THE LAST WEEK HAS BEEN TOTALLY THEATRICAL... SORT OF "SWEENEY TODD" MEETS "HIGH SCHOOL MUSICAL!"
TO GET THROUGH THE LAST FEW DAYS REQUIRED A TOTAL SUSPENSION OF DISBELIEF...AND A WILLINGNESS TO BELIEVE IN "MAGICAL THINKING."
CONSIDER:
THE COMMODITIES "CRASH" WAS NEEDED AND NECESSARY FROM THE FED'S POINT OF VIEW...AND IT WAS EXECUTED WITH VIGOR...
THE WEAK DOLLAR AND HIGH OIL HAD BECOME THE VILLAIN IN THE OLD STORY LINE BIG TIME.
AND YES, IT WAS PARTLY A "MARKET EVENT"...SUCKER FLEECINGS ARE COMMON WHEN INVESTMENTS BECOME "NO BRAINERS" AS GOLD AND OIL HAD BECOME.
AND THE BIG HEDGE FUNDS WITH THEIR DANGEROUS "GROUP THINK" ARE THE BIGGEST SUCKERS OF THEM ALL...THEY ARE FLEECED REGULARLY BECAUSE OF THEIR BIG POSITIONS IN FAVORITE "MARKET PLAYS"...
AND REMEMBER, WHEN YOU STAMPEDE THESE GIANTS...SERIOUS DAMAGE CAN RESULT. THE BULL IN THE CHINA SHOP TO BE SURE.
INDEED, WE SAW THIS IN GOLD AND OIL THIS WEEK...BIG TIME!
BUT THE REAL PROBLEM WAS THAT THE UNDERLYING NARRATIVE WASN'T RIGHT...
FIRST SOME "GIVENS"...
WE KNOW THE FED HAS BEEN STUFFING WALL STREET WITH CASH...LIKE THERE IS NO TOMORROW... THIS IS VERY INFLATIONARY...BUT THE HOPE IS THAT THE NEW CASH WILL GO TO OUR BELOVED "ASSET INFLATION"...
AND THAT NONE OF THIS "NEW MONEY" WILL "SLOSH" INTO COMMODITIES AS HAPPEN IN THE RECENT PAST...
WELL...MAYBE...SO FAR SO GOOD.
ADDITIONALLY, THE RATE CUT WAS A "DOLLAR NEGATIVE" THAT WAS "MAGICALLY" SPUN INTO A DOLLAR RALLY BASED ON SOME QUESTIONABLE STORY TELLING...
SUPPOSEDLY IT WAS LIKE THIS:
COMMODITIES ARE DECLINING BECAUSE THE GLOBAL ECONOMY IS GOING INTO RECESSION...SO IF COMMODITIES DECLINE THE DOLLAR MUST GO UP! OK...I'LL BITE...
BUT THEN BECAUSE THE DOLLAR WAS UP ON THE BIG COMMODITES SELL OFF...STOCKS SOARED BECAUSE THAT COMMODITY MONEY HAD TO GO SOMEWHERE...
ERGO:
STOCKS WENT UP BECAUSE THE GLOBAL ECONOMY IS IN RECESSION...
AND ARE YOU READY FOR IT...?
GLOBAL RECESSIONS ARE GOOD FOR STOCKS!!
WELL...ANYWAY...THE CURTAIN WILL GO DOWN ON THIS WEEK... AND SOME LOGIC WILL RETURN TO THE MARKETS...
LIKELY THE MACROS WILL KICK IN AGAIN...
A STRUCTURALLY WEAK DOLLAR...WEAK GLOBAL GROWTH...HIGHER NOT LOWER COMMODITIES PRICES TO REFLECT THE DOLLAR, IPSO FACTO... AND LOWER STOCK PRICES TO REFLECT THE FACT THAT THE FED HAS TOTALLY FUCKED UP IT'S MONETARY POLICY.
THIS WEEK THE FED AND WALL STREET ESTABLISHED THEIR "NEW STORY LINE"...
(REMEMBER, I NOTED THAT THE STREET WAS DESPERATE TO GET OUT OF THIS CURRENT "NEWS CYCLE". PERHAPS IT DID THAT THIS WEEK.)
BUT NEXT WEEK THAT "NEW STORY" WILL BE TESTED...
AND PROBABLY FOUND WANTING...UNSUBSTANTIAL AND LIKELY COMPLETELY UNTRUE.
IN THE MEANTIME...
DON'T DRINK THE FED'S KOOL AID!
