Last weekend, we received a notification from the city water department. Long Beach has reinstated water rationing, allowing turf and landscape irrigation only on Mondays, Thursdays, and Saturdays, and solely before 9 AM or after 4 PM.
Undeniably, the weather has been hot and dry. To add to the tension, many believe that the notorious “big one”—the major earthquake along the San Andreas Fault—could strike at any moment. The anticipation is palpable.
Indeed, unusual occurrences abound. In California, the Santa Ana winds have made an early appearance this year. On Wednesday, a vast fire erupted in the outer boundaries of the Los Angeles Basin, where the foothills of Cajon Pass meet the high desert.
Before long, thick plumes of dark gray smoke enveloped the landscape, extending from the San Gabriel Mountains to the Pacific Ocean. The foreboding atmosphere was momentarily lifted by a stunning sunset. We paused to take it all in…
Perhaps the universe was trying to convey a message. “Get Out!” it seemed to say. We felt it was our duty to share that urgent warning with you…Get Out!
Something Unnatural in the Air
For instance, “The Dow Jones Industrial Average closed at a record high on Wednesday, buoyed by stocks rising after the Fed continued its slow tapering program and reduced its monthly stimulus payments by another $10 billion,” reported USA Today.
“The Dow gained 45.47 points, or 0.3 percent, closing at 16,580.84. This marked its first record close of the year, surpassing its previous all-time high of 16,576.66 set on December 31.”
Many view a new high as a signal to invest. With stocks on the rise, they reason that now is a great time to buy.
However, the optimal time to buy was actually years ago, when stocks were still reasonably priced. Today, with stocks at elevated levels, the time has come to consider selling. There’s something unsettling about a new stock market record high, especially when it coincides with the withdrawal of Fed support.
This sense of unease only intensifies against the backdrop of rising heat and early spring wildfires…something feels amiss. There are plenty of questions, but we also have some answers.
Preparing for the Greatest Show on Earth
Has the economy truly regained its footing? The signs suggest otherwise. In fact, first quarter GDP growth barely registered—showing a meager 0.1 percent annual increase.
Can we really remove Fed credit, which has been pivotal in lifting stocks over the last five years, without deflating the market bubble? Absolutely not—it’s akin to trying to lose weight while continuously overeating.
Should you adhere to the adage ‘sell in May and go away’? Many would argue emphatically in the affirmative…this may be one of the wisest financial moves you’ll make this year.
Clearly, the final surge before the next significant market downturn is drawing to a close. Even technical traders are acknowledging an impending correction. “I want to be perfectly clear,” stated Richard Ross, global technical strategist at Auerback Grayson. “I’m feeling quite bearish, and I believe the market is headed significantly lower.”
So why not sell and perfect your smile? You’ll have every reason to relax as the market spirals into chaos.
Prepare your popcorn and pour a substantial glass of soda. The Fed, the Treasury, the President, and Wall Street will soon be tumbling about like circus performers. Get ready for the greatest show on earth.
Sincerely,
MN Gordon
for Economic Prism
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