Everyone Sees The White Swan, No One Sees The Black One.

Let's start with the indisputable facts: the American economy has been destroyed. Look at the GDP, consumer spending, business failures, housing market, personal bankruptcies, etc. That's reality.

Couple that with initial unemployment claims now at 31 Million and you get the picture. You all know that no one, and I mean no one, can repudiate the business cycle so markets should logically be in the tank but they aren't.

In fact, the stock market has just had its best month since the crash of 1987. Why is that, it makes absolutely no economic sense? Easy as pie: The White Swan is called The Fed and it artificially creates money out of nowhere each day and injects it into the Bond Market and companies. Investment and money-centre banks get dough but with strings: they must use the money to purchase stocks of companies in trouble in order to artificially inflate the stock price. And they're doing it, in spades. That's the only reason why the stock market goes up with any regularity. Like I said, you can't get rid of the business cycle but The Fed can monetize its way to putting the final day of reckoning off for God knows how long.

Now, here's the point to this post: no one sees The Black Swan that's out there for all to see. It's called The Fed and it will ultimately crater both the Bond and Stock markets. Plain and simple, you can't do QE To Infinity, Repo Bailouts and everything else forever. You can't create trillions each day and every week and expect it can go on and on. One day, The Fed's Balance Sheet will no longer permit it. Just how many trillions can The Fed accommodate on its off-balance Balance Sheet? And when that day finally comes, The Fed will sink the markets but good.

Don't expect a second leg drop of 40% cause that's Disneyland talking. Prepare yourself for at least a 60% whopper because it's on the way, one hell of a lot sooner than most people think. Even your worst financial nightmare is nothing compared to what's coming. Hold on tight and get the hell out of large-cap and dividend stocks as fast as you can.