Operation Descending Exponential Twist

Ties that bind the banking community to the Fed and Treasury,  which help  bring about the near collapse of the world banking system in 2008, to the rescue through the secret terms of TARP, to the new Bernanke Bubble in 2013, the same outflow and inflow investment cycles prevail.   Fund outflows found the bottom in 2009 and now fund inflows funding the top in 2013.   Their entrance into the market comes after a DJIA rally of 114% from 2009 lows and a mere 33% higher since the Fed instituted Operation Twist in September of 2011 as the markets were about to renew their downside momentum.   But just as this blog warned of the AAPL bubble floating where ever in may, so to will the S&P 500 and the DJIA drift with the collective descriptions of wonder attached to their ascension.  But just as before, those subtle negative calculations begin to factor until a descending exponential event occurs sending markets lower. Same game.

In Bubbelot

Market continues to bubble-up in Bubbelot, a land of the great expectancy of continuing low rates, low volume, and lots of lowly.  This is the time of season when the impressive gaming occurs over the hills of  stock expectations. It is a thing of beauty where an analyst and the company he covers dance together over better than expected earnings.  What a surprise. There is joy everywhere.

And it came to pass in the land that there was plenty of talk about the how everyone had missed the big move in stocks.  This could not stand. Yet one might understand however why the folks in Bubbelot might be afraid of getting smoked by the great downside again after being so patient for anything good for the previous 10 years.  Their great hero, Ben of Bernanke, a tiny little man of great intervention, has committed himself to the struggles of the lessers by instituting what is being called the great wait and see.   There is much to live for in Bubbelot.

Happy Anniversary Collapsing DJIA

It is only fitting as we mark this week, the 13 year anniversary of the DJIA hitting a high in 2000 before it collapsed from euphoria, with the celebration of two creative ideas made over the last week or so;  the trillion dollar coin and Buffett's declaration that banking is forever clear of disaster.

The trillion dollar coin concept ranks right up there with all great concepts that occur when all the koolaid is gone.  Turning all the challenges in life into good thoughts where nothing bad can happen and everyone is good at sports.   

And now Warren Buffett, who looks at the world from a vantage point as market wizard with extraordinary perceptions that go beyond any bearish thoughts formed by ordinary accounting, says the banking system in the US, which went broke just five years ago, is now fixed even without much change in their cloudy murky real financial status.

A trillion dollar coin for you, and a banking system for you, and good everywhere where accounting is a bother.

Delivering Up

Today's sharply higher opening reminds me of the first trading day of 2000.  Markets exploded on the upside as investors tried to get in on what was thought to be another year of up.  It would of coarse ultimately represent a market beginning to hit severe stall speed.  That year turned into crap as the market players scrambled to adjust to the downside momentum of the bubble burst. And while no two markets are the same, it seems impossible to believe in whatever perception of good which may have seemed to have been delivered by the Fed, Treasury, or Congress is for any other reason but to continually perpetuate a notion that in seeking returns, price is a proxy for value.  It is an approach where all values are put at risk.