The QT Pivot And The Long Drawdown Ahead

The casino got itself all bulled-up again yesterday because Mario said he’d keep eurozone interest rate pinned to the 0.0% bound for another 15 months, at least.

Apparently, visions of endless carry trade killings danced in the heads 0f the boys and girls in the fast money lane—-perhaps signified by the Russell 2000 making another all-time high. It is now up 41% from election day 2016 and 365% from the March 2009 low.

So never mind that it traded yesterday at 90X LTM earnings. When you have been buying the dips with such spectacular success for more than 3300 days running, why would you worry about such a trifling matter as a virtually non-existent earnings yield?

^RUT Chart

The truth of the matter, of course, is that this so-called index of America’s main street companies has become an object of pure speculation and is being driven by bullish momentum and nothing more. Another stark reminder of that baleful condition came with this morning’s release of the industrial production index for May.



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