Fire!

Will You Get Out in Time? Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Fire! - Investors know the market is extremely overvalued, but don’t care… - The fire in the crowded theater… - The Fed, accidental arsonist… Recommended Link [Special Rebroadcast — VERY Limited Access]( [Read more here...]( You recently MISSED the most important Special Profit Briefing Jim Rickards has ever given. In case you don’t know, Rickards is the one of the media’s biggest “go to” guys for context on global macroeconomic happenings… And how to make money from them. In his new Briefing, he blew the lid off a growing international conflict that’s already costing $6.6 trillion a day. Yes, trillion… Every. Single. Day. More importantly — Jim reveals his proprietary secret for profiting from this massive daily flow of capital. [Watch The Replay Here]( Annapolis, Maryland June 30, 2021 [Brian Maher]Dear Reader, 1: The stock market is deliriously overvalued by history’s standards... 2: Investors fully acknowledge 1... 3: Investors continue to pile into the stock market despite 1. Conclude the gentlemen and ladies of Bespoke Investments: “Investors simultaneously think the market is overvalued but likely to keep climbing.” Natixis Investment Managers adds that wealthier Americans — those with a minimum of $100,000 of investable assets — expect long-term returns of 17.5% above inflation. We are not one whit surprised. It is these Americans who have gained most from Federal Reserve welfare programs. Asset prices as a whole run past 200% of GDP. That is, unsurprisingly, a record. More money has poured into stock funds within the past several months… than the previous 12 years combined. That is correct. More money has poured into the stock market within the past several months than the previous 12 years combined. Impossible — but there you have it. Exuberance This, at a time when valuations are by certain measures the highest in history. That is, investors are paying more and more for each dollar of profit. Mr. Lance Roberts of Real Investment Advice: Investor exuberance is evident from the massive increase of household equity ownership as a percentage of their disposable personal income. The current deviation from the long-term exponential growth trend rivals every previous bubble in history. To repeat Bespoke Investments: “Investors simultaneously think the market is overvalued but likely to keep climbing.” Will it? Keep climbing, that is? The Crowded Theater Imagine the scene: A man is hot to take in a gaudy and popular show. He has read the reviews. He has heard the critical applause. And so he purchases a ticket — an extravagantly overpriced ticket — and squeezes himself into a crowded moving picture house jammed to suffocation. He shoulders his way through the throngs to obtain a choice view of the show. He is aware he has entered a potential slaughterhouse — should a fire sweep through, most will fry. Yet he believes he will spot the spark... he believes he will sniff the smoke... before the ignorant herd that surrounds and envelops him. He believes he will beat the crush. This is what he does not know: Each of his fellow showgoers, each herd member, is equally alert to the hazard. Alas, a carelessly discarded cigarette encounters dry material… and a flame is born... Recommended Link [Before You Put a Penny in the Next Tech Stock, Watch This Video]( [Read more here...]( Everyone’s glued to big tech stories these days. Yet they’ve all missed the biggest of all. Not surprising. No one else is talking about what you’ll see in this video. Even before you put another penny into another tech stock, you'll want to watch this video first. [Click Here For More Details]( Uh-oh Our man strikes out instantly for the exit door, believing he is stealing a march on the unknowing mass. Yet he is confronted at once with a dreadful awareness: He is but one of multitudes sharing the identical strategy… all trusting in their superior sagacity. He discovers he is not a wise owl after all but a bovine steer corralled in a pen. He finds himself jammed and imprisoned within a desperate human stampede clogging the exit. Can you picture the Pacific Ocean jamming itself through a sipping straw? Then you can picture the scene. ‘This Time Is Different’ The evil has spread without check, without mercy. The theater has now become a conflagration of flame. The poor fellow is engulfed… and succumbs to the blazing inferno… one of many hundreds who likewise believed they would beat the crowd out — but could not. Their miscalculation has proven fatal. Substitute the stock market for the theater. Substitute the selloff for the fire. Substitute the showgoer for the investor. Now you have your parallel. Come the inevitable fire and the equally inevitable panic... most investors will fail to gain the exits. This time will not be different, at least by our reckoning. Let us add another character to our fiery tale, the villain of our plot. That villain would be — and is — the Federal Reserve. ‘In the Fed We Trust’ If by unlikely chance fire erupts, the crowd believes the Federal Reserve will douse the thing before an inferno rages. The aforesaid Lance Roberts: “Investors are convinced there is ‘no risk’ in the market because the Fed provided an ‘insurance policy’ against loss.” The Federal Reserve has done nothing to shake the crowd’s faith in its firefighting. To the contrary, the audience considers the past year iron proof of its superior fire suppression abilities. If the greatest economic blaze since the Great Depression cannot raze the theater… what can? The marquee has never glittered brighter, the lines snaking around the corner have never stretched longer, sales have never been stronger. After all — the greatest and grandest show on this or any conceivable Earth airs daily. But that is when our hair goes standing on end. That is when goose bumps pimple our skin. That is when our spine freezes into ice... For that is when the chance of fire is greatest. Recommended Link [Free - Digital Currency Summit 2021]( [Read more here...]( On July 13-15, more than 47 of the world’s top digital currency insiders are gathering for an epic event. Where they will reveal the best investments for the digital currency bull run of 2021. And if you move fast, you can get access for free. [Click Here To Learn More]( What Spark Will Light an Inferno? Again, Mr. Roberts: Irrational exuberance from investors, easy credit with investors taking out personal loans to buy stocks, and risky stocks outperforming. The level of exuberance currently matches previous major market peaks, the only missing ingredient is a catalyst to start the reversal. That is, the only missing ingredient is the spark to kindle the inferno. What will it be? We do not pretend to know the answer. And no one rings a fire bell at the top, before the upheavals. We are only certain the kindling is dry and that fire conditions are ideal. Here Mr. Roberts seizes upon our theatrical example: The biggest problem is that investors are crowded into a theatre with a single exit. When the selling starts, the exit will become very narrow, very fast. We hazard the Federal Reserve’s firefighting will face fresh challenges for which it is unprepared. Accidental Arsonist The general always fights the last war... and the Federal Reserve always fights the last fire. Not only does it fight the last fire — it fans another. It is an accidental arsonist. Once the initial fire is doused, it begins hosing in kerosene somewhere else. The ultimate fire proves a greater inferno than the last. Artificially low interest rates and cheap credit form the accelerant. Example: During the late 1990s, Mr. Alan Greenspan emptied combustible material into the stock market. Fire erupted in technology stocks. Once out, the Maestro seeded a blaze in the housing market… which burst into hellish flames under one decade later. Now scroll the calendar forward... The pandemic ignited a five-alarm financial fire. The Federal Reserve leapt into action with wild abandon, with every asset it could muster — zero interest rates, oceans and oceans of liquidity, etc. The fire is contained. But Mr. Powell and mates have poured in so much liquid, a savage burning appears inevitable. Can they get enough water on the next fire? We are far from convinced they can. We know only — or at least believe strongly — an inferno is but one spark away. Will you make your exit in time? Cheerfully yours, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: As a former advisor to the CIA and the Pentagon… Jim Rickards says the U.S. government is engaged in a [world wide type of “asymmetric” warfare called the Sixth Domain of War.]( Jim has recently blown the lid off this covert, yet rapidly escalating war that’s causing [$6.6 trillion to change hands — every single day.]( But unfairly, this “battleground” has offered little in the way of profit opportunities for everyday folks — until now. Jim has developed a strategy he calls [C.O.B.R.A.]( — a first-of-its-kind chance for retail investors to capture the upside of this massive $6.6 trillion bonanza. Jim says you can tap into this massive, daily flow of money for potentially HUGE profits. But hurry, this bombshell presentation is coming down [tonight at midnight.]( Sorry, the decision’s been made. [Go here for all the critical details while they’re still available.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Brian Maher][Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. 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