The Feds announcement today and the stock market's reaction to it signaled to me that reality truly no longer exists. Fair, random walk, DOW theory - you can throw it all out the window. For those that have not been on the manipulation train for the past two years and do not believe in such things, I have a feeling that you will not awaken from your slumber till it is far too late.
What the non-believers see is a rising market and an economy that is "recovering" on most "data" points. What non-believers don't see is reality and that the Fed told them today that all is not well. With the Fed seeing "exceptionally low rates thru 2014" does not sound all that promising does it? "Housing remains depressed" is not good. The Fed reiterating "Significant downside risks" does not sound so hot either. What does ring loudly in the ears of the bulltards is "Fed expects to maintain a 'highly accommodative' monetary policy" and that is all that matters.
The flow of "funds" or "QE" or whatever fiat forces that make it from the Fed to the markets that lift and give the illusion all is well in the markets has blinded (intentionally) the bulltards. The fact that the Fed is monetizing debt at an exponential rate to keep the banks open and the system alive means nothing to the non-believers. They believe that the recovery is real which is the farthest possible position from reality. But the bulltards keep making money and with every tick higher they become more bold in their belief all is well. This is just what "they" want, welcome to the trap.
We now have a government that has to stay open funding its self via not funding its employees pension plan (for the second time in a year), that has not had a budget in almost three years, with an exponentially expanding National Debt close to $15.3 Trillion (your share is now $135,000 and growing every day), running over 100% debt to GDP (Did Obummer bring any of this up last night?), and so things are really not all that well at all are they? What's worse? The $117 TRILLION in unfunded liabilities to social security, medicare and the like (of which you are responsible of $1million - what - Obummer did not mention that either? ) We're so screwed, but the markets don't care (and neither does your government). U.S. National Debt Clock : Real Time
I suggest you read "Tying It All Together" with David Rosenberg | ZeroHedge. Bottom line is the markets are addicted to the fiat hopium and require the injection (or promise or rumor of) in order to react and rise. This is the new reality. "He adds that while many believe last year's extreme volatility was an aberration, he wonders if in fact the opposite is true and that what we saw in 2009-2010 - a double in the S&P 500 from the low to nearby high - was the aberration and market's demands for more and more QE/easing becomes the volatility-inducing swings of dysphoric reality mixed with euphoric money printing salvation. In his words, perhaps the entire three years of angst turned to euphoria turned to angst (and back to euphoria in the first three weeks of 2012?) is the new normal. After all we had angst from 1929 to 1932 then ebullience from 1933 to 1936 and then back to despair in 1937-1938. Without the central banks of the world constantly teasing markets with more and more liquidity, the new baseline normal is dramatically lower than many believe and as such the former's impacts will need to be greater and greater to maintain the mirage of the old normal."
I highly suggest that you (both believers and non-believers) watch this video "US financial economic collapse?!" Max Keiser Gonzalo Lira - YouTube. It is the best On The Edge video I have ever seen and explains so many things. It will walk you through a range of topics from the comparison to the fall of Rome, the current dictatorship, the NDAA, MF Global, bank holidays, hyperinflation and the coming retirement plan confiscation. It sounds just like they have been reading my blog over the past three years. So, is now the time to leave America?
I have to do some chart updates tonight to reaffirm my bearings. Right now I'm thinking this has been more like the run off the Jackson Hole August '10 1040 SPX lows to the QE announcement in November where the markets sold the news (as all called here on STB). The charts are ready to sell. We're thru everything but the EU/Greek mess. What I'm still not certain about is how the market gravitated its interpretation of Fed speak from what was a definitive "QE" to now interpretating 'highly accommodative' monetary policy as sure fire QE.
Taking into account the election year and several other factors, it appears the big fix may be in, which means you can possibly breathe easy (/sarc) till the Iran war later this year or till after the election. My theme has been that it can crash it at any moment or they keep it afloat thru the election then it crashes. That still stands as my "event" (the exogenous one that rips control of everything from the central planners and throws everything into the pit of fire) can happen at any moment.
I need to sort thru my disbelief that all this is really happening and get my head straight before commenting more on the markets or possible scenarios. The Fed's actions today simply confirm that we are even further down the road to total destruction than most imagined. We've been discussing for weeks now that they (the Fed) were scared of something. They were protecting and hiding something.
That something is the debt problem, insolvent banks and an economy that is DOA (not to mention accompanying global issues). The global Ponzi is busted and we're now simply buying time till the end. I had thought that they would manufacture one last major correction in the markets to allow for an easier transition (in appearance only) to a more 'accommodative' stance. Apparently they want the whole enchilada and could not give a flip about appearances anymore.
Today was a big move for the central planners as the markets applauded their arrival with more stimulus and goodies for everyone. The non-believers rejoiced and adjusted their blinders appropriately tighter to keep from seeing the bullshit that is flying past them at mach 10. All they want to see and hear is more stimulus ignoring the fact that this same stimulus will be exactly what brings the most pain down the road. Man is this place screwed up.
GL and GB!