Stocks ride earnings wave of mostly upbeat results
BY DR.Benevolence
Will the current bounce last? Will analysts keep setting the bar low to help stocks rise? beating bad numbers remain the game by which stocks are priced? The future level of stock market indices cannot be predicted because the calculations that will go into future market manipulations are yet unmade.
George Soros is largely correct in postulating that market action can stimulate changes in economic fundamentals. If markets could not be manipulated by mega-interests, then the April 1994 Soros speech at M.I.T. would be without meaning. As Soros explained, the world economy is a real-time laboratory to see how far markets can be pushed out of equilibrium, and how state economies respond to changes in market direction.
The gods of the mega-interests constantly study economic indicators and the actions of players, publics and resource managers. They evaluate how preferred fraternities are positioned relative to other populations. Then, they decide where and when to puff up prices or drain them down through mechanisms as simple as patterned responses to earnings in relationship to analyst estimates – a matter hinted at in the Gibson article.
Mega-elites are willing to sacrifice the financial interests of lesser members of preferred fraternities if it advances their game plans. Likewise, they’re willing to take temporary losses, if, in the process, their opponents and competitors are made to suffer relatively larger competitive impairments. It is a game about relative wins, not absolute gains. Hence, prediction of where the stock market is headed is futile because the market will buck and heave in whatever ways it serves those who have long made capital markets their religion.
There is a lot of market activity that is a random walk, even as a good deal of market action reflects the constant winnowing efforts of the mega-program traders that rely heavily upon propriety computerized trading systems. The random aspects of market activity and the irregular mixing of that activity into longer-term price movements serve to conceal the designed in purpose of financial market architecture; namely, to draw off through speculative maneuvers the productive wealth generated by the broad middle class.
Outsiders making market projections should offer them subject to revision, since market action reflects the ever-adapting tactics of mega-interests. A month ago I suggested a clear possibility that equity markets could retrace 50% of their decline during the next 12-18 months. I am now reinforcing that observation and suggesting that market indices may recover (on a temporal basis) at least 60% of their decline from their 2007 tops.
A rebound of more than 50% will produce shock and awe worldwide, triggering an upswing in economic conditions that is currently not priced in. The market beast will awaken from its deadly wound: The world will wonder and worship. The gods of money, peace and safety will be praised. Worshipers of fast money will run back to the Ponzi designs that they criticized only months before. Arrogance will again replace hope. But someday the world will reap the whirlwind it has sown, with a lot of bones left to bleach in the wilderness.
I am no market cheerleader, no neocon, and certainly not someone with a vested interest in seeing new speculative bubbles. I am deeply concerned about pushing a rebound that is founded upon the governmental mismanagement of financial resources, widespread injustice, an unsustainable economic model, an elitist preferentialism that rewards moral hazard, and a regulatory environment without scrupled propriety. Granted, there are dozens of reforms underway that are warranted. But they serve to patch up a financial system that is nefariously unjust and unwholesome.
Granted, in many ways the world is better than ever before – in someway immeasurably better. There is laudable goodness, fairness and decency in many quarters. But tragically this progress on countless fronts is undermined by intractable evils in matters of high finance and politics.
Rising stock market indices should not be equated with a rosy economic outlook. To the contrary, the prices of equities often move in opposition to underlying fundamentals. In some cases prices move in opposition to performance expectations six to twelve months out — in total contradiction to received market wisdom. There are various reasons for these phenomena, not the least of which is the perception that key players in the casino have decided to play their hands in contrarian fashion against received wisdom. Hence, copycat money chases contrarian money and creates a self-fulfilling prophecy. Since profits for mega-powers are maximized when large numbers of rational players have to capitulate, the goal of manipulators is often to make markets proceed in irrationality beyond what risk management can tolerate.
There are thinking people who are quite certain that markets will collapse from here, either to retest recent lows (technical chartists) or to reflect evolving fundamentals. If these people over-extend themselves, their positions will be attacked. They will short mini-tops only to find that they are selling into bottomless pools of bidding. When they seek to cover, market makers will show no mercy as prices rachet higher. The repeated attempts of some groups to short stocks is enough to drive this market much higher, as it did in the NASDAQ market in 1998-2000. Granted, we WILL retest market lows before going much higher IF that is where the craftiest cabals find the most alluring opportunities to exploit public vulnerabilities or stimulate coveted political concessions.
The general public needs to be aware that short covering could produce such upward market momentum as to trigger a BUYING PANIC as people rush in from the sidelines. A buying panic in the mutual fund universe could produce a super-spike in market prices — a disequilibrium — that would in turn lead to the demise of the spike. In this scenario, money would flow out of safe havens, especially treasuries. The resultant environment could make it very difficult for the U.S. government to continue funding an economic recovery, leading to a reverse panic and an opposite disequilibrium. Since a good deal of program trading nowadays is based upon trend following systems, the swings could be rapid, diminishing the utility of policy adjustments.
Readers should remember that unforeseen events may occur that cause mega-interests and hedge funds to reverse their positions again, just as they did in March 2009 (going from short to long). Hence, a keen eye on developing circumstances is needed, along with mental flexibility.
Is this not a reprehensible way to run capital markets? Why structure economies so that mega-elites, manipulators, fraternal insiders, and advantaged speculators disproportionately gain the world’s capital and control of key organizations? Why not reward honorable merit instead? Scientific accomplishment? Labors for the public good?
It is time that “America the Great” properly identifies a wide set of financial improprieties, criminalizes exploitative acts, then punishes this evil in the same ways that burglary, rape and murder are punished. Why should heinous acts go unpunished because they are “financial” rather than physical? Why should people get escape justice because they attended an Ivy League school rather than a community college? There should be one justice for all.
We ought to create a new humanitarian capitalism that rewards honorable merit rather than gamesmanship, ruthlessness, deception, exploitation, and fraternally protected incompetence. Decent people must unite across ideology, race, religion, geography and social class. If we do not act with timely prudence, the days will come when the laws of this land no longer tolerate a public uprising against corrupt masters. People who see and care must make larger commitments to organize for political and institutional redress.
BY JAN Paul
The Dr. said
Likewise, they’re willing to take temporary losses, if, in the process, their opponents and competitors are made to suffer relatively larger competitive impairments. It is a game about relative wins, not absolute gains.
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This is 100% true. The people who are manipulating markets, the currency, global financial institutions, etc. have no loyalty to any nation (they live in several and have homes in several they move to when the mood suits them or things get hot where one of the homes are).
They have no party affiliation and use political parties from far left to far right and all in between to reach their goals. They will sacrifice any nation, currency or person if it advances their goal of being able to control all governments through the money supply system.
The will destroy investors if they are out of touch with what is going on. They will also enrich investors if they are in touch with the goals of those pulling the strings, though they have no actual interest in those investors, only their own goals.
Now with modern communication, institutions like Goldman Sachs can work the Tokyo market in the evening and the Dubai and Europe markets in the night and ours during the day, non-stop. They buy and sell options in the hundreds of millions. They hold thousands of short or long positions in several markets to move those markets.
As the Dr. points, out, if it serves them, they will even take a loss because chances are, they have planned for that loss and are covering it in other ways that will profit when that sector the loss is in, goes down. That is another advantage of having inside information on what governments and central banks are going to do. Since the system is rigged to where those who can benefit from the inside information are also those giving the advice to the banks and governments, it is almost impossible for them not to know what will happen.
That is why the Federal Reserve Act was written the way it was so that the FED would be a private corporation “owned” by the member banks in each district who would also elect 6 of the 9 FED board members in each district while the appointments by our government only select 3 of the 9. Thus, any instruction going to the FED is automatically going to the main member banks that “own” the FED. So, even without corruption and unethical transfers of information, which also exist, they will know most of the time how to profit from upcoming FED and government decisions before anyone else. Then they can start in Tokyo and move around the world in markets taking advantage of what they know.
Quote:
OPEC and 13 Asian countries may call for measures to curb speculation in crude oil to prevent a surge in prices once the global economy recovers from the worst recession since World War II.
Ministers participating in an energy roundtable in Tokyo may seek increased oversight of over-the-counter trades in oil and its derivatives, according to a draft of a statement to be released by the chairmen after today’s meeting, a copy of which was obtained by Bloomberg News. The document, which may change, calls for limits on speculative positions in oil futures.
“The oil market needs transparent trading in an orderly manner,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “Calls for reinforcement of trade regulations won’t stop.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaKVbdK5PsrA&refer=home
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This oil market is especially good for making money if you know ahead of time what the dollar is going to do and thus, knowing ahead of the market what the FED and governments will do that will impact the value of the dollar creates huge profit opportunities in both up and down markets.
The markets have become major tools for the international banking cartel (central banks, not regular banks, except a few key ones tied to central banking) to move the world to a global financial system and all that the Dr. is pointing out, serves them in reaching their goals even if at some times it appears to cost them a loss in a sector.
http://bit.ly/htI03
