Tag Archives: federal reserve dishonesty

Stock Market Next Week

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081417

Very little has changed in a week. Notice the green index at the bottom of the chart. Again, prior to an acceleration to the upside, friends of the Fed load up on bullish derivatives ahead of time.  Usually, before the market launches there are multiple articles in the media outlining reasons why doom is just around the corner. This is to draw in short sellers to fuel the advance when the trigger is pulled. Those news stories are missing going into the trading week.  Again friends of the Fed participate in return for advance information. To participate they must make a profit. They will not take any risk.

When they cannot profit even when the Fed helps them they will cut and run. The market will crash. I know this is mostly a repeat of what I have already said.

The market will not drop as a result of supply slowly rising above demand. That kind of drop can be managed and it is often orchestrated as a way to draw in short sellers. If a fast drop occurs, it may continue.  The lack of etf volume is an indication that friends of the Fed are having trouble staying in the black. This has been a long standing feeding frenzy, so they won’t cut and run just because they take a one or two day loss. They will cut and run when they ascertain that there is no more profit to be extracted out of the unaware.

The free money for helping the Fed actually started during the Reagan Administrated and has continued to the present with very little interruption. The central economic planning also started during the Reagan administration and has continued to the present also. It is a testament to the free market philosophy that it has taken this long to destroy the system.  But, it has been destroyed and there will be hell to pay.

Again, the crash can occur on any day but there is only a low probability that it will happen on a given day. The potential consequences are to great to justify holding long positions. The market does look much more vulnerable than it has in a long time. We still cannot rule out the chance that central banks will just start buying outright with newly created unearned money. I am still holding a pile of cash and own just a few bearish 3X etfs. Sorry I can’t be more precise. I know my limitations and that alone has saved my neck more than once.

There is a good chance the European markets will start to tank prior to the U.S. markets. Keep an eye on that.

House of Cards

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house-o-cardsIt takes a long time to build a house of cards. The house of cards collapses at a much faster rate. Since 2011, the market buying has been funded with lies and deception. Efforts to stabilize the market are ongoing. That will continue until panic sets in. It can happen any time.  I have gained a little more confidence that the sell off will continue through mid-October. I have increased my short exposure again to about 40% up from 20%. Be cautious of abrupt short killing bear market rallies. They can be orchestrated of they can happen naturally.

Again, I am the only economist in the world that sees the Federal Reserve policy as totally political. The members are not stellar citizens doing their best to right the economy. Any sane person knows that central economic planning transfers wealth and income only, and guarantees a disastrous outcome. Janet Yellen and her crew have no honest bones in their collective bodies.

The corporate buybacks that supplied orchestrated stock market gains are litterally going to kill the corporations that participated.

When the current round of manipulation began in 2008 and then in 2011, those bear markets were not complete. One of the values of a complete bear market is that a countries assets are very efficiently allocated when it is over. This bear market will probably end at a level lower than was seen in 2009 and certainly lower than what occurred in 2011.  Why? Those bear markets were not complete. Instead, they ended when government started supporting stocks. Reallocate resources is a natural function of falling stock prices. Currently assets are at least as miscalculated as at the top in 2007. This is going to get very bad. It will probably be a mistake to flip long before a considerable amount of time passes.

Folks with stocks in their IRAs will get cleaned out. Most will be unwilling to take penalties and will take bigger losses than they would by paying the penalties and closing the accounts.

These thoughts and opinions are based on sound economic principles on which numbers cannot be attached in the present. That is the nature of free market economics. People cannot be observed behaving in the present in ways that economic principles guarantee that they will. So, most economists ignore these things and look for numbers instead. That is to their disadvantage since the present is where the action is and where the principles apply.