Lately, stocks aren’t trading with any rhyme or reason that many participants expect fits reality. Stock prices oftentimes don’t move in the direction of changing fundamentals, either markets end in a crash or trade at extremely lofty levels from time to time, but these boom-bust characteristics at least have a constant and predictable theme and storyline. Traders shrug off bad news in bull markets and shrug off good news in bear markets, pretty consistently, until the turn is well on the way and the cycle begins again.
The “Efficient Market Theory” has been discredited over and over again, and yet again. There’s nothing efficient about the stock market; it’s really only a gauge of public sentiment with a sprinkle of fundamentals thrown in as talking points to enhance a collective party experience, either a fun party or a pity one. Two stock market crashes and two bubbles occurred within one decade. Doesn’t sound efficient at all, does it?
And then there’s the “Conspiracy Theory” that markets are manipulated.
Currency wars involving central banks buying and selling currencies in an effort to please domestic exporters or to pressure another sovereign nation; deals made with Saudi Arabia to regulate the price of oil; subsidies to farmers to either grow food or not; tariffs imposed on select imported products to protect domestic interests; Federal Reserve price-setting of short-term interest rates; and a slew of other markets influenced by the State and other powerful influences through politics, sometimes chicanery, doesn’t apply, apparently, to the sacred cow, the stock market.
Many so-called conspiracies are, in fact, eventually shown to be true.
The latest action in stocks smells of intervention of the President’s Working Group, or more colloquially known as The Plunge Protection Team (PPT). There are scores of market mavens who insist the group that was in fact signed into official existence by a Ronald Reagan executive order doesn’t exist at all, while others who acknowledge its existence claim the PPT wouldn’t dare influence stock prices unless it was an absolute emergency.
Well, we’re in an emergency. Aren’t we?
Following the latest reading from the Commerce Department, which reported a 309,000 annual pace of new homes sold in the month of January, dropping the pace of new homes built to a nearly 50-year record low along with additional horrifying news from Commerce that new home prices plunged 5.6% in ONE MONTH, stocks shot up sharply in relief that at least the world hadn’t come to an end. Yes indeed, we’re in an emergency, a full-blown one at that.
The financial authorities cannot have tanking home prices and stock prices at the same time. It’s good-bye to peace and tranquility in the streets of America. Call in the Team; this is a matter of national security. Never mind radicals hiding in caves, we have well-trained returning veterans right here in the Good Ol’ USA to worry about.
Don’t think for one moment that members of the National Security Advisers (NSA) haven’t addressed the possibility of an economic collapse leading to a violent overthrow of the American Fairytale lifestyle replete with nanny do-gooders elected to protect us from the realities of life. The question now becomes: How long can the manipulators keep this lead ball in the air? And what if it can’t be kept aloft? It’s time then for more secret government conspiracy theories.
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