The Stock Market Doesn’t Believe The Fed Chariman
Yesterday, I opened up msn.com and right on the home page there was a picture of crazy Ben Bernanke and a headline “Fed Sees Signs Of Improving Economy.” Of course, this was released just minutes after the FOMC meeting ended.
The funny thing is, directly below that was the market ticker, and all 3 major US indicies were in the toilet. I have a snapshot of the image on my computer at work, and I’m going to post it here in a bit.
The Fed and FOMC are screwing the public
If you’ve never followed Larry Levin, you really should pay attention to what he has to say. This is the message he sent in his Nighly Newsletter from http://secretsoftraders.com this morning:
The market was once again trading in a very tight range this morning…and
it was VERY choppy. A few hours before the FOMC announcement, however, the
S&P was very quiet – waiting in anticipation.In a nutshell, the FOMC said “We’re gonna keep interest rates at zero,
giving mega-banks free money, so that they can more easily rape the public
to earn massive interest and fees. After all, the mega-banks are still in
big trouble even though we’re not going to tell you all the details. These
fees and free/zero interest for the mega-banks are bringing them back to
life, and even though your 401k’s are now 201k’s – we don’t care. The
mega-banks are more important than everything else under the sun.”“Speaking of the importance of the mega-banks, we will continue to monetize
US debt without admitting it of course. How we do it is through the primary
dealers: Government Sachs and the boys buy up all the IOUs and then we, the
Fed, buy it a few days later. Since there is a middle-man holding this new
debt for a few days, we can deny monetizing it and the dolts in Congress
leave us alone.”“Oh, oh – and the massive $18-trillion of loans and guarantees that we have
made will not be stopped any time soon. That would lift the curtain on the
bank asset sheet problems and we can’t have that. And according to our
records and those of the Wall Street Journal, about 50% of the current bank
profits are coming from their trading desks. Since we are guaranteeing
everything under the sun there is no fear of loss and the banks can jam the
market as high as they like. Oh yeah, and the high frequency trading
scandal that is currently being discussed, we’re gonna stop that. Allowing
the mega-banks to cheat and steal billions of dollars from their best
suckers…clients…is OK with us at the Fed so we’re gonna put and end to a
few Congressional outcry’s of manipulation. So what if they’re right; the
mega-banks need the money.“To hell with ‘what’s right’ and legal; we’re the Fed and you can’t stop
us.”
The reason I quoted the entire message is to shine light on an important point. That is:
expert traders and economists (such as Larry Levin and Peter Schiff) are stating that the economic turn and this current market rally are all the result of a game of smoke an mirrors being played by the government, the Fed, and the media.
We’re going to see a huge correction, and it IS comming soon. It’s ok to trade long for now, but do not get carried away. I wouldn’t have any more than 10% of any portfolio commited to long positions at this point. In fact, I think covered calls may be a safe bet for the next 2 or 3 months, as a period of consolidation is likely to occur.
Take care,
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