First off, before we get into the discussion of the day, I want to make a quick note about the “Vegas play” that we developed. Back in late October, we told our Insiders club members of a possible way to turn about 19 grand into over a million dollars. We knew the strategy was sound, because we used that very strategy in 2010 – 2011 to do just that. 30K turned into 1.4 million.
While we certainly have a long way to go, and the math isn’t working out exactly as it did in 2011, the results so far have been impressive to say the least. If you only did the first leg of the play, your 19K is now worth north of 80,000. If you did the second leg with us, your 19K is now worth north of 96,000. I know a lot of you Insiders are curious about doing leg 3, and trust me I’m working on the timing of that. Because the math isn’t following exactly as we want, there are a couple things we can do to increase our take Stay tuned, I’ll probably give the yes/no on the move into leg 3 on Friday..
Okay, so the market has been in total ramp up mode since they saved it on Feb. 11th. Nothing has been able to stop it. Not bad economic reports, not missed earnings. It’s taken on a “melt up” attitude of its own.
Yet these are the most dangerous of all markets. In late 1999, the market was soaring virtually every day. It wasn’t uncommon to see a powerhouse of the day like Yahoo, gain 15, 20 dollars a share DAILY. It just kept feeding on itself. But back then the Central banks weren’t nearly as involved in the stock market as they are now and it was fairly easy to call the top, which we did in early 2000.
Same thing with the 06 – 07 run up. We hadn’t had the big financial crash yet, and while central bankers were indeed active in the economy, they hadn’t taken over the stock market. So once again, as we entered 2008, we got very defensive and then went “short”. It worked fine.
But this time it’s different. I know that you should never say “this time it’s different” but it really is. This time the entire world’s central banks have come right out to your face and said they are BUYING STOCKS. Ex central bankers like Greenspan have come out to say that QE was designed to PROP UP THE MARKET. The ex Fed head of the Dallas Fed, Fisher has said on TV that the goal was to support the markets. This is not secret any more, it isn’t conspiracy crap. It’s just fact.
The Swiss National bank holds BILLIONS worth of US stocks. Just last night the futures market was fading pretty badly, and the S&P futures were down over 8 points and gaining steam to the downside. But then like magic, they started to rise and by morning they were green. Why?
Because Goldman Sachs put out a report suggesting that at the end of April, the Bank of Japan is going to have to do more accommodation and they believe they will increase their EQUITY buying to 7 trillion yen. Notice the words folks..equity. That’s shorthand for STOCKS. They are using ETF’s to buy up baskets of stocks.
Do you see why it is so different today? Look, Intel is a massive corporation, with their fingers in everything from PC chips to the “internet of everything”. They just reduced their global outlook for the coming quarters and announced a 12,000 person layoff. Well, 12K people is 11% of their entire global force. If things were as rosy as Obama says they are, would INTC be laying off 12K people? Of course not.
Yet guess what? Intel was GREEN on that release. Yes folks, guiding sales and earnings lower and putting 12K people on the street gets you a HIGHER stock price in 2016. No matter who warns, no matter how low they revise GDP to, no matter how lousy retail sales, no matter how bad the inventory to sales numbers are, we just float higher. Well that’s simply and solely because of Central banks the world over, buying up stocks and stock futures. THAT is what’s different.
There’s a small panel of people that we call the plunge patrol. They were instigated by President Reagan in his term and they are officially called the “Presidents working group on Capital Markets”. This is a team of people who are mandated to “save” the market in the event of something really bad happening. Like a major banking institution going under. Well that crew was in place during the 2000 bubble crash, and even in the subsequent “mini crashes” but their presence was to “save” markets from a big fast fall. You could detect their games almost daily, as “someone” would buy tons of S&P futures anytime the market was about to lose a really important level.
But that’s a far cry from the shenanigans of today. The plunge patrol made sure we didn’t have any 1000 point down days, but they weren’t in there to buy stocks just for the sole purpose of keeping asset prices ever rising as we see today. As I explained in the letter named “job one”; today there are so many derivatives written against stocks as collateral, that the Central banks HAVE to keep assets either flat or rising. If they are in any danger of a big fall, they will buy them with abandon. Otherwise trillions in debt obligations are going to go “poof” very similar to what happened in 2008. They know this.
This market is so completely overdue for a massive 20 – 30% correction it isn’t funny. Yet the CB’s know that a fall of that magnitude could cause a debt collapse in so many multi party derivatives they shudder to imagine it. So they simply make sure the market stays up.
Now you might think that if you’ve got the CB’s of the world acting as a gigantic put option on the market, you might as well go batcrap crazy and go 100% long on margin no less. Yes that sounds wonderful…until something out of the ordinary happens. Consider Japan of the 1980s. We saw something quite similar happen there. Their stock market went from 14,000 all the way to 40,000 on the heels of Central bank silliness, and the public’s desire to believe all was well and getting “weller”. Unfortunately when that bubble burst, their market fell all the way down from 40K to just 9K.
We are in a bubble that makes the 1980’s Japan bubble, the housing bubble and the tech bubble look like kid toys. There’s an estimated 700 trillion worth of derivatives floating around out there, not to mention the debts. Here in the states they tell us we’re 19 trillion in debt. We WISH it were that low. Add in all the junk that isn’t on the balance sheet like Social security and Medicare, etc, and we’re at 90 Trillion. Do you think we can pay 90 trillion? Neither do I . Neither do the Central banks. And thus, they’re frantic to keep the wheels on all this, until they are ready to launch the “reset”, where they usher in SDR’s to serve as the new world reserve, and currencies take their debt cuts.
We are in a period the likes of which NO ONE has ever seen. Negative interest rates? Unheard of for 6K years. Central banks blatantly buying stocks just to keep them up? That was only conspiracy nut talk just 10 years ago. Bank bail in’s? Never seen until recently. Changing your bank deposits, into “unsecured loans” to the banks? Completely new. Pushing to eliminate cash? Never seen before. I could go on and on.
The point being simply this. We’re in uncharted water. They’re doing things never seen before. Maybe they’re all so smart that it all works out. I have my doubts. Take this market melt up with a big grain of salt folks. It isn’t based on fundamentals, earnings or even good drugs. It’s based on CB fraud and manipulation, and that’s NOT a good reason to be fully invested.