Today's market is is so stuffed with cheap money that it reminds me of a turkey that's about to be served for Thanksgiving.
The dislocations are unprecented. Treasuries are soaring despite the stock rally so far this week:
Meanwhile, the dollar continues it's collapse as the Fed continues to rain money all over the markets:
The USD unsuccessfully tried to rally today after it broke through the critical 78 level like butter on Monday. We now risk breaking back down to the recent November lows of 75.63 which was when the Fed announced their ridiculous QE program.
Folks, if there was any confidence in this rally then bond yields would be soaring right now because the markets would be worrying about inflation and a falling dollar as the economy recovers.
The fact that investors are flocking into bonds despite the above risks tells you that the market is scared ****less. No one that believed in an economic recovery would be in bonds at this point. The inflation risks would simply be too high.
The Bottom Line
The deady combination of Helicopter Ben and high frequency trading robots has turned the markets into a total mess.
"Cheap money" is sloshing all over the system and it's ending up everywhere: Stocks, bonds, and commodities(until recently).
I don't know why anyone would want to touch this cesspool at this point. This is a total frickin speculative DISASTER.
Everything's fine for now as long as the music doesn't stop.
The problem we have here is that history has showed us time and time again that the music always stops when the fundementals are ignored.
Betting "the house" on equities thinking that "the Bernanke" will always have your back is simply foolish.
Bernanke will continue this game as long as he can get away with it. However, since this is unsustainable he will eventually have to stop. It will end in one of two ways: The dollar will crash or the bond market will take yields to the moon.
Like I have said before: THERE IS NO FREE LUNCH!