Friday, December 3, 2010

It's Official: Schizophrenic Stock Market Completely Off Rails, Delusional, Bat Shit Crazy

It was difficult trying to find the most accurate words to describe our crony capitalist and bank owned stock market. In fact, words very often fail. I just drool. I have traded for nearly 30 years. Wild horses could not drag me into this market. I am in awe at what the Bernank has accomplished.

On a day when non farm payrolls missed expectations by a WHOPPING 111,000 (which of course was underestimated but will be revised upward when nobody is looking) I expected to see the Dow crater at least a few hundred points. It was the worst miss in 2.5 years. Thirty straight weeks of mutual fund outflows. Forty three million people using food stamps. Every corporate insider selling stock. And a completely schizophrenic market that knows only one direction. Forget the predictive value of the stock market. There is no housing led recovery, there is certainly no employee led recovery, and there is certainly no export based recovery.

So what is causing this 20 month rally?

One man. The Bernank. The Bernank and his Quantitative Easing program. Six hundred billion and maybe more. This dude is shoveling money at Primary Dealers and they are buying everything in sight. They are monetizing the debt instruments issued months and weeks before in the greatest check kiting Ponzi scheme I have ever seen. All that excess liquidity has nowhere else to go and when this mother blows, I expect quadruple digit losses.

You simply cannot short this market. Because Bernank will make blood come out of your ears. He has single handedly hijacked this market. Put options are downside risk insurance only. Short sellers are future buyers and since they are rarer than a white buffalo, there will be nothing to impede a market implosion.

There is simply nothing to do but watch. And drool.

1 comment:

conservativesonfire said...

And I suppose that all the investment banksters are confident that they are Too Big To Fail. How sweet it is.