Manipulated Markets act differently
Foolish Talk Dominates
We have had a number of days of big swings this week with what seems as a lot of foolish talk, like after inversion we have 18 months before the wheels come off. Historically that may be true, but when you have a President doing dumb stuff, and trying to force the Fed to save the markets, you have no historical safety valves.
What Does this Mean Now ?
It is difficult to know, so far the market has reacted to the global downturn, created by Trump, by believing that he can successfully force the FED to cave to extremely low rates. So far that has not worked well as the market has gotten way ahead of itself and has inverted the yield curve.
Ironically, stocks which will eventually bear all the burden, have been relatively unscathed, other than the extreme volatility mentioned above.
Polls show that 70 % of Wall Street traders want to believe that Trump will be reelected, and why would they not want that, this has been a market that is built on buying every dip because of the belief that Washington will take care of them, there is little long term perceived risk.
So far of the 24 Democrats running for 2020 President, only one has tackled the extreme inequality that is built into the current funny money scheme started by Bernanke and extended to extreme lengths by Trump. That is Warren, all the rest don’t have a clue.
The Scenario Going Forward
Look for More volatility, probably even more extreme than recently, maybe even tests of the highs and major trading low, essentially 3025 and 2521 on the S&P. This is a goal line stand by the funny money crowd. Trade only from the short side on rallys.
Big Picture on Funny Money.
I am watching polling between Trump and Warren closely.
Currently in what I view as soft polling she leads, if she extends her lead as polling hardens over the next few months, look for a point where Wall Street will get the hint that the funny money game is closing out.