Intent on Self-destruction, the Fed and Washington Politicians Should Be Encouraged to Get On With It

Two straight days of losses should have some investors a little concerned that all the money the Federal Reserve is using to prop up markets may not be enough.

Especially frightful is the short term head and shoulders pattern the Dow has printed, raising the possibility for another serious downturn that could leave the Fed outflanked, flummoxed, and low on ammunition.

Considering that the recent move forward off the March lows was anything other than an aberration predicated on the vacuuming up of voluminous amounts of debt by the central bank is just wishful thinking. After all, the entire planet is being ravaged - societally and economically - by a pandemic, the likes of which have not been seen in over 100 years. Stocks should have been sold right into the trash pile. Instead, the past six weeks have primarily demonstrated the Fed's ability to meddle in the natural functions of what used to be a free market. While profits were deteriorating at a manic pace the Fed saw fit to massage market integrity with bubble-gum, candy, and ice cream, looking past the most obvious and painful resolution to overpriced, overvalued equities: a quick crash and revaluation at lower levels, bankruptcies for the least protected or most egregiously offensive, and a sober look at systemic solvency.

Acting more like an overprotective soccer mom than a steward of principled financial policy, the Fed managed the nearly impossible feat of taking an already-overvalued market to even greater levels of investment insanity, throwing ridiculous amounts of capital and liquidity into a hyperventilated landscape on the verge of collapse.

It's high time for the Fed and the president to back away from the punch bowl of fiat fantasy and allow the market to determine for itself where it wishes to go, though the likelihood of that happening are about the same as Dr. Fauci speaking out of only one side of his mouth.

The president wants negative rates and while the Fed protests against the lunacy of capital destruction, they will eventually comply because that's all they know how to do. When all you have is a hammer, everything looks like a screw, so it's a safe bet that when push comes to shove - sending the major indices back into bear market territory where they belong - the Fed will no doubt begin to engage in financial hari kari.

By introducing negative rates, they will have effectively given up all hope for salvation of the capitalist system, punishing investors and savers even more than a zero-interest rate policy has for the past two decades, now insisting that bond holders lose money and currency is flattened under the steamroller of failed radical policy.

It's one thing to want to rescue a company or an industry from default or liquidation, but the folly and sheer egotistical panache of trying to save an entire economic system is on the table and being gorged upon by the inmates at the Federal Reserve. The panicky regional presidents and FOMC governors are about to put on a show for the ages, demonstrating, for anyone interested, how a group of supposedly intelligent men and woman can openly conspire to their own demise. With every shovelful of capital they feed to the market, the deeper they dig their own grave, with ample assistance from Washington politicians intent on not being outdone. Congress will compete with the Fed for lunatics of the century by doing on the fiscal side about what the Fed is doing on the monetary side, abandoning any remnant of financial discipline by exploding the federal budget with deficits wider than the Grand Canyon.

The American public should allow it. In fact, we should cheer on their efforts emphatically from our stay-at-home prisons. Since the public isn't allowed to go to sporting events or concerts, garden shows or lectures, the least they can do is encourage the people who masterminded this economic mishmash to demolish the antiquated, decrepit, malfunctioning miasma of governance, economy, and policy as quickly as possible, because then, a new functioning system can begin to evolve, one that hopefully does not include elected morons and economic theorists of central planning.

As predictable as day turns to night, the old gives way to the new. If those atop the pyramids of power wish to willfully fling themselves from the their perches, they should be allowed and even encouraged to do so.

It will hasten the pain and speed the healing.

At the Close, Wednesday, May 13, 2020:
Dow: 23,247.97, -516.81 (-2.17%)
NASDAQ: 8,863.17, -139.38 (-1.55%)
S&P 500: 2,820.00, -50.12 (-1.75%)
NYSE: 10,829.44, -226.14 (-2.05%)

Is The Global Economy About To Roll Over?

Recent pullbacks in stocks, and, more importantly, their inability to recover, is a sure sign that trouble lies directly ahead for the global elite chieftains of central banks which have dominated economics since the Great Financial Crisis of 2008.

The central banks are not the only culprits when it comes to how poorly economies of countries are engaged, elected and unelected officials in government need at least a share of the blame. Both parties promote endless debt in a finite world, a construct which cannot endue without obvious pitfalls and the troublesome realities of mathematics.

Central banks issue currency as debt. Politicians tax and spend money they don't have. Between the two, the only profiteers are those large enough to engage and/or endanger the system, i.e., very, very rich people and large banking interests, otherwise known as commercial banks, investment banks, insurance companies and ultra-large, multi-national, monopolistic corporations like McDonald's, Wal-Mart, Google, Facebook, the six big oil companies.

Nothing against big companies and very, very rich people, except that they've benefitted from a very, very unlevel playing field of economics which takes - by way of interest, taxes, and various fees - from the common and remits to the oligarchical controllers of said economies.

This world is ending because of inertia and entropy. Individuals and small business cannot keep up with rising taxes, inflating prices the result of increasing interest rates. Credit has skyrocketed near all-time highs in America, and the wallets of those individuals tasked with repayment are thin - as thin as they've been since 1999, the last time incomes kept pace with inflation or the meanderings and maneuverings of the central banks and governments.

The stock market is not a cause of wealth or decline. It is a symptom, and it is breaking down.

It's only a matter of time before the symptom of excessive valuation falls prey to the reality of diminishing returns.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84

At The Close, Wednesday, March 7, 2018:
Dow Jones Industrial Average: 24,801.36, -82.76 (-0.33%)
NASDAQ: 7,396.65, +24.64 (+0.33%)
S&P 500: 2,726.80, -1.32 (-0.05%)
NYSE Composite: 12,707.01, -13.76 (-0.11%)