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Testy Tuesday – 50 Ways to Goose the Markets?

Posted on the 07 April 2015 by Phil's Stock World @philstockworld

The problem is solved inside the Fed
She said to me
The answer is easy if you
Pour on the QE
I'd like to help improve your Economy
There must be fifty ways
To goose the markets – Paul Simon

  • You drop all your rates, Jake
  • Centrally plan, Stan
  • Value destroy, Roy
  • Make the money FREE

Well, you get the idea…  

There are so many ways to manipulate the markets, I don't think 50 covers them.  Yesterday morning, with our futures down about 1%, NY Fed President Bill Dudley felt it neccessary to save us by saying he felt the path of rate increases would be "shallow," once again pushing back expectations of Fed tightening and dropping the Dollar 1%, which lifeted the markets 1% back to even.

From there it didn't take much to puch the markets higher since all the players who went short on Friday in the Futures on the TERRIBLE jobs report (and huge downward revisions to previous reports) were forced to cover and, with Europe closed for Easter Monday and the bond markets closed – money LITERALLY had nowhere else to go but US Equities.

“If we raise interest rates and portfolios perform poorly, that’s likely to slow us down.” – Dudley

Wow, I did not know it was in the Federal Reserve's charter to make sure your portfolio is performing well, did you?  Thank God we're in the top 1% investing class and not one of THEM or I'd be pretty pissed about all this meddling on our behalf.  I must say it is very nice to have our own personal Central Bank looking out for our interests…

This is, of course, an indication of how endemic market manipulation has become that one of our own Central Banksters doesn't even feel the need to disguise his motives anymore.  He's there to protect our investments – this has nothing to do with the US economy and everything to do with keeping the top 1% happy. 

And look how happy we are!  As you can see from the chart above, we've taken all but 25.6% of the wealth from the bottom 90% but that will soon be ours as well as we take over the water industry and begin raising those prices.  This will guarantee they have to sell what few possessions they have left to survive and that 25.6% can begin to trickle up to us.  

After that, we can set our sights on our "faithful middlemen," the "top 10%" (less our 1%, of course) that enable us to suck all that cash away from the poor without getting our hands dirty.  Right now they are happy because they have 34.6% of the wealth compared to the bottom 90%'s 25.6% (leaving 39.8% for us, so far) but when the bottom 90% have 12% of the wealth and we have 50% and the top 2-10% have 38%, our loyal toadies will be THRILLED if we leave them just 18% in the next round of market manipulation while we take 70% -because it will still be better than being in the bottom 90%, right?  

So we, in the top 1%, with the help of Dudley and other manipulators whom we have placed in high offices (via our operatives at GS, JPM, etc), can look forward to increasing our wealth almost another 75% before we have to turn on each other in the final battle for supremacy.  Remember, in the end – there can be only one!  

This morning it's Atlanta Fed's Lockhart (from Citibank)'s turn to pump up the markets as he says a June rate hike would be premature due to the recent, weak economic data.   This is, by the way, the same data the MSM is telling you not to worry about.  See, you can have it both ways!   

As John Hussman puts it in his weekly letter (with an excellent example of how the Fed does NOTHING to help the economy):

If the Fed now launches QE, it does so by purchasing Treasury securities from Bessie, and paying for them with newly printed currency or crediting Bessie’s bank account with reserves (base money). Does that inject new purchasing power into the economy? No, it does not. It just changes the form of government liabilities held by the public, from bonds to base money. Is Bessie more likely to consume just because her savings take the form of cash instead of bonds? No – not if she didn’t have spending plans already, and not unless the economy was otherwise constrained by a lack of currency.

"Money doesn’t go “into” the stock market – it goes through it from a buyer to a seller. The resulting price changes are purely changes in the relative value that people place on these pieces of paper, and amount to changes the amount of “paper wealth” in the economy.

"These changes should emphatically be distinguished from the real wealth of the economy, and the underlying stream of cash flows that will be generated over time. The relationship between those two quantities – between the price of the piece of paper and the underlying stream of deliverable long-term cash flows – tells us about valuation and probable long-term investment returns (even if speculative factors play a role in driving paper wealth over the shorter term)."

As VALUE investors, we're not impressed by the PRICE of equities – they have nothing to do with the underlying health of the companies they represent.  That we will discover over the next few weeks of earnings and, if we are wrong to be in cash – that can quickly be rectified.  


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