Nothing Can Stop The Mighty Fed Printing Press And Back Room Bookkeepers

The protesting, rioting, and looting was noticeably on the downswing Tuesday night. It could be seen as a sign that cities and states have things under control or just a lull in the overall action. Depending on location, it's likely a little bit of each.

Before the curfews took effect, the Masters of the Universe on Wall Street managed to enrich themselves and shareholders just a little bit more, sending stocks through the proverbial roof, with most of the gains happening in the final half-hour of trading. The Dow, for instance, was up about 100 points at 3:30 pm ET. By the closing bell, it had gained 267 points.

Apparently, there's little to no downside for corporations no matter what happens in the real world. Pandemic? No problem. Print more. Widespread civil unrest? Meh. Print more. Supposedly, a nuclear holocaust would send the major indices to record highs.

What's amazing about the rally since late March is not that it has come with a background of lockdowns, over 100,000 deaths, street protests, rioting, looting, and assorted public dislocation, but that stocks were overvalued even at the low point. First quarter earnings reports were dismal, yet stocks continued their ascent to nosebleed levels that are now more overvalued than almost any time before.

The current CAPE ratio (Robert Shiller's 10-year P/E ratio) stands at 28.96. For purposes of comparison, the same ratio just prior to the 1929 crash was about 30. The figure before the panic of 2008 was around 27.50. Only the dotcom era produced a record high higher than Black Tuesday and the most recent levels, when it peaked at 44.19. For reference, the median CAPE is 15.78.

What we have is a market of zombie corporations controlled by financial manipulators, expert at buying back shares with borrowed money at near-zero interest, limiting the number of shares outstanding to goose the price of the stock higher. Many companies don't really make money anymore. They just play games with the books to make it look like they do.

In the background, other elements of the price-fixing regime that has become Wall Street back rooms, the NY Fed and controllers at Treasury and monolithic banking operations (primary dealers, but mostly JP Morgan Chase) keep gold and silver under wraps on the COMEX, as they did on Tuesday, slapping down the recent runaway rally in precious metals. That's a necessary evil under the control economy because the Fed doesn't like competition for their Federal Reserve (debt) Notes and gold and silver are real money, rather than just currency, like every other sovereign fiat.

Also well under the control mechanism is the price of oil, which is forbidden to fall to prices that comport to affordability for drivers of gas-powered vehicles. There was a brief opportunity to save a little at the pump, but that's now over, with oil pushing toward $40 a barrel. Truth be told, oil is old news. Renewables have taken a serious bite into the overall market share, especially solar, as advancement in solar panels have made self-generated electricity as cheap as what's supplied by fossil fuel plants and in some instances, cheaper.

The price of oil can go to $200, but people with solar installations and hybrid or EVs (electronic vehicles) will barely notice. What they will notice is the slowdown of the outlying economy, which would be crushed under regular unleaded at $6 or $7 a gallon.

There's no stopping this juggernaut monstrosity of a stock market nor the destructive money printing of the Federal Reserve. If and when stocks nosedive again, the Fed will just increase its balance sheet another for or five trillion, loan out money at negative rates and call it a day. By then, there will be no economy, just some cheap, fake import from China masquerading as a market.

Later this morning, ADP will release May private payroll numbers, which will be a disaster and a presage of Friday's non-farm payroll report for May. None of it will matter. Even with unemployment at 20%, stocks will still stroke higher. Welcome to the new world of finance, where nothing matters other than questionable or fraudulent bookkeeping and willful ignorance.

At the close, Tuesday, June 2, 2020:
Dow: 25,742.65, +267.63 (+1.05%)
NASDAQ: 9,608.38, +56.33 (+0.59%)
S&P 500: 3,080.82, +25.09 (+0.82%)
NYSE: 12,046.41, +146.17 (+1.23%)