Well, we certainly had a dull day yesterday till BB spoke and confirmed what should have been obvious, the easing won't stop anytime soon. The market reacted accordingly, and it appears off we go again. Well, that's what they want you to think. I suggest you take a gander at What Bernanke Really Said, Or How The Chairman Just Lost Control Over Policy Again.
There you will find, "In a simple stroke, the Fed Chairman has undone the work of his communications of last month. The credibility that began to emerge from the June 19th press conference is gone. There is a large segment in the investment community that believes the Chairman cannot exit this policy, and his statement about not letting markets tighten only strengthens their case. The Chairman has returned the markets to the point where he has lost control of monetary policy, again."
Translated, they can't stop easing although they must. They can't let the markets correct or they crash. The taper talk was nothing more than BS. They will ease till infinity or till the system collapses, they have no other option. Bottom line, everything we've been discussing for well over a year.
I've often noted that BB has many times warned congress to stop spending. They can't for many obvious reasons, but mainly they will all lose their jobs once their constituents have their candy taken away. This is not an option. Just look at the hell unleashed by an $84 billion sequester (that was not fully implemented), and they need to cut a trillion to balance the budget!
So what can stop the cycle? Absolutely nothing can take us from the path we are on other than the system failing, which it eventually will. They are damned if they do, and damned if they don't at this point. For years I've discussed the impossible math simply on the budget side of the equation. One trillion in income (and declining) has to support two trillion in spending, $18 trillion in debt and over $120 trillion in unfunded liabilities.
Now is there any possible way they can overcome this hurdle? That involves another STB hot topic, the direct confiscation of the near $20 trillion in retirement savings and possibly every investment and bank account in the country. After all, they are called Federal Reserve Notes. They can be taken back at any time they like. Think Cyprus, and don't laugh at those that deemed it a template. And don't forget the confiscation of gold like in the 30's (cause they surely don't have nay gold left). They are already well into the real estate grab.
Funny thing is is the problems discussed above are minuscule to the quadrillion CDS market that must be supported and perpetuated or literally everything with any value gets evaporated. Shall we also discuss the fractal lending system that has been rehypothecated over and over where the assets being lent are supported by collateral that has been promised 10 or 20 times over?
How about the fact that the US taxpayer, via Fed funding, is keeping the global financial system alive via lending our dollars to keep foreign banks solvent? The IMF and ECB and EU and the BIS all are on the verge of death without our support. Wait, don't we have enough problems here where we should be using our own fiat to support our system? The juggling act they are supporting is truly amazing, but when you can print what's necessary and control rates, that makes their job a bit easier.
Want to skip forward past the bond market, a plethora of other funding and economic issues and get to the real fear point? All those issues above and the many not mentioned pale in comparison to the salvation of world reserve currency status. Now we're deep into what's really important. Without the petro-dollar we're really sunk.
OK - I just briefly (as in very briefly) hit on the issues that exist without going into any real detail, and I left out a plethora of other financial and economic problems that persist. All that and I just skimmed the top. Like details matter at this point. If you need any further explanation you've either been living on another planet, are as ignorant as the other 98% of the nation or live in total denial. Is a solution plausible? Ain't no way and they know it. We're way past the point of no return.
The only solutions at this time involve the unthinkable and range from direct theft (Cyprus) all the way to the horrific possibility of a eugenics event. Remember, no financial crisis of this magnitude in history has not ended without a world war. Is it any wonder why the police state is rapidly expanding, and our constitutional rights are being purged? They are preparing for a grand event. They are using the market's euphoric levels and the MSM to distract us. They are relying on the complacency they have instilled in our beings. Get ready STB readers, the worst is yet to come and it scares the hell out of me.
On to the lie-
As if it matters -
Daily SPX - The high today came within 20 points of the top. That's like nothing for this crowd to over come. My inflection point and second target have come and gone. BB did what he had to to temper the taper issue. Consider that over for now I guess, who knows? Things are so screwy how anyone can get a handle on anything is beyond me. Just look up till something happens. That's about all you can do.
I'm gonna hold off trying to nail down any targets till next week. Given everything I've described this week and last, the hope of a major turn looks rather dire, but there is still one last glimmer of technical hope, the red wedge on the minis that could be overthrowing here. Other than that, and given BB's plan of action, it sure looks like 1700 is a no brainer here. I got you to 1635 and thought if that went down with the 61% retracement on the minis then a higher high would be in store. Here we are and pulling the trigger on that call makes me more ill than anything, cause it means the farce is alive and well. It means that market manipulation is as strong as ever. It means confirmation of our belief they can't let the markets correct even the slightest bit. It means nothing is real and that sucks.
More charts to come below as usual. I'll get a minis chart up in the morning as I'm on the travel computer. Speaking of travel, I have to issue yet another STB travel fail warning for tomorrow afternoon and Friday.
If you have not been reading the comments, you really are missing out on the best part of the blog. the board has been killing it. Other than RC being gone (who did briefly return last night), the conversation has never been better.
Have a good day.
GL and GB!