The Federal Reserve: The only game in town
- Thread starter Tsing Tao
- Start date
logic? foreign equities?
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DAL sector still looks bearish/near 52 week lows- but i'm not long or short that.
FED only game in town ??
LOL The US stock market uptrended 100 years before the FED was formed.
Actually with DAL downtrending for 3 years+; most likely not the DAL bottom. But thats not a prediction.
LUV is run much better than DAL anyway, but its a historic weak sector; good thing for the bulls most companies are run better than DAL...…………………...
It's worth pointing out that when the Nikkei was at ATHs, many companies were trading at PEs of 50x-100x - so that slice in half has merely taken it from insanely overvalued compared to other asset classes/countries (SPX PE was only 15x!) to more or less fairly valued.
I agree that CBs accumulating stocks of assets doesn't do much for the economy in the long run, but in the short run the buying activity sure seems to reduce the length and severity of market selloffs.
IDK what you mean by wrong? If I would be wrong this market would be down 50% similar to the financial crisis. I think betting on stocks to fall is betting against the FED right now. When they start buying ETFs Price discovery will only be possible above the Put Threshold. In the End we will see either a reset or a failed Dollar and thus a new global reserve Currency. I wouldn't dare to speculate what will be once the Dollar is done. In the meantime you might Reverse Google my Avatar/Options God
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So that's it? A major function of the CBs is to keep anyone from feeling a pain when they stub their toe?
Recessions used to be times of "rebalancing"... "healing".... where weakness was cleaned from the markets and strength flourished. (Kind of like draining the pus from an abscess. Now days we never let the pus drain... thus nourishing the infection.)
https://finance.yahoo.com/chart/NQ=...TcGFuIjpudWxsfV0sImN1c3RvbVJhbmdlIjpudWxsfQ==
you want price discover - is this enough discovery my boyz been doing?
like I said I been talking to a bunch of deaf and blind people.... boyz been doing discovery BIG time for several weeks already.... do you think after these 'discoveries', any weak hands are still left in the market?
check AAII sentiment, 3 weeks in a row now, only the hard core holders left around 30% bullish, bears been around 50% or more for 3 straight weeks - do you think you are not the dumb money? think again~!
you want price discover - is this enough discovery my boyz been doing?
like I said I been talking to a bunch of deaf and blind people.... boyz been doing discovery BIG time for several weeks already.... do you think after these 'discoveries', any weak hands are still left in the market?
check AAII sentiment, 3 weeks in a row now, only the hard core holders left around 30% bullish, bears been around 50% or more for 3 straight weeks - do you think you are not the dumb money? think again~!
So that's it? A major function of the CBs is to keep anyone from feeling a pain when they stub their toe?
Recessions used to be times of "rebalancing"... "healing".... where weakness was cleaned from the markets and strength flourished. (Kind of like draining the pus from an abscess. Now days we never let the pus drain... thus nourishing the infection.)
It's actually even worse than that: since the Fed's largesse is selectively made available to the largest incumbent players, it turbo-charges their already extant structural advantages over small business and new market entrants generally. In good times they borrow at rock-bottom to ramp leverage and either buy out or squeeze out smaller competitors, then get outright bailed out in bad times when the risks of such a strategy should come home to roost.
No wonder that every single year new business formation falls, industry concentration grows, and the profitability gap between small and large enterprises rises.
The effects are visible all around us. For instance, ten years ago a commercial area near where I live was probably 60% small landlords / owner-operators and 40% large commercial property companies. Now 80-90% of properties are owned by large corporate outfits, with sky-high purchase prices funded by rock-bottom bank loans or the bond market. Many of the locally owned businesses have been replaced by bank branches or 3D billboards (ie branded chain stores paying drastically overpriced rent) and many others are vacant, so much so that the city has started to impose fines on vacant property. A recession and credit panic that wipes out the highly leveraged corporates and re-sets property values far lower would be a boon to local activity and entrepreneurship, but it's not to be.
the big outfits OWN the government, i mean literally, they fund both of the parties, they have lobbyists, who ever gets elected already is in debt to them.
I appreciate that many of you who are diehard bulls view this as a welcome development. But there is an inherent and gigantic problem in the central bank buying junk. Like, more so than all the other things they put into place to try to prop up what is a sick system, gorged on too much debt.