Thursday, August 23, 2012

Stocks Fall Across the Board as Fed Stimulus Hopes Fade

This is a seriously perverse stock market.

One of the primary reasons stocks took a beating today was that many in the investment community are awakening to the idea that the Federal Reserve isn't going to do another round of QE before the elections because, get this, the economy isn't "bad enough."

That's right, because the economy is just limping along and not falling off a cliff into recession, the Fed is reluctant to enact any bold policy actions, thus putting the proverbial lid on stocks. Besides, with the all-important presidential election upcoming in a little more than two months, the Fed doesn't want to do anything to improve the economy, being that they are so, so, apolitical.

At least that's the story they're trying to sell.

The truth is that the last two rounds of QE were massive money-dumping busts which enriched only the well-connected and already wealthy. Those dwelling in the middle and lower classes of society are still awaiting the over-hyped "trickle down," another canard dreamt up by political and economic hacks who believe to have bamboozled the entire global population in service to their wealthy masters.

It's twisted logic at its very finest, the kind of thinking that only sleazy politicians and interest parasitic bankers could command.

Next, they'll be telling us that raw chicken is fine to eat or that eight percent unemployment is "natural."

In effect, the politicos and central bankers are out of bullets. All they can do now is pile up more debt on what's already outstanding until the whole edifice of corruption and funny money collapses upon itself.

Of course, the rich will be hurt the least, if at all. The middle class will take it standing up, lying down or whichever way the government-controlled media spoon-feeds it to the unsuspecting masses.

Not to worry. When stocks continue their slide into and through Labor Day and Americans wake up one morning and find that they are actually European, or worse, when it comes to national monetary and fiscal policy, we'll all make do with less, because the last twenty years, we'll be told, were a mirage of our own making for spending too much, wanting too much and not paying attention.

At least there's a tiny nugget of truth there. Americans haven't been paying attention for so long, the government is now responsible for nearly half of GDP when one adds in transfer payments (welfare, social security, state and federal pensions, etc.) and the once proud American economy is a shadow of its former self, controlled largely by a handful of corporations which pay little to no tax.

That's OK. The economy isn't "bad enough," right?

Meanwhile, the advance-decline continues bleeding negative and new highs, new lows compress further, advancing toward equilibrium.

Gold and silver were off like rockets. This is rotation from risk assets to hard assets, and it's gathering momentum.

Dow 13,057.46, -115.30 (0.88%)
Nasdaq 3,053.40, -20.27 (0.66%)
S&P 500 1,402.08, -11.41 (0.81%)
NYSE Composite 8,011.44, -62.79 (0.78%)
NYSE Volume 3,019,112,000
Nasdaq Volume 1,392,715,500
Combined NYSE & NASDAQ Advance - Decline: 1743-3759
Combined NYSE & NASDAQ New highs - New lows: 82-47
WTI crude oil: 96.27, -0.99
Gold: 1,672.80, +32.30
Silver: 30.46, +0.90

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