A few final observations:
In my view, daily stock charts (and to some degree the application of technical analysis) have been rendered less useful against a backdrop of risk parity and other products and strategies that worship at the altar of price momentum (and that exaggerate short-term price movement).
If you think price discovery is natural and that you can essentially day trade based on these moves -- and you can beat the pants trading against machines and algos -- you are daffy, unless your time frame is measured in hours.
Thanks for reading my Diary.
Enjoy the evening.
NONE

The S&P (now at 2928) has moved closer to the upper end of my expected trading range (which is 2950) - and I have reloaded on the short side.
The proximate cause of today's rally is the tweet delivered by the president regarding the delay of some tariffs with China.
Meanwhile, today the 2/10 has inverted, Trump seems not to have a real comprehensive trade strategy (it's ad hoc and not based in facts, for example who pays for the tariffs), stocks rally into the mouth of the Beast.
Despite the market rally what happened today should give investors even more pause because of the obvious uncertainty in policy. How does a corporation make long duration business fixed investments given that uncertainty?
I truly feel there are no adults left in the room anymore - just machines, algos and Pavlov's dogs.
To be frank, I no longer feel sorry for anyone who falls for the nonsensical and hastily crafted policy delivered by tweet.
I am sticking with my contrarian streak and my ursine fundamental views on economic growth and corporate profits.

I have had a Twitter dialogue with Rev Shark today (see above) - he thinks today's move has technical consequences and represents "a change in conditions". I respectfully disagreed with him.
I continue to support the notion that there is only limited natural price discovery (because of quants) and that stock charts have lost their legitimacy and/or "predictive ability".
Finally and most importantly, with today's sharp gains I continue to rely on my calculator which suggests upside reward is now dwarfed by downside risk.

"I don't know."

- Jeff Spicoli (Sean Penn), Fast Times at Ridgemont High

"People become more married to their opinion than they should be, as opposed to being married to observable events and their P/L.... You can't always get what you want. But you can always find something to fit your narrative. "
- Kate's Dad

Five and a half years ago, exasperated by the self proclaimed authorities in the business media (who have an explanation for everything) - I wrote a column about the value of saying... "I don't know".

There seem to be so many self confident talking heads in the investment business these days. Their self confidence, well it's contagious and annoying.

No question goes unanswered. Few questions are answered without an extraordinary amount of confidence even when it is clear that the respondent has no clue.

I just don't get it - perhaps it about expanding their 'influencer' status or an attempt to sell something (money management, technical or fundamental services,etc.).

Increasingly, especially when the tide is going out, viewers/readers can see through the Fugazzis and their phony and ill informed narratives.

Always remember, pride and celebrity goeth before fall.

Here is the aforementioned article from 2014:

Late yesterday I asked, Why aren't there more talking heads like Fast Times' Jeff Spicoli, who is brutally honest (with Mr. Hand) when he says "I don't know" in response to why he is constantly late to Mr. Hand's history class?

I got quite a response from my brief post on the know-it-all people that trot out their self-confident views (bullish and bearish).

"I've been thinking about this, Biz TV Talking Heads. If I am here and you're here, doesn't that make it our time?"

- Jeff Spicoli watching Biz TV

The fact is that snark (a combination of snide and remark) and opinion far too often envelop the business media instead of facts and figures. Equally infuriating is the confidence of view in the delivery of the snark. Sometimes the reason for this is out of necessity, as the media appearances are typically brief and expected to be on point. Nevertheless, in a world characterized by an absence of certainty and an interrelated and a complicated market mosaic (and complexity of issues) without memory from day to day, too many attach self-confident reasons to randomness.

I would characterize a lot of the pabulum in the business media as instantaneous entertainment and not as rigorous analysis.

Of course, there are exceptions. Consider as an example, the preparation that Jim "El Capitan" Cramer goes through when he interviews a corporate executive on "Mad Money." Another example is CNBC's "Squawk Box" with Joe Kernen, Becky Quick and Andrew Sorkin, which provides a guest host with one to three hours to do a deeper dive in analysis (e.g., just watch Jim Grant's appearance yesterday, which was solid and thoughtful in analysis). Or Bloomberg's "Market Surveillance" in which Tom Keene shares the spotlight with an interviewee for almost a half an hour, digging into the analysis that forms the foundation of view.

Not every move in the markets is explainable, though far too many observers attach a reason for every wiggle and move. (Consider the 5% correction that was recently erased. Why? I have no clue, though many express a strong understanding in the moves.)

To some, the projection of confidence of view is seen as a validation of an intense and rigorous decision-making process. Increasingly, however, many are fooled by the abbreviated, simplistic, staccato- like explanations and conclusions, because, more often than not, the snark is shown to be wrong in short order as the curtain disclosing a mere human (not the Wizard of Oz) is revealed.

Genius Is a Rising Market

In a market that has many feeling uber smart, there are too many Good Will Huntings (i.e., geniuses) and not enough Jeff Spicolis out there these days who say "I don't know."

My experience is that the most valuable views are based on intensity of hard-hitting and time-consumptive analysis less valuable (though self-confident) views that are three miles long but only a few inches deep in knowledge can get viewers/listeners in a lot of investment "hot water" and are not healthy for your financial well-being.

Accordingly, to make my point, in the future, I will simply solicit Spicoli's famous phrase when "I don't know" and when I have not the answer to the question (of the day or the week).

Again, such was the case in the media's discussion of yesterday's rise and fall (of half the gain late in the day) in which all knowing talking heads explained the causality. (Note: With futures down another 4 handles in premarket trading, the overall S&P futures gain, including yesterday's 10-handle rally, is only 6 points.)

I simply don't know why the market behaved as it did yesterday.

"Aloha, Mr. Hand."

- Jeff Spicoli

(CGC) , the object of my recent affection, is starting to pick up in price.
I am seeing some large institutional buy interest.

From my RMPGIC teammate Mikey:

badgolfer22

Stocks seeing volatility buying (bullish call buying/bearish put buying):

Calls:

KHC Sep
27.5 calls are seeing interest with 17.7K contracts trading vs. open
int of 6580, pushing implied vol up around 3 points to ~34%. Co is
expected to report earnings late October.

This in-depth article (hat tip Whitney) in the Financial Times makes the bear case: Does Investing in Emerging Markets Still Make Sense?

Here is an excerpt:

Apart from China and India, there is little sign that developing economies are converging with the developed world...

The basic calculations are changing for emerging markets as that growth potential dims - and with it, part of the core rationale for investing in the asset class.

Starting in the early 1990s, globalisation, in the form of increased cross-border trade, the commodities supercycle and the rise of global supply chains, drove the emerging world inexorably - or so it seemed - along a path of convergence with the developed world.

For many investors, emerging markets became a core part of their portfolios because they offered strong returns and faster growth as the emerging world caught up.

Hundreds of millions of people were being lifted out of poverty and into the consuming classes, offering new opportunities to local and foreign companies. Investment in factories, roads, ports and other infrastructure promised to keep the momentum going.

But convergence is no longer assured. Today, high commodity prices are a fading memory. Trade is stuttering and global supply chains are being disrupted. Far from catching up with the developed world, many supposedly emerging markets are growing more slowly. As globalisation risks going into reverse, many investors are asking what, if anything, will drive the asset class in future, raising questions over the role of emerging markets in a diversified portfolio.

"The entire rationale [for investing in emerging markets] has been exports and consumption," says Bhanu Baweja, chief strategist at UBS and an emerging markets specialist. "People came into our industry at a time of hyperglobalisation. But now globalisation is flattening, not just because of [President Donald] Trump, but for deeper, organic reasons."

For two decades after the creation of the benchmark MSCI Emerging Markets equities index, EM stocks tended to outperform the S&P 500 index of leading US stocks by a wide margin. For most of the past decade, however, EM stocks have stagnated, while U.S. stocks have more than doubled in value.

I prefer to criticize by category and praise by individual.

Yesterday an unnamed financial news correspondent on TV said, "The global markets know this is a perennial problem re: Argentina."

This is not true.

Not too long ago Argentina's 100 year bond was 10x oversubscribed at 7.875%.

So, no, I don't think "Global Markets" were thinking "problem" at issuance in May 2018.  

Participants joked about it, just as there are currently nonstop jokes about Austria's 100 year or Ireland's, etc., but it was waved in with abandon. 

The Argentina bond was not inconsequential in size - it was a $2.6 billion issue! (issued at $90 to yield 7.90% and now trading at about $56!).  Certainly, Argentina has a long history of default, but I wouldn't even call this one an easy short given the cost of carry for 15 months... the bond took a surprise 15 point election poll hit for it to crack in a bad tape...  

No, price isn't truth.

Markets are often inefficient.

Good (read lucky) cover of Apple (AAPL) recently, Monday's buys (of Amazon (AMZN) , Facebook FB and Alphabet (GOOGL) ) and yesterday's sale of (VXX) long and partial cover of (SPY) and (QQQ) shorts.  

Today's market is an example that no one should be self confident in view in a "newsy" and uncertain backdrop in which tweets move markets.

I have just fully reestablished a large (SPY) (at $293.60) and (QQQ) (at $189.15) shorts - raising me back to medium-sized short of exposure.

* Listen to this discussion of MMT - it is very worth while
I got a really nice email from an old friend, David Kotok at Cumberland - in response to my opener today:Doug. Brilliant one today.At Camp Kotok we did a 5 person panel on MMT. While the group in attendance (about 50 and over 1T in AUM) mostly opposes it, we also debated if it is coming. Sadly the majority believe it is a serious concern as any recession will now cause a political coalition of Trump fed bashing fools on one end and socialist leftists on the other to combine.Some fear a negative rate scenario might unfold in the US. In Europe NIRP is destroying the entire financial sector likes banks. Insurers. Services. In JAPAN the same. In the US the policy is starting todo the same.The bull market is in the places that deliver cash flows and earnings in such an environment. You named a few. There's a lot more. Good message today.

David R Kotok
Chairman & Chief Investment OfficerCumberland Advisors

Here from Camp Kotok (a description of the camp is here) in Maine is the aforementioned MMT discussion -which is in public domain - this is great!

Here is the full tweet from Jim Bianco (it's in the public domain) which frames the discussion with Danielle DiMartino Booth and others:

Jim Bianco

MMT Discussion at Camp Kotok Saturday Night in Grand Lake Stream Maine. 

With Jim Bianco and ¿¿@EconVue¿ ¿¿@SamuelRines¿ ¿¿@DiMartinoBooth¿ and Stewart Taylor, VP and portfolio manager at Eaton Vance. 

¿¿@CumberlandADV¿

#soundcloud

Apropos to my opener, Amazon (AMZN) ($1786) is my Trade of the Week.

* I am in full agreement with Jimmy that there always is a bull market somewhere
* We are in agreement that Facebook, Amazon and Google shares are exceptionally attractive now and will likely provide strong absolute and relative investment opportunities regardless of one's market views

"There's never a bull market anywhere.
That about sums up my twitter feed right now, something that's virtually a ritual near the bottom.
In fact, it may be the most reliable indicator I know."

- Jim "El Capitan" Cramer, It's History, Not Me, Saying There's Always a Bull Market Somewhere

As you all know I often disagree with Jim "El Capitan" Cramer on the markets. Jim is prone to bullishness and history shows, with the market's gravitational pull higher over time, that his posture is correct. By contrast, I am prone to seeing the glass "half empty."

To me, this fundamental difference of view provides subscribers with a refreshingly balanced menu of opinion - on both sides of the ledger.

Despite often disagreeing, I always defend the rigor and commitment in his investing process, the value of his investment conclusions and his work ethic/elan - regardless of my view.

I have even called myself the Anti Cramer, at times. (The Anti Cramer first appeared in the late 2000s)

But Jim and I are in solid agreement on the subject of his opening missive this morning (see above).

There is always a bull market somewhere and I believe we also agree on where that bull market might be found over the next few years - the FANG stocks.

I recently used the weakness in the shares of Alphabet (GOOGL) , Amazon (AMZN) and Facebook FB  , and moved to large-sized.

Thesis:

1. Facebook Hits $200/share But Its No Surprise To Us!

2. Amazon May Hit $3,000 by 2021 and Surpass $5,000 by 2025

3 . Google's Web Dominance

I have written volumes on these three very different stocks but to distill the attraction to a few bullet points:

* FB, AMZN and GOOGL have first mover advantage and critical mass (that is now impossible to replicate). The size of these companies, in particular, today preclude bona fide competition.
* The existential threat of regulation has virtually come and gone. Sure there will be fines and imposition of more costs (especially in a Democratic administration in 2021) but, if anything, their moats have grown deeper and more impenetrable as the years have gone by and the companies dominant control. Moreover, regulation would not enure to their competitors, their size are so small that it would virtually obliterate them.
* FB is the past and future of social media.
* Amazon is the past and future of consumer purchasing trends.
* Google (last week's Trade of the Week) is the past and future of search (and other functionalities).
* All three companies have limited Chinese involvement.
* In a backdrop of extended subpar global economic growth, FB, GOOGL and AMZN can profitably shine.


Lessons I Have Learned From Jim Cramer

"I mean, I'm not smarter than the market, but I can recognize a good tape and a bad tape. I recognize when it's right and when it's wrong and that's what my strength is."

- Jim "El Capitan" Cramer

This concept of a bull market somewhere today brings me back to a column I wrote about Jim more than two years ago. It delivers a number of solid reasons why I believe attention should routinely be paid to his views:

Every day I jot down on yellow legal paper a list of ideas and subjects that I think will be interesting to our subscribers and that I can add value to -- topics for future opening missives in my Diary.

Each morning, at around 4:45, I think about what I will write as the subject of my opener for the day.

I typically contemplate the prior day's market action and the overnight price changes in the major asset classes and regional markets around the world and I try to come up with something relevant, topical and actionable.

Something on my list, for many moons, is the subject of the lessons I have learned from Jim "El Capitan" Cramer.

Over the years I have written about the contributions that Jim has made and I have defended Jim as well against the wrong-footed criticism that he often faces in his role as a high-profile and visible public figure.

My defense of Jim is not done because I essentially have worked for him over the last two decades. Rather, it is heartfelt and done in the recognition of the contributions that Jim has made since he invented and founded TheStreet. I do this in large part because Jim has been my professor, an important contributor to my investment experience.

I have learned monumentally from his input to the right of my Diary. I read every single word he publishes, sometimes twice.

Stated simply I have never in my life, and that's over four decades of investment experience, met someone like Jim who has such an immense reservoir of investment knowledge and who possesses the sort of insight into the markets that he has.

To be honest and direct, I have met and befriended many investment legends, but Jimmy is unique in many aspects. His ability to distill the rhythm of the markets into a few understandable bullet points, his general and specific insights, his keen sense of finding and adopting market leaders and explaining the rationale is unprecedented and borderline miraculous, and his understanding of the market's subtleties are delivered in a succinct and well-articulated manner.

And, unlike the many, there is a strong sense of honesty and integrity in his writings. When he is wrong, he admits it, and when he doesn't know, he writes that, too.

Jim is the supreme educator of all things investment-wise.

Importantly, Jim recognizes that the path to investment success is not made with phony promises and superficial analysis. The road to lasting wealth is a road to be travelled carefully, with thought and analysis.

I often criticize talking heads and commentators in the business media as managers of memorized bullet points. At the core, however, their knowledge is typically miles wide but only inches deep. Their investment advice is too often uninformed and reckless. And typically there is little follow-up, especially from the "carpet sweepers" who sweep their investment boners under the rug, never to be heard from again.

By contrast, Jim's three-and-a-half decades of investment experience -- including a lengthy period of managing a hedge fund that delivered substantial excess returns -- is coupled not only with insights but from many hundreds of direct interviews in which El Capitan goes belly to belly with company executives. In those interviews, mostly on "Mad Money," Jim distills complicated issues that every company faces into concise questions that provide us with answers that often illuminate our understanding of specific investments.

He constantly follows up, on the winners and losers.

As our mutual pal Byron Wien has stated, "Disasters have a way of not happening."

As Jim constantly has emphasized, the preponderance of days, weeks, months and years is for the gravitational pull of markets to move stocks higher.

Despite my protestations, 2017 has been a year of market progress. My fixations on President Trump (his inability to pass legislation and his dysfunctional administration), the economic message I interpreted from the bond market, my valuations concerns, the possibility of a number of adverse economic/market outcomes and so forth have been wrong-footed. I should have listened to Jim more this year -- and for the last 20 years!. Like Jim, I should have played the odds, as stocks, over time, have a gravitational pull higher.

Today's missive is long overdue.

In this opener I discuss some of the many lessons I have learned over the last two decades gleaning over to the content to the right, in Jim's columns. Among them:

* Always worry, but keep the worrying in context. Sometimes you can be too skeptical.

* In other words, optimism "trumps" pessimism in most markets. Rather than looking at potential headwinds and adverse outcomes, I should have been more upbeat.

* Spend time searching for superior company investments as the micro is often more important than the macro.

* Being long is inherently a better bet than being short, as one can make "only" 100% on a perfect short but one can make an infinite amount of money on a perfect long.

* A large portion of one's time should be dedicated in isolating the one to two sectors that possess market leadership potential.

* Develop important investment themes and do not be afraid to participate in those themes regardless of your overall investment views.

* Delivering superior investment returns is critically dependent upon finding companies and sectors that will beat consensus expectations.

* Active management is far superior to passive investment management.

* When wrong, respond quickly.

* An important ingredient to good stock selection is one-to-one, belly-to-belly contact with company managements.

* But a blind acceptance of management's optimism is unacceptable. Move further. Talk to customer and competitors.

* Organic growth is more valuable than cost cutting.

* Stocks move in groups.

* The first double usually leads to a triple. Let your profits run.

* If a stock goes down on great news, sell it.

* No stocks are too cheap to sell.

* Don't violate your cost basis.

* "Breaking up is easy to do."

* Don't make investment decisions solely based on government releases.

* Pay little attention to buy and sell decisions of large, high-profile hedge-hoggers and other "big-time investors."

* Don't be fooled by contract wins; they are exciting but seldom move the needle.

* Relative valuations seldom justify a purchase.

* If the fundamentals change, just exit. Cut your losses when the thesis changes.

* Insider buying is not a reason to buy; clusters of buying deserve attention.

* Identify big-picture themes, as the right thesis can be a gold mine and can transcend the macro concerns and headwinds.

* Stock leaders, more often than not, overshoot.

* Typically buying the best of breed is the preferable alternative.

* New age means investment leaders means superior investment performance.

* Determine what matters, what doesn't and what we should care about.

* Listen to conference calls.

* Try to take advantage of confusion.

* Be worried about sharp market declines -- it's not the time to be calm.

* Check your emotions at the door.

* Stick with your convictions.

* Change with the times.

* There is usually a reason why stocks are underperforming, especially for an extended period of time. Always and continuously test your investment thesis.

* Above all, do your homework; there is no substitute for research and there are no shortcuts.

Frankly, I could go on and on, for pages. I have just touched the surface of what I have learned from Jimmy over the last two decades, but I think you get the point by now.

Jim "El Capitan" Cramer is an investment treasure and unique resource from whom we all can learn.

Bottom Line

A Bull Market in FANG seems a high possibility event over the next few years.
I would (and do!) own FB, AMZN and GOOGL - and in sizable amounts.
To both Jim and I, There Is Always a Bull Market Somewhere - and that somewhere can likely be found in some of the FANG constituents (despite varying market views).

* Numerous problems are weighing on stocks overnight
* But the biggest problem remains that "The Fed Is Pushing on a String"
(please read this riposte again below)
* The last few times the Fed started cutting rates was right before recessions and large stock market declines
* It's different this time as we start an easing cycle from very low yields with untenable U.S. debt loads, a lack of G8 cooperation, undisciplined fiscal policy and unprecedented animus between the two political parties in the U.S.

"Workin' on our night moves
Trying to lose the awkward teenage blues
Workin' on out night moves
In the summertime
And oh the wonder
Felt the lightning
And we waited on the thunder
Waited on the thunder."
- Bob Seger, "Night Moves"

S&P futures were higher most of the night only to take a dive in the wee early morning hours.

Futures at this writing were down 10 handles after being up 9 handles earlier. 

Here is what I see: 

* A Technical Breakdown in Our Markets - Again it looks like the topping process that started in January 2018 continues.
* A Further Breakdown in Global Interest Rates and the possible negative impact on the transmission of credit.
* Germany's Weakening Economy and Markets (Overnight Germany's ZEW August Investor Expectations came in at a horrible -44.1 compared to estimates of -28)
* More Signs of a Weakening Chinese Economy - The engine of global economic growth is sputtering.
* More Hardline Talking From Peter Navarro and the Trump Administration on China Trade
* Hong Kong, where all airline departures have been halted
* Argentina's financial crisis - Its stock exchange suffered the second worst (down 36%) daily regional decline in history
* Expanded Concerns Over Repayment of Over $17 Trillion of Dollar-Denominated Debt
* Growing Recognition that the Fed Is Pushing on a String (a constant refrain of mine) and so is the European Central Bank, as seen in a wobbly European banking industry. 

Of all these concerns I remain most concerned that The Fed Is Pushing on a String. As expressed in my early June column this issue will be among the main issues facing investors over the next one to two years. It is not market-friendly and it is valuation- depressing. 

To repeat: 

You don't go long the first rate cut, you go long on the last one."
- David Rosenberg, Gluskin Sheff

(For some time), market participants have responded positively to Fed Chairman Powell's more dovish utterings since December - The Powell Pivot II!

Despite trade disputes on increasing fronts and more signs of weakening economic growth (global manufacturing PMI is at a seven year low and the three year U.S. counterpart is at a three year low with backlogs and vendor performance weak) - that euphoria has been even more celebrated in the last two trading days.

Back in November, 2018, in my 15 Surprises for 2019, I predicted that the Fed would pause this year and would cut rates in 3Q2019, leading to more QE in 2020.

This Surprise seems likely as the current 50 basis point (plus) inversion between the Fed Funds rate and the two year Treasury note always has led to rate cuts over time.

Though the market's expectations (in only six or seven months) has moved from three rate hikes to three rate reductions, to this observer the market and economic enthusiasm are unjustified for the following reasons:

* Interest rates already start from a near historic low.

* Lower interest rates won't solve the problem of a massive U.S. debt burden.

* The economic expansion is now long in the tooth, celebrating its 10th anniversary this month. The last similarly long expansion (believed to have been a "new paradigm", ended abruptly as a result of the lagged impact of tightening.

* While large debt loads will be aided by lower short term credit costs (by lowering debt service), many companies (and municipalities) have already refinanced.

* The headwinds facing the housing market is not low mortgage rates - it is lack of affordability and changing demographic trends.

* Lower interest rates (from here) adversely impact the engine of credit creation - commercial banks. With lower interest rates, deposit growth has slowed - that's the lifeblood to a healthy banking industry. Banks, even in the face of Fed fund cuts, will be even slower that usual to pass on lower lending rates (credit cards, mortgages, etc.).

* Market rates have already captured the expectation of more Fed Fund cuts. It is quite possible that even three Fed funds reductions will result in an increase in long bond rates.

* Taking into account the nine Fed tightenings and QT - rates have been raised by nearly 350 basis points in this cycle. Over history, such a tightening has invariably produced a recession with a six to 18 month lag.

* Credit quality is weakening. According to Moody's, covenant protection on loans and bonds is the poorest in history. This will not change with lower interest rates.

* Historically, stocks have performed poorly into the early stages of a cutting cycle.

* The lack of coordination between G8 countries is unprecedented - and despite Fed fund cuts more trade rifts may raise inflation and inflationary expectations. Trade conflicts create a roadblock of uncertainty - impeding consumer and business sentiment and spending (regardless of the trend of interest rates). A reversal of globalization (coupled with adverse demographic trends) support a secular slowing in global economic growth.

* The lack of fiscal discipline (by both Republicans and Democrats) is unparalleled.There is a national debt time bomb that is gaining in potency daily.

* Rising geopolitical risks (notably in North Korea and Iran) are also unique to this cycle.

* The animus between the parties will delay a much needed infrastructure program or any other fiscal stimulation, for that matter. Again, unique in this cycle.

* Disruptive technology's role in lowering prices and knee capping industries will be unaffected by lower interest rates.

* Brexit, unique in the face of a rate cutting cycle, may not be smooth (and will likely be disruptive and economic growth unfriendly).

Bottom Line

Governor Eccles: "Under present circumstances there is very little, if anything, that can be done."

Congressman T. Alan Goldsborough: "You mean you cannot push a string."

Governor Eccles: "That is a good way to put it, one cannot push a string. We are in the depths of a depression and..., beyond creating an easy money situation through reduction of discount rates and through the creation of excess reserves, there is very little, if anything that the reserve organization can do toward bringing about recovery."

- House Committee on Banking and Currency (in 1935)

Pushing on a string is a metaphor for the limits of monetary policy and the impotence of central banks.

Monetary policy sometimes only works in one direction because businesses and household cannot be forced to spend if they do not want to. Increasing the monetary base and banks' reserves will not stimulate an economy if banks think it is too risky to lend and the private sector wants to save more because of economic uncertainty.

This cycle is much different than previous cycles as there are a host of anomalous conditions that will work against the likely rate cuts that lie ahead.

What has occurred in the last decade?

* $4 trillion of QE

* $4 trillion of corporate debt piled up

* $4 trillion of corporate buybacks

* A Potemkin-like expansion in earnings per share as the share count drops to a two decade low.

Meanwhile, capital spending has failed to revive (leading to negative productivity growth).

And, as a three decade low in birth rates and fertility are combined with restrictive immigration policies around the world, labor force growth has dropped to about only 0.5%/year - and with it has been accompanied by a secular reduction in the prospects for global GDP .

While this is not a short term call for an imminent drop in the equity market, if my concerns are prescient and fully realized we will likely see more than the process of a market making a broad and important top.

Rather, we will probably see a sustained Bear Market.

The Fed is pushing on a string.