Japan), and followed up last week with Mario Draghi's willingness to buy up everything in sight, including corporate bonds.
But this week, the party is preparing for the mother of all lies and bulls**t as the Fed's July FOMC meeting will take place at the same time the Bank of Japan announces its next round of policy actions.
Since history loves to rhyme as well as repeat itself in similar ways, the euphoria of the stock markets hitting new all-time highs in record fashion masks the underlying instability of the corporations that make up those markets. That is because earnings estimates have now declined for six straight quarters, and there is not a single reason other than the implied promises from the central banks that provide any fundamental indicator as to why the markets have been going up over the past two weeks.
And where have we seen this before? How about 2007.
Inevitably, central banks are left with the Ogre's Choice of whether to die slowly, or die quickly, as for the past six years they have chosen the path of sacrificing the future to paint the stock markets higher thinking they could fool the masses that this was the real economy. And this coming week will assuredly bring more of the same, as through a combination of ignorance and malfeasance, the 'three amigos' of the Fed, ECB, and BOJ will use their spin and rhetoric to push for even higher stock prices knowing that the alternative will be a collapse of biblical proportions if they stop.