by Michael McCune –
There is some amazement among Wall Street observers about how well the market is doing in the face of so many stern headwinds. Their continued amazement is either a sign of stupidity or culpability.
These analysts say there can be no major bear market and that the market has a good run left in it despite are a host of problems coming from almost every quarter. But there is one big booster which overrides all the negative factors.
This Administration needs–not desires or wants but needs–a healthy stock market to promote its agenda. Time after time we’ve heard the president point to the market’s rise while patting himself on the back for the programs he has instituted to stop the recession.
The bad news is without the Federal Reserve’s unrestricted printing press program, the market would be stuck below 10,000 yet. But that sea of red ink, which the on-site analysts disregard, is going to be the undoing.
A quote from an article today by Matt Nesto of Breakout on the bear-defying stance of the market says, “Stocks continue to defy logic and widespread expectations for an overdue washout.”
The market is defying two important factors–logic and general expectations–which suggests a factor never seen before in the market is at work. That factor has to be the Federal Reserve.
The deference and reverent awe with which the average market insider clings to every utterance from the Fed is a new phenomena and is far removed from the free marketplace America has always associated with its indexes. It suggests a controlled situation far removed from the norm.
Recently a huge, 100,000-share put contract costing $15 million was placed on the Dow Jones Industrial Average.
As a point of reference, the normal size of this type contract is 500 shares. What this bettor was gambling on–against all odds–is the market will become a vicious bear cutting more than 8,000 points from the DJIA’s current level…BY APRIL 25!!!
This contract was only good for 11 weeks. When the DJIA dropped from its 14,124 point high down to 6300 forming the core of the recession, it took 18 months. That is a remarkable bet. Who has that kind of money?
Two names popped to mind. George Soros and the Federal Reserve. But Soros has never been blatant about his moves until the time was ripe. He has his guy in the White House and he has done this type of currency-wrecking before but it wasn’t known until after the fact. This move was totally unlike him.
So, the Fed is left standing. Why not put in this kind of a contract when you have two things working for you. First, the Fed owns the printing press so all it has to do is run the press a tad faster if it has guessed wrong. Second, unlike most bettors, the Fed controls the game. It is the house. It created this bull.
So when market sycophants like Sam Stovall or Warren Buffet continue to trumpet the benefits of the market overall, beware.
Look at the disregarded logic. Europe is still a cesspool of unresolved debt issues without a meaningful economy to revive its one-money policy so there will be no aid from that quarter. Japan too is mired in debt and has essentially lost the last two decades by spinning economic wheels. The wage average in the United States has flat-lined for the past decade at a time when taxes and necessities’ prices have surged. More than half of all U.S. households cannot even afford a new car.
Yet the market is challenging all-time highs?
The more these analysts rely on “past performances” the stronger is the belief something is missing. These are not the same times as America had between 1946 and 2000. And it starts at the top.
Americans, by every poll, do not believe what their government claims. The amount of disbelief varies but the majority, every time do not believe the public statements and assertions.
When the Rant has provided definitive proof over and over on how numerical numbers are manipulated in Washington even on something as simple as the unemployment figures, how can it be otherwise?
Without that belief, a country established of the people and for the people becomes a pipe-dream. The government assails God-given, Constitutionally-upheld rights daily because they no longer trust the people and try to govern not by logic but on emotion.
But who actually bet against the market, a bet which will devastate the business climate of America? Who is in a position to do so? It has to be someone inside the government with the knowledge and ability to make it happen.
I have lost much faith the past eight years as I can’t tell who my countrymen are. I’ve lost more faith because I can’t tell what our government is or whose side it is on.
“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson
I once again have the honor of addressing the OLDE/VIOLA group this Friday morning, 6:30-8:30, at the Perkins Restaurant, NE of the I-25/Crossroads Blvd. junction at 6020 Stallion in Loveland, CO. I will be covering economic topics with a focus on taxes. I would appreciate seeing you there-Mike