Mania

This morning’s economic reports ranged from dismal (PMI) to horrible (mortgage originations, new home sales). However the stock market is strong because – Ms Yellen will feel forced to take taper off the table and we’ll get more QE! Our bubble will get bigger! Yeah! Time to buy the Russell 2000 small-caps with their 85 average P/E!

And of course the housing market will get crushed even further because QE increases interest rates (despite the intention to do the opposite). Just look at the charts.

Sometimes you just have to step back and marvel at the complete lack of rational analysis when a mania is in progress. People seem to get herded into a sort of Alice in Wonderland state. I guess I just don’t have the gene.

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