Why the Market Will Collapse Regardless of Rate Hikes

Carried on the back of behemoths such as AAPL, AMZN, BIIB, GILD, & NFLX the markets continue to push new all time highs. Of the major indexes only the Nasdaq Composite is not currently trading at all time highs. However; Have no fear the finish-line is in sight. The momentum is in motion and the Bulls are mere days away from cracking the all-important psychological 5,000# before the engine that is Apple fueled by the gas in the tank of the modern day Biotech bubble ramps this beast into uncharted territory! 
 It is interesting to note that although the index is rapidly approaching nominal highs, in real inflation adjusted terms the index still has a ways to go.

Isn't it funny the difference only a few weeks can make? Inebriated by euphoria of marginal new index highs, the Bulls have already forgotten that just yesterday the street was panicked at the reality that the primary and essentially only economic growth engine of America since the 2008 Financial Collapse is being decimated : That area of course being the Energy Sector, as the entire ideal of the 'Shale Oil Revolution' and American oil independence gets systematically taken down and destroyed. What was viable at $100 oil is now a money incinerator at $49 oil.

I personally am glad that oil is down. Gas is cheaper and I have to pay less money to fill up my car at the pump. Lower energy costs are of benefit to most people. Unfortunately things aren't as simple as that; as this report from the chamber of commerce shows that employment growth  in oil & gas jobs far outpaced all other non-farm jobs since the financial crises.

There have, 'been at least 40,000 announced layoffs in the U.S. and, as Bloomberg recently reported, over 100,000 globally. If oil prices stay low for much longer the U.S. could top 100,000 job losses by the end of the year as companies with exposure to low oil prices cut costs to stay afloat.'-source

Well seeing as how today's oil inventory report confirms that there is still a huge supply glut in oil; I don't see the trend of low priced oil reversing any time soon.
This brings me to the point of why the Federal Reserve will not raise interest rates any time soon. 

We discover from reading the statement that Janet Yellen gave congress today that the fed has not even began considering an increase in rates yet and that they will only consider it if economic and labor market conditions improve.
Well logically knowing that because energy prices are likely to remain suppressed and also knowing that 90% of the economic data coming in for February has missed indicating a rapidly deteriorating economic landscape we can logically conclude that the Fed won't be raising rates any time soon.

Rate hikes would most likely be Bearish for stocks and that is why the Bulls of Wall St. Fear them so much to the point that they hyperfocus on them. However, the lack of rate hikes is not necessarily Bullish for stocks. Because the rest of the world is rabidly debasing their currencies, The U.S.A just by not lowering rates anymore from zero makes the dollar relatively strong compared to many currencies. The strong dollar is a contributing factor to why oil prices have been bludgeoned so strongly and remain suppressed. Unfortunately for the energy sector the dollar is locked in a massive bullish supertrend which is highly unlikely to reverse any time soon. 

You see, Energy is the key to unlocking this entire puzzle. The artificial financial suppression of interest rates has created a global hunt for yield. As a result many investors have been forced into much riskier asset classes than they are accustomed to in a desperate search for returns. Much of the 'recovery' was built upon highly risky Junk Bond issuance's in what was then, the booming shale energy sector. A bunch of these energy companies have been financed by high interest loans. There are many companies who were barely profitable at $100 oil and with oil at $49 will almost assuredly have difficulty paying off the debt. In many cases these companies will quickly find themselves insolvent with oil below $50, see the oil cost curve in my previous post Reversal/Venezuela/Energy not much has changed since that post last December except that oil has dropped even further and Venezuela has gotten even worse...

We can see from the charts that as energy 'stabilized' in a what is beginning to look like a textbook bull trap in a violent downtrend and investors have been soothed by the Fed that low rates are here to stay, the unquenchable thirst for yield is back on with a vengeance as the High-Yield (or Junk as it used to be known as) bond market has bounced with vigor. Energy stocks have also outperformed the commodity as billions of dollars of bottom callers money has flooded into the market .
Using the knowledge gathered from the inventory reports, and unstoppable trends in increasing oil production and dollar strength a logical person can conclude that oil has further to fall. Once oil gives up the previous $43.58 lows I expect the crowded junk bond trade to unwind and floodgates will open once again.
In conclusion just because the market is making marginal new highs in the indexes powered by limited participation, do not fool yourselves into thinking that everything is rosey. The fallout of the energy sector is very real and there is certain to be contagion...