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Thursday, June 27, 2013

Good is Good & Bad is Good: Explaining this week's Market

What a BS trading day Wednesday was..

Where to begin.. Oh, where to begin  ~shakes head..

On Tuesday the market broke a 5 day trading losing streak based on poppycock and pollyanna good news in housing and consumer expectations that was all fluff

On Wednesday, the market continued going upward, this time based on downward revisions that instead of an anemic 2013 1Q growth of 2.4%, it turned out growth was an abysmal 1.8%
And that was celebrated of course by the rats & roaches on Wall Street because it meant the assumption that the QE infinity gravy train could not be tapered now, No Sir (or Ma'am!)

Of course if you think about it objectively, between January and March, the F'ing Fed spent $255 Billion which is over a quarter of a Trillion dollars of your money and got 1.8% growth..

That's not much bang for the buck is it..

And the evil ones rejoiced...
The Big Boys may use the word 'recovery' a million-billion times a day to hoodwink the populace but they know we're not in one, and they absolutely do Not want to see a recovery any time soon...

Recovery = no more QE and that means no more free ride

So before we get into the nitty gritty, the lesson to take is that when when something is 'Good' the market goes 'Up' unless it negatively impacts QE, in which case, what is 'Good' is 'Bad' and market goes down

And when something is 'Bad' its treated as 'Good' unless it has no impact on QE, in which case its kept as 'Bad' and ignored so market can continue to rise...

Got that?  Good..
Back to the specifics...

GDP growth in the US over the 12 month has been 1.6%

That is Pathetic, folks... A slow down compared to 2010 & 11

And that's with the $85 Billion/month ($2million per Second) Fed money spigots running at full release..  Four years of QE and this nation can't even sustain continual +2% growth!

Then again its that money that's a big part of the problem.
Absolutely no incentive for companies to hire people and expand their businesses when they're generating quality profits simply by buying up their own stock dividends with the free money

Another reason is personal consumption dramatically decreased.  Guess that's what happens when wages stay stagnant or decrease while prices go upward and personal credit dries up..

Make it hard to continue buying shit we all don't need with money we truly do not possess..

Guess those 5,000 phone survey participants of the Consumer Confidence Board who mostly said they feel very confident about the economy in June, have it better off than most..
Or they're on drugs.

But hey, at least there's housing, right... that's strong as ever yes?

Americans selling their homes.. Wonderful..  Of course we really don't care if its Americans who are the ones doing the buying, or if its investor-speculators or despicable house-flippers...

As long as the media has some thread to cling to when writing their propaganda..

And yet, it was announced yesterday that mortgage applications collapsed to their lowest level in 19 months!
Specifically, mortgage applications are now down for 7 of the last 8 weeks and have collapsed a stunning 29% over that time. - the biggest overall plunge in 30 months!!

Thank God for the Brazilians, Russians, Indians & Chinese, yes?

They're the ones buying up US real estate-- too cheap to pass up

Get used to it.. the BRIC nations are on the economic rise as we and the rest of Europe & Asia continue sabotaging our economic policies for the greater good of the few.

Hard to plot a course to sustainable economic growth when Captain Ben has steered us into quicksand... The Fed is forced to keep QE ongoing and not simply because of the vile vermin who will purposely crash the market the second it ceases...
 See, the Fed has no choice but to continue buying up mortgage assets, government bonds and other toxic sludge..

 If the Fed were to reduce its purchases of this debt paper, nobody else would buy it.  The reason the Fed buys the quantity it does in the first place ($85 billion-a-month) is that nobody else would touch it at the offered zero interest rates.

The US Treasury and the mortgage bundlers could only sell the stuff if they paid higher interest rates. But the US government would choke to death on higher interest rates because its aggregate debt is so huge...

That's why we can never default on our debts.. its not China or Japan that owns the bulk..  It is us..  Well, the Fed..
The scheduled interest payments are SO gigantic that a one percent increase would destroy even the fantasy of economic equilibrium.

Thus the Fed is trapped into being the buyers of first and last resort.

Think of it like going to an auction house.  Behind the auctioneer are hundreds of items for people to bid..   One time after another, the auctioneer starts bidding at $5... No takers..  So a 'fake' bidder who really works for the auction house steps in, bids the $5, then 'wins'...

The auction bought its own items to save the embarrassment of no one ever bidding...
The Fed works similar when it comes to the purchase of Treasury bonds which is a fancy way of saying the their IOUs by the government for future repayment based on immediate money to run the government and keep the plates spinning.

When you really understand what's going on behind the scenes and how truly fragile and weak this economy is, its utterly frightening...

In a way, we can't blame the ignorant for keeping their heads buried in the sand...

Then again, you bet we can...
Information is knowledge which is power...

Power leads to making the best decisions for you and yours when things ever run amok.

This BS market - it will go up and down and up and down...

And all the dirt-dogs will make their little profit...
But here's the key:

When you see the price of gold begin a genuine and continual rise, then you will know to dump all your stock and hunker down, because it will mean a panic buy; people fleeing for financial safe havens and to use a nautical expression, battening down the hatches

No need to thank us for the forewarning.. Spreading the word about us to others is thanks enough.