Seems that every email I have received lately, blogs sent to me for reading or those on twitter give absolutely no chance for the world to continue. End of the world predictions are as common as a sunrise. Yet, how have those predictions ever worked out? Today’s macro issues are nothing to be complacent about, I have no doubt there will be more pain before the healing process begins. Further, the instability of the deciders makes for a tenuous situation at all times. Always on high alert for ‘something’. But armageddon? Really? Who will be around to pay that off if that indeed occurs? Are bragging rights enough to feed one’s ego?
The ‘Endgame’ is the name of a book written recently by John Mauldin that portrays a new world with less reliance on debt. He talks of the end of the debt supercycle not from a standpoint of a ruined economy rather from the view of a more healthy system, sustained by real money. While he predicts a sluggish future for years it is no different from a hangover effect that lingers. Mauldin does not talk about the end of days rather just pulling in the reins from a time of excess. The can kicking has continued far too long and will eventually have to be picked up.
The VIX is a great indicator for fear and greed in markets. Extreme readings tend to be great points to look for market reversals (it’s a contrary indicator). You can see earlier this year we had good entry points when fear peaked in the Spring and then in late summer. This time around the fear levels have not been excessive, and with the SPX selling off 8% in about seven days that is quite curious.