Well three things that needed to happen to cause the S&P 500 (.INX) and Dow Jones Industrial Average (.DJI) to set new records have now happened. They were 1) a levelling off of the rate of new infections in the US; 2) Trillions of dollars of stimulus being injected into the banking layer of the financial system, and 3) a resolution of sorts to the “price war”in the oil sector.
The agreement to reduce oil output by 9.7 million barrels a day will start to move oil into an upward trend, and markets will reward the stocks affected by oil prices in that direction too.
But last week’s record leap in asset prices quoted on major exchanges was fuelled by direct purchases of assets by government funded groups acting on the tacit understanding that the trillions of dollars lavished on them by the Fed are intended to shore up stock market prices.
This is designed to give you and me a sense that everything is all right with the global financial system, and we should gladly come back to the great casino of markets and try our luck.
It is remarkable that, as I write this just before markets open on Easter Monday, the futures are all pointing much lower, which is counter intuitive to say the least; if we just solved the oil price war problem, how can markets be headed lower? Especially when the COVID-19 numbers are also showing a tendency toward the holy “flattening of the curve” in new cases?
The answer is simple.
The Fed-funded buyers are not showing in the futures market for the simple reason that its still a long weekend for the financial elite. They will be back tomorrow, and you will see another record week in the market.
This is the new era we are in. Stock prices are described as being a result of these earnings, or that deal reached in a given sector. But that is just the mainstream financial media performing its daily trick for the governing elite in exchange for their reward, which is the direction of the majority of the world’s search traffic to their sites.
Have you noticed that absolutely harmony with which all news outlets now report financial events and connect them to specific causes that are subjective at best, and downright wrong better than half the time.
They should not be relied upon by any intelligent human being.
Today is a perfect example. All the fundamental reasons in the world for markets to be up are in alignment, yet the market is going to have a down day because it inconveniently falls on the Monday of an extended long weekend. The financial puppeteers don’t work on holidays. So the markets must suffer a down day.
Watch as CNBC, Bloomberg and MSNBC fumble the facts and try to draw lines between dots with no relationship to anything.
Despite this, the trend this week will be very much higher, because that is the only outcome injecting $5 trillion into the monetary system can have on stock markets. Fundamentals are no longer the result of business cycles or supply and demand metrics; these are now manufactured scenarios.
So get your glove and get in the game. The masters of the universe have decreed that markets are to go higher and set new records, and so that is exactly what they will do.
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