You Got Served... Bflakaz was right once again!

As anyone who has been reading this blog in the past month knows, I've been pounding the table saying that stocks were vulnerable and due for a correction, or at the very least a pullback, since late June. Well, well, well... look at what has just unfolded!

All of June AND July's gains were wiped out... WIPED OUT... in a single day. What sent the markets into a tailspin yesterday? An Argentinian debt debacle / default and new concerns over a major European lender, Banco Espirito Santo.

While Q2 GDP was pretty good, coming in at 4% and above the 3% consensus, the economy still only grew by 1% in the first half of 2014. Now when they calculate GDP for a quarter, the reported number is at an annualized rate. If you take the last four months of CPI data, i.e. over the same time that the economy was snapping back from that harsh winter, inflation is at an annualized rate of over 4%. If the trend continues, all eyes will (as if they already weren't) be on the Fed. Will they hike rates sooner to combat inflation? Or will Grandma Yellen say, "We could use a little inflation to really get this recovery going, therefore no rate hike." I believe the latter is more likely, since I've said before that nobody can afford higher interest rates. If they do pull a huge Bernanke and raise rates to combat rising inflation, then it's all over, just like it was in 2006. Ironically, there has not been a rate hike since 2006.

It's also important to take note on the overall atmosphere of the markets... complacent and worry free. Let's take a look at my time stamped tweets on StockTwits: @Bflakaz

Complacent and worry free was the EXACT attitude of the markets in December of 2007, right as shit was really hitting the fan! Now it is important to say that this time is different, since there is no banking crisis about to unfold... unless you look at Europe. But it's also important to say that this time isn't different: The FOMC cannot prop up the stock market. They can't lower rates, and if they unleash QE 4 than it will be just like any 4th movie in a series... overdone, unsatisfying, insignificant, and universally hated.

TAKE THAT NAYSAYERS
AND THIS
AND A LITTLE OF THIS

Sincerely,
Brandon