By John Shirley

Looks like SuperBen and the League of Extraordinary Bankers are getting their suits on.

Over the last two weeks, I have made the case that another stock Melt-Up is likely following the mini-correction I wrote of in April, which, as I have stated, I believe is now over. Many are now wondering if the big up moves in equities are sustainable. I have stated numerous times that various intermarket trends have acted like a Lehman-like event has ALREADY occurred, and yet there has been no event.

The negative narrative has been shockingly powerful. It has blinded many from understanding that the escalation of commitment by fiscal and monetary authorities in preventing a complete economic collapse means reflation expectations can come back with a vengeance to markets which have acted like a crash has already taken place.

If you were a Martian and looked at bond yields globally, defensive sectors, AAII sentiment surveys, and rhetoric, you would think we are in an epic depression. Yet, we aren’t. Stock resiliency, because of the bear paradox, cannot be denied. And this isn’t about me being a perma-bull as my Summer Crash call of last year proves — the road to destruction can be paved with immense stock rallies ahead, and I am respectful of the madness of crowds in causing irrational up moves when nudged to take risk in a rising inflation expectations environment.

I have talked at length many times about the role of what I call “central bank paranoia” over a 2008 repeat as a reason to be bullish, and with yesterday’s news of potential global coordinated policy action happening once again, I thought it best to revisit the idea.

First, make no mistake about this: QE3 is you and me. Rising stocks are more stimulative than anything central banks can do with yields already at stunning lows. The fear trade got us to a point where return of principal got confused with return of purchasing power. They are NOT one and the same

full article at source:
http://www.marketwatch.com/story/central-bank-paranoia-fuels-melt-up-2012-06-15