Plane companies are fairing poorly right now. Boeing is delaying their new 747. Airlines are cutting back and some are announcing more layoffs. Train companies don't see signs of economic recovery as that include that tidbit in their earnings releases. Automobile companies? Well, you know their story. Ditto. Do you think the market cares? Nah. The stock market senses a rally but that's just because the stock market has had its senses beaten out over the past eight years. It has also been taken over by central bankers who have nothing to offer but money and market rallies. So, we have a rally. Is the central bank a genius for engineering a 'turn around'?
Hardly. The chart below is the DIA ETF and it shows the week's action. Friday was again interesting because Microsoft and Amazon announced poor earnings results and less than stellar guidance. UPS continued to see a weak economy and so did a few train companies. The market sagged on early Friday morning after an ugly futures market overnight. So what. We have the PPT and they were simply not going to let the market, or at least the Dow, fall back below 9000. Who needs earnings anyway. Besides, the PPT has to keep the rally going as we look forward to a record $115 billion in Treasury issuance this coming week. I've said a lot so let's break it down.
The Federal Reserve runs the market now and they don't need earnings and they don't need an economy. Both are just noise. All they need is money and they have a lot of it. To play the con game of 'economic recovery leading to market recovery', they need shills. Enter Goldman Sachs and JP Morgan. Since the Fed gave them their money back from all their real estate Ponzi scheme losses, they assist the Fed in buying up stocks. And, they all make a killing do so. Are they all geniuses? Again, hardly.
One only has to ask where the Fed gets all the money to buy half of the Treasury action while manipulating the markets. Again, notice the volume in the last 20 minutes of Friday afternoon. It picked up significantly and that is not 'normal' for a July Friday. Guess who was buying the rally? Okay, we know the Fed plays the ETFs. We also know they dominate the derivative market. They even admit this. Now, we also know that the preponderance of derivatives and swaps are interest rate oriented. Who knows more about interest rate direction than our very own Fed? How much of the coming $115 billion in Treasuries will they buy and what will be their timing? Insider trading is not genius. Criminal, maybe. But not genius. Of course, they likely call their buddies Goldman, JP, and BofA up beforehand so they can all get in on the action. Hence, all the great earnings reports from the Fed's right hand men. As in the case of BofA, they lost $2.5 billion in credit cards and lending. However, in 'global banking' and 'investment banking' their piles of profits grew to the clouds thus producing a smackdown second quarter that will no doubt result in big bonus checks for the swindlers. Isn't that nice. Two quarters ago they were all headed for bankruptcy. Turn back the hands of time, allow mark to fantasy accounting once again, liar loans, 125% financing through Fannie and Freddie, cook the books, steal from the tax payers, enlist of the help of the dumbest people ever to walk the planet Earth (Congress and the House of Reps - Pelosi, Reid, Dodd, Nit, and Wit), and engage in insider trading and frontrunning and presto! Back to record profitability and executive bonuses! Ain't Americans stupider than a bucket of retarded nails. Who says crime doesn't pay. Hey, enjoy the rally. The Fed sure is. Oh, by the way, the next target to bust up the downtrend on the Dow is 9600 and then 10500. What the heck. We may never even have another down day in the market!!!!!! Rock on, PPT.
5 day, 10 minute bar chart DIA ending 7/24/09
Chart courtesy StockCharts.com