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Thunderroad-Report-Q4 Here we go again, creating another asset bubble for the third time in a decade and a half,

Thunderroad-Report-Q4 Here we go again, creating another asset bubble for the third time in a decade and a half,

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Published by Claude
“Have we really got to the point where it’s just about more and more QE, corralling more and more flow into the equity market until it becomes (unsustainably) ‘top-heavy’?“
“Have we really got to the point where it’s just about more and more QE, corralling more and more flow into the equity market until it becomes (unsustainably) ‘top-heavy’?“

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Categories:Business/Law
Published by: Claude on Nov 14, 2013
Copyright:Attribution Non-commercial

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12/29/2013

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report
 
Thunder Road
Into a Bubble?
October 2013
Strategy
Buying Time in a Brought Forward World
40060080010001200140016001800
         1         9         9         6         1         9         9        7         1         9         9         8         1         9         9         9         2         0         0         0         2         0         0         1         2         0         0         2         2         0         0         3         2         0         0         4         2         0         0        5         2         0         0         6         2         0         0        7         2         0         0         8         2         0         0         9         2         0         1         0         2         0         1         1         2         0         1         2         2         0         1         3
S&P 500 -since 1996
Sectors/stocks
: as pressure on consumers grows, companies
supplying essential goods & services will be relative benefciaries
 
 
Into a bubble?
 
Bubbling Up 3
 Megaphones and Domed Houses 3 Polar Opposites - middle of a bull market or imminent peak? 5 Need a Plan B? 6 Trying to Make Sense of Bubbles 7
 Buying Time in a Brought Forward World
 
11
 Manipulating the Time Horizon 11 It Should Work Both Ways 11 Theme: Essential Goods & Services 12 
Is the Cycle Slowing Again?
 
14
 Slowdown versus 2004-05 Style Mid-Cycle Acceleration 14 The US Consumer 19 The Picture Outside the US 20 
Ination Versus Deation: short-term resolution imminent?
31
 
Ambiguous Signals 31 Bigger Picture 34 Gibson’s Paradox 36 Interest rates and Interest Rates (Repos) 38
Research: Paul Mylchreest +44 207190 7242 pmylchreest@monumentsecurities.com
This is a marketing communication. It has not been prepared under the Independent Investment research regulatory requirements and accordingly there is no prohibition on dealing ahead of the dissemination of this research material.
 
3
October 2013
Bubbling Up
Megaphones and Domed Houses
Here we go again, creating another asset bubble for the third time in a decade and a half. This chart holds
particular signicance for us since our colleague, David McCreadie, has been writing about it in his daily
 “Tactical Trader” emails for nearly 5 years.
Eckhart Tolle was voted the most spiritually inuential person in the world and teaches that:
“the primary cause of unhappiness is never the situation but your thoughts about it”
 Which seems apt right now.We noticed the immediate spike to an all-time high in the S&P 500 on the release of last week’s NFP data at the same time that increasing doubts are surfacing over
Whether the US economy will reach “escape velocity” and;
The benet of QE on the real economy rather than asset prices. It’s getting increasingly difcult to argue that we haven’t crossed the threshold into bubble territory in
equities. Are we going to bounce off the upper resistance of the “megaphone” pattern in the chart above and fall sharply? Another near-perfect chart set up came and went. George Lindsay’s “Three Peaks and a Domed House” pattern
was forming through 2011-12, until the QE3-driven rally (pre and post the September 2012 announcement)
in equities ultimately “blew out” the last wall of the domed house - and the chart only shows the early stages.
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   1   9   9   6   1   9   9   7   1   9   9   8   1   9   9   9   2   0   0   0   2   0   0   1   2   0   0   2   2   0   0   3   2   0   0   4   2   0   0   5   2   0   0   6   2   0   0   7   2   0   0   8   2   0   0   9   2   0   1   0   2   0   1   1   2   0   1   2   2   0   1   3
Dow Jones Industrial Average -megaphone pattern since 1996
 S  o u c  e  : Bl   o om b  e  g ,M on um e n t   S  e  c  ui   t  i   e  s  .

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