A reader contacted me earlier today after seeing the absurd article on the Wall Street Journal heralding in the “7-year bull market” in stocks:
Absolutely amazing they can put out crap like this: “Still, with GDP growth expected to be 2.3% this year, according to a group of more than 60 economists surveyed by the Journal, market strategists project the current bull market has more room to run.” The WSJ editors just lost all credibility they may have had with that end to the article. How could they find more than 60 delusional [or shill] economists that all say the sky will be blue for years? I’m tired of worrying for myself and my family. Where can I find what they are smoking? Must be some really good hopium.
It has not been a seven-year “bull market” in stocks or housing prices, it has been the biggest bull market in money printing and credit creation in history.
While the media clowns and Wall Street shills celebrate the seven year “bull market” in stocks, the fundamentals underlying the U.S. economic and financial system continue to deteriorate – quickly.
The most recent economic activity “end zone” dance was over February’s domestic auto sales, which seem to be occurring at an all-time high when viewed on an “annualized rate” basis. Of course, no one wanted to discuss the fact that Ford’s sales would have been flat or negative if their huge jump in rental fleet deliveries were stripped out of their numbers. GM’s sales were down slightly, and dealer inventories continue to balloon.
What’s worse, subprime auto loan delinquencies are spiking up to their 2008 pre-financial collapse level (click to enlarge):
It’s no secret that the banks have been willing to extend to auto loans to anyone who can fog a mirror. Credit score is largely irrelevant and there’s no requirement to show proof of income.
The prelude to the 2008 de facto financial system collapse, washed by trillions in QE and added credit, is now starting to repeat again. An article in the Wall Street Journal (source: Zerohedge) is reporting that used car prices are headed lower again. With over 32% of all car “sales” accounted for by leases, as these cars come off lease and flood the used car system, prices fall. This in turn affects the amount for which someone with a used car can get paid in order to “buy” a new car. Add that inventory to the already sky-high repo inventory, and the auto sector is set-up for a huge “pile-up” crash. But go ahead and just conveniently ignore the record level new car inventory sitting on dealer lots…
Meanwhile, the wholesale trade “gap” – the difference between the level of wholesaler 
inventory and sales – is now at a record level. Furthermore the wholesale inventory to sales ratio has spiked up to its late summer 2008 level (click to enlarge):
This ratio is spiking up from both excessive inventory accumulation at the wholesaler level of the distribution system and declining sales of this inventory to the retail sector, reflecting weak consumer spending and an outlook for continued weak consumer spending.
What’s perhaps the biggest factor contributing to what I believe is a rapid deterioration in economic activity? “Americans are buried under a mountain of debt:” LINK Per findings in the article from Gallup: “The amount of debt Americans carry is staggering and grows every day.”
The “celebration” of the seven year “bull market” is emblematic of the degree to which propaganda is being used to cover up the truth. If you give me a printing press to print money or an ability to issue an unlimited amount of credit, I can make any object increase in value. The big run-up in the stock market and home prices and in auto sales was enabled by $4.5 trillion in printed money from the Fed and the enabling of an insane amount of credit creation, including derivatives which are nothing more than another form of credit.
When this hits a wall – and I think the gold market action is telling us that the collision is occurring or is imminent – it will cause a systemic upheaval that will make 2008 look like a civilized tea party.