Thursday, July 3, 2014

The Hilarious Fed

Fed Chair Yellen spoke a few days ago and I have been laughing ever since. Ms. Yellen commented on the state of investing and cautioned investors against getting too complacent. She opined that investors were not respecting risk like they should. 

Yeah, I know. Readers probably need a moment or two to compose themselves after a hearty belly laugh. Me too. The Chairperson of the Federal Reserve Bank thinks we are discounting risk of asset price declines too much. Seriously? I guess she is serious. This is like Santa Claus cautioning against children becoming too expectant of receiving toys on Christmas morning. Of course, if Santa didn’t show up every Christmas Eve night and deliver toys to children they would not be so expectant of the gifts. And so, if the Federal Reserve Bank wouldn’t show up every single day of the week at 10am to boost stock prices higher we investors wouldn’t be so ebullient about ever ascending prices. Risk? There isn’t any. Why should any of us even give risk a thought? Stock prices are not only headed higher, but they are headed to the very top of the bubble that the Fed has once again blown.

Should the Dow Jones Industrial Average drop 100 points at the open of trading on any given morning, we all know beyond a shadow of a doubt that the Fed Bank would be right there to arrest the selling and turn the frown into a smile as we watch the magic. By noon, the 100 point loss would be turned into a 100 point gain. The PPT would go into action. The Fed’s own POMO would be busier than the ‘global warming’ crowd blaming warmer temperatures for the growing sea ice in the Antarctic. The new US nanny state is home to the nanny stock indices.

For instance, the Fed needed a little ‘good’ news to push the Dow over the 17k mark. And so they got it. Supposedly, the US economy created 288k new jobs. Sure it did. Really. That’s what the Labor Department said. Of course, within the report we can see that half of those jobs came from retail and hotel/leisure. I even read one government propagandist writing that retail jobs average $17 bucks per hour. Really. I read that. Aren’t these the same people that the Obamanistas keep trying to help by raising the $7.25 federal minimum wage? Doesn’t sound like they really need help! And of course, part-time jobs showed an increase as well. But whatever. Who cares about truth? The economy created nearly 300k new jobs and stocks rallied.

On the other hand, had the jobs report matched the first quarter negative GDP and shown that no jobs were created, the Dow would have plunged. No worries. Santa Claus would have been there to stop the selling and then magically drive the Dow to new heights. Uh, I mean the Fed would have stepped in. And Ms. Yellen wants us all to pay more attention to risk. That’s hilarious!

I have to give Ms. Yellen a shout out since it appears that she may rival the Pelosi in intelligence. As readers know, Ms. Yellen reminds me of the bumbling Aunt Clara character from the old ‘Bewitched’ TV show. So let me help Aunt Clara out in getting investors to respect risk.

Hey Aunt Clara! Put a stop to the current QE program immediately. Then, the next time the Dow has a negative start to a day, tell the PPT to stand down. Send the POMO criminals home. Let the Dow go where we investors think it should go. Allow investors to discover real stock prices. I’ll bet every investor would suddenly respect risk again.

But readers know this isn’t going to happen. In fact, my last shout out to Aunt Clara was obviously heeded. On May 23, I had to holler at Aunt Clara that the Russell 2000 had sunk into bear market territory. No sooner than I had my blog posted, shazaam! The Russell 2000 is no longer in bear territory. Just a scant month later, the RUT has turned positive for the year! Shazaam! Below is a 1-year look at the RUT on a weekly basis. Since Ms. Yellen was given the memo of struggling stock indices in late May, they have all gone straight up. Check out the chart. Notice the blue line. That would be the 28-week EMA. Again, when Aunt Clara sees an index dip below this line, she conjures up a rally. Of course she needs a little help from the criminals on Wall Street and the criminals in the bankster world (you know, the guys that have been fined a $100,000,000,000 dollars so far this year for all of their criminal activity) but since we no longer care anything about the truth, that is not a problem. 

Check out the chart below and have a good chuckle over the holiday weekend!

RUT - 1 year weekly 
Chart courtesy

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. 

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