Thursday, April 12, 2012

A Manipulated Stock Market That Never Falls*Updated

Boy, I'd sure love to see Glass Steagall suddenly return. With all of the bankers and their counterfeit money out of the market, the Dow would drop at least 6000 points.

Like zombie banks, we have a zombie stock market. So with today's big jobs miss, on top of the eternal upward revisions in unemployment from the predictable BLS each and every week, what happened? What great news is out?

Nothing. Probably half of today's rally was short covering. The shorts, on the heels of a gigantic 5 day bear move, probably stuck a toe in the shallow end of the pool before the bankers threw a toaster in the deep end. The speculation of QE3 by two Fed members was what did it. That's all. Just some talk.

The only thing keeping this market alive is the threat of more quantitative easing. You simply cannot short a market where on any given day- just the threat of QE3 and subsequent huge liquidity injections will cause the shorts to piss their pants and cover.

That and it's an election year.

The holy grail of our American way of life is the stock market- currently on QE3 life support. Unfortunately, there is simply no other place to park any dough and make any kind of return. (with one exception) There isn't a chance in hell that equity invested retirement funds are going to make the 8% that their actuaries are counting on. Other investments are laughable and involve far too much risk for no reward. I rolled my eyes when I saw Idaho's PERSI was up a whopping 1% year to date. That on the heels of the market's big move up in the first quarter. With one quarter left in this year- they'll be lucky to make 2%. Real inflation is north of 7%.

How long can fund managers, both private and public, keep dodging the truth? Not only are funds not going to generate the returns they need for sustainability- but REAL inflation is giving them negative rates of return.

If you have been on the sidelines for the last 5 years, like I've been, you simply can't capitulate now. You would be an idiot to get in here. You've missed the zombie move. You can't short markets because Bernanke has shown his willingness to print and turn the paper over to the member banks. Those huge liquidity injections go straight into equities.

I've never seen anything like this and quite honestly- I have no idea how long the FED can keep this market levitating and on life support with it's quackery. Worse yet, all of those folks holding equities at these levels are going to need buyers to get out and lock in gains.

This will go on until it becomes so transparent and laughable that everybody in the free world, including men in pickup trucks with confederate flags on the rear slider, will have sniffed it out. It takes two parties to complete a transaction. It's pretty hard to sell something when there are no buyers. Good luck with that.

*Sometime after I posted, ZeroHedge posted this. California.

1 comment:

Anonymous said...

"CalSTRS is committed to working with all of our stakeholders to develop a plan ..."

I don't imagine the tax payers were one of the stakeholders, do you?

One of these days the Fed will not be able to hide the true inflation. That's when bond holders will demand higher interest and the game will be over.