Friday, May 25, 2012

Plunge Protection Team, Plunge Protection Team - Where For Art Thou?

Why on Earth would anyone be buying stocks these days? The European Union is the second largest economic collective in the world and it looks like they are headed for a recession or worse. The Greek debt debacle is alone going to count for a trillion in bank losses when they default. That will be followed by defaults in the other sorry excuses for countries that thought they could live far beyond their means. Eventually, the chickens really do come home to roost. 
China’s economy is slowing a bit and that is a story by itself. China exports of course to the rest of the world so if an export driven economy is slowing, what does that say for the rest of the world? Yes, in spite of the propaganda issued by the US regime, the world is experiencing weak economic conditions. Sure, the US economy and gooberment was captured years ago by the Federal Reserve and sure, the average amuricun is far too ignorant to notice a different master has mounted them and now controls the reigns. Slip an oat sack over their head and these people just keep plowing. Freedom, liberty, dignity, respect, and courage are the last thing on the peoples’ minds. Europeans have awakened to central bank domination and they don’t like it. At least they know something has changed. What can they do about it? The answer is revolution requires the intelligence to recognize dominance and the courage to demand liberty.
This is the message in the world of stock investing. The central banks have seized complete domination over what was once a capitalistic market. The Fed has now exerted so much domination over the investing process as they have determined winners and losers with bailouts for lenders that they have infected investors with a sense of dependence. The Facebook IPO is a perfect example. Facebook is a completely unnecessary web portal that was hyped more than the Super Bowl. Everyone was clamoring to own it and Wall Street investment bankers were more than happy to sell the stock to the suckers. Uh, I mean ‘investors’. The stock immediately took a nose dive in price and the buyers immediately lined up to sue anyone involved for supposedly misleading the public. Excuse me while I fall out of my chair laughing at these fools. What do they think Wall Street does every day? What do they think the US regime does every day? Step right up, one and all. Get a piece of this brand new stock. What? Stocks can actually fall in price? Since when? I thought Ben Bernanke told the world several years ago that the Federal Reserve’s sole function was to support the stock market? I thought he lived to drive the Dow higher? 
Then look what happened when JP Morgan reported $2 billion in derivative losses. Yes, the number will likely balloon because if JP Morgan said anything, it has to be a lie. There, if the Facebook buyers read articles like this they would know all of Wall Street and all of the US regime to be the pathological liars that they are. That’s their job. They cannot tell the truth. Anyway, the FBI has been called in to investigate the bank. When did a public company losing money become a crime? Answer - in the Ben Bernanke era. Do we all think stocks like Facebook should rise in price everyday and companies like JP Morgan can never lose money? After all, this is just one of many banksters that bankrupted themselves a few years ago trading derivatives. They just aren’t that smart. Without a lot of help from the Fed, they could not make it as a business venture.
And so eventually investors get on to the scam. Bernanke’s Fed has been rigging the indices to rise with constant stimulus programs aimed at giving money to stupid bankers and lowering interest rates to record lows. Meanwhile, they have to keep the economic recovery ruse going lest the oafs with oat sacks over their ears might get rowdy. When one of these programs comes to an end, so too does any stock rally. The stimulus ends in June and the stock rally ends in May. Duh? So everybody sold when the calendar turned to the month of May. Not only was stimulus ending, the world economic fabric was fraying. Investors had plenty of reasons to sell stocks. Other than the insidiously ludicrous data put out by the US regime, prudence dictated an exit. 
But we all know what happens when it looks like a stock route might actually reflect economic disintegration. We cry, “Plunge Protection Team - where for art thou?” And like a Jack-in-the-box, out they pop! On Monday of this week, the PPT tried to arrest the stock decline of the previous three weeks with an immediate rally. That was pretty impressive given JP Morgan had just reported major losses and Europe was careening toward destruction. I’m sure the US regime put out some wondrous economic news to spark some buying but even the greediest Facebook buyer would have to admit that it is strange that the US is the only place on the planet Earth where everything is wondrous just because the fellow sleeping in the White House said so. But then the Fed rally faded on Tuesday after another Fed jolt in the morning (that coincided with the scheduled POMO activity). On into Wednesday the Dow plunged. ‘Oh Bernanke, oh Bernanke. Where for art thou?’ Presto! The Dow look poised to fall towards 12500 as the head and shoulders bear pattern suggested it should. But alas, our hero can’t stomach capitalism. Suddenly the Dow changed course and proceeded to gain some 200 points by the close. The PPT goosed the Dow again on Thursday morning but investors were having none of it. Down again until midday. Again, the Dow got a 100-point jolt from someone with a lot of money, no risk of losing that money, and the stupidity it takes to buy stocks when there is so much risk to the downside. Friday continued the meltdown until the final thirty minutes of trading when that same someone no doubt stepped forward to put some lipstick on the growing pig. Or should I say bear. Have a look at the chart below. It tells the story. Without the Fed, there will be no rally. Without the Fed, there will be a bear market. Isn’t that kind of sad? What does it say for us as a people? 

DJIA - 15 minute bars 5/21/12 thru 5/25/12
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. Advisory services offered through BMF Investments, Inc.

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