What's Driving The Rally?
Well, early in the year we said not to get too comfortable with any assumptions about the direction of the market because the seeds for a rally were building. I'm not sure you'd call this a rally since we are still below February's highs but it has been constructive. I'm far less sanguine than those calling a bear market bottom. Frankly, because I rely on trading and investment models instead of Wall Street hype.
Some of the measurements of credit in the economy have finally started to gain traction. Not a surprise given the government is demanding that banks lend. Not exactly a brilliant strategy. We will suffer for this at some point in the future. Forget about all of the bloviating about what is driving the market. The press is not a source of truth when it comes to why markets move. What we are witnessing now is a classic Wall Street scheme. Because Wall Street has monopoly access to credit, it allows them to front run credit in the economy. In other words, if Wall Street can rally the markets, they will. Not because of reality or fundamentals but because they can. That's the insider's scam. It has nothing to do with the wisdom of Wall Street. Wall Street's wisdom is Ben Bernanke. And Bernanke is now finally pushing on the accelerator with both feet.
Even though banks are still in no man's land, they have rallied very substantially in the last few weeks. Obviously, there was either anticipation of the Fed and Treasury's actions or Wall Street was tipped off. Not terribly surprising given half of Washington used to work on Wall Street or vice versa.
50% of global wealth has been destroyed, national incomes around the globe are imploding and the world now has twice as much debt as it did just a few years ago. So, when the burden of this crisis hits home, reality will set back in. In the mean time, we'll see how far they can push. They are pushing awfully hard awfully fast.
By the way, it's worth repeating something we have written on here for years. There is no demand for capital in the American economy. So, all the Fed is doing is re-igniting the same mess we had before. That is why commodities are screaming. Soon, the economic suffering caused by the Fed's actions will likely create another self-fulfilling prophecy - to slam the door on credit once again. I fear those running for bonds right now are in for a very rude awakening at some future point. Does anyone in Washington have a clue? It sure would be nice if they no longer taught Ponzi economics from this point forward.
By the way, how did you like the specifics of the Geithner plan announced today? Taking from average folk to give to bank executives, bond holders, private equity, hedge funds and the sort surely rises to the level of tyranny. Plus, there's one more minor detail with the plan. It won't work.
Some of the measurements of credit in the economy have finally started to gain traction. Not a surprise given the government is demanding that banks lend. Not exactly a brilliant strategy. We will suffer for this at some point in the future. Forget about all of the bloviating about what is driving the market. The press is not a source of truth when it comes to why markets move. What we are witnessing now is a classic Wall Street scheme. Because Wall Street has monopoly access to credit, it allows them to front run credit in the economy. In other words, if Wall Street can rally the markets, they will. Not because of reality or fundamentals but because they can. That's the insider's scam. It has nothing to do with the wisdom of Wall Street. Wall Street's wisdom is Ben Bernanke. And Bernanke is now finally pushing on the accelerator with both feet.
Even though banks are still in no man's land, they have rallied very substantially in the last few weeks. Obviously, there was either anticipation of the Fed and Treasury's actions or Wall Street was tipped off. Not terribly surprising given half of Washington used to work on Wall Street or vice versa.
50% of global wealth has been destroyed, national incomes around the globe are imploding and the world now has twice as much debt as it did just a few years ago. So, when the burden of this crisis hits home, reality will set back in. In the mean time, we'll see how far they can push. They are pushing awfully hard awfully fast.
By the way, it's worth repeating something we have written on here for years. There is no demand for capital in the American economy. So, all the Fed is doing is re-igniting the same mess we had before. That is why commodities are screaming. Soon, the economic suffering caused by the Fed's actions will likely create another self-fulfilling prophecy - to slam the door on credit once again. I fear those running for bonds right now are in for a very rude awakening at some future point. Does anyone in Washington have a clue? It sure would be nice if they no longer taught Ponzi economics from this point forward.
By the way, how did you like the specifics of the Geithner plan announced today? Taking from average folk to give to bank executives, bond holders, private equity, hedge funds and the sort surely rises to the level of tyranny. Plus, there's one more minor detail with the plan. It won't work.
<< Home