Wrong Assumptions Lead to Wrong Conclusions

One of the greatest challenges of the current market is to try and discern what is real and what is imaginary.

I am reminded of a quote from Dostoevsky's The Brothers Karamazov:
Yet would you believe it, in the final results I don't accept this world of God's, and, although I know it exists, I don't accept it at all. It's not that I don't accept God, you must understand, it's the world created by Him I don't and cannot accept.

Keep this in mind when viewing the following chart courtesy of Hawaii Trading:

The "Egg of Doom" helps us keep our perspective on the Quantitative Easing program by the Federal Reserve. It shows that what is propped up by artificial stimulants cannot last forever.

The near zero interest rate policy of the Federal Reserve, the central bank that prints the world's reserve currency, creates monstrous, Godzilla sized distortions in valuations of most asset classes.

If the Japanese decide to fund their earthquake reconstruction by selling some portion of the US Treasuries they hold, the results will be predictable - higher US interest rates and lower bond prices.

So for those who doubt, ask yourself what is real.


Or this?