Bernanke Boggle: Halo or Horns?
The Bernanke Boggle concerns the stealth inflation factors which the Federal Reserve has largely ignored during it's calculation of inflation, excising hydrocarbons and carbohydrates. As with the early 70's, the Federal Reserve is behind the inflation curve and will only exacerbate the inflation curve by painting themselves into a liquidity trap.
Bernanke will have a "Halo" for the stock market by not raising rates higher, despite the inflation warning signs. The temporary Bernanke Halo will turn to "Horns" when the market's irrational exuberance begins to fade. The Federal Reserve's charter is to prevent runaway inflation, such as "hyper inflation" that Germany experienced after World War II. You could not buy a loaf of bread with a wheelbarrow of money in post World War II Germany. There are many countries today who are suffering from hyperinflation, but you will not hear the Market Media Matrix talking about those countries. The Market Media Matrix's job is to only spout endless stories of "happy days are here again". The sad fact is that the more this lie is told, the easier it is to convince more people that it is true. I see the polarization of America in my travels across the country. The rich are getting richer and the middle class are getting poorer. The un-skilled laborers are slowly being moved into the poverty line by inflation.
The immigration inflation factor is also an unknown factor. In my last post, Profit, Politics, and Protection, the protest marchers have learned very quickly to market themselves as peaceful protestors. If we see the protestors marching with American Flags and singing the National Anthem with the words they wrote to the song, their stealth infiltration into the American economy will be complete. Make no mistake by believe these are just un-organized peaceful protesters; they have a highly organized structure and financial backing. Their financial backing is based in the communist party. Hence the march on May 1, the "world workers party
The classic Federal Reserve incompetence, gambling with the world's future economy. In their arrogance of trying to "fine tune" the free market place, they will create the largest loss of market capitalization in the history of the world. The new Federal Reserve Chairman, Ben Bernanke, will undoubtedly try to institute his historical understanding of the ''Great Depression of the 1930s. According to Dr. Bernanke, he would to flood the economy with dollars spurring economic activity to "grow out of a depressed economy".
That is the correct way to end a depression, however, we are entering into an inflationary period of time as China, India, and other developing country compete for resources.
The Ben Bernanke Boogle has begun with the market media matrix spouting its everlasting bullish attitude to the average investor. Ben Bernanke failure to recognize the inevitable harmonic stock market cycle will create the greatest challenges for long term investors, which are the "baby boomers".
The Federal Reserve goal is to fight inflation, not spur the stock market to irrational exuberant highs. The market media matrix drum beat of high corporate profits doesn't mean a thing to the average investors. "Earnings up 14% on the S&P 500 stocks" read the headlines. When company xyz make spectacular earnings, how much are they paying to the shareholders?
High earnings mean nothing if the investor doesn't make dime in dividends.
The average investor who watches the news sees
the Dow Jones Industrials are marching toward a new historic high. My target for the Dow Jones Industrial average is 12,454 points. The average investor must be fully invested before the inflation bubble collapses the market. Inflation is not something that can be measured quantitatively and does not move in measured increments. The "data" the Federal Reserve uses only looks backwards in time, just as corporate earnings reflect. There are many factors which could cause inflation to erupt like a "back draft" which will incinerate long term capital gains in a matter of days. The inflation "back draft" list is growing longer each day. These include geopolitical events, oil production disruption, oil production nationalization, illegal immigrant inflation factor, bird flu, interest rates increases, natural disasters, political, social and racial riots, and celestial events.
The same scenario happened in 1973 with the same geopolitical problems. Unlike the 1970's however, most Americans were not invested heavily in the stock market. The geopolitical events will be the driving force that precipitates the market's decline. The geopolitical forces are not quantifiable by the Federal Reserves calculations on inflation. Congress has been complacently incompetent by incumbency trying the same old tired solutions of the 70's with the high cost of fuel. Until we have new leaders in Congress, the same mistakes will be repeated just as the 70's gasoline lines begin to form during Memorial day Weekend. The oil company's profits are a hyped by the Market Media Matrix knowing that most American's are ignorant of how the stock market works due to the lack of public education on the capitalist system of free markets. The Generation X's have been taught more communism and socialism instead of capitalism. The "baby boomers' history of protesting during the 70's will define the stock market over the next few years. Every generation has a need to become the dominating generation. However, the members of "Generation X" are deficient in critical thinking to create a rational and logical solution to the problems we face today. The Generation X members who are money managers are culpability for the high levels of programmed trading in the stock market. The fact that 6 out of ever 10 trades are being manipulated by computerized programmed trading will lead to huge market collapse in the stock market over the next year. The Russell 2000 Index is largely a proxy for programmed trading with over 1200 out of the 2000 stocks controlled by institutional traders. Out of these 1200 stocks, 50% of the shares are owned by institutions. These institutional traders will lead the market depreciation through derrivative caputulation by programmed trading.
The stage is set, for most Americans the collapse will be felt in their retirement accounts and 401(k), the home valuations, and the cost of food and energy. Meanwhile the nimble traders will make huge profitable trades shorting the stock market.
OTHER ARTICLES BY DOCTRADER
Profits, Politics, and Protection
Starting on Monday, Americans will find out how much illegal immigration will cost businesses in profits, who will be held politically accountable, and how much it will cost for real border protection.
This month's sell off began on May 4 and May 5, when the Dow Index failed to break above the yellow signal line. Once the green signal line crosses the yellow signal line, prices usually fall to the next level of support at the red signal line. Over the next 3 days, if the yellow signal line falls below the red signal line, we will begin a cyclical bear market lasting 9 to 18 months.
Bernanke: Batter UP!
The market anticipates the next two Federal Reserves meetings with
The new Federal Reserve Chairman, Ben Bernanke to end raising interest rates.
The Feds Liquidity Trap Part II, Inflation or Deflation?
The market is walking a fine line between higher inflation and a depression. The liquidly trap that the Federal Reserve has created with the housing market will resolve by the end of this year. On the other side of the line is a 1930's depression era recession which could last beyond the retirement years of the "baby boomers. The depression era threat is real and the new Fed Chairman, Ben Bernanke, has studied the depression era as a hobby.
Cognitive Pricing Reminiscence
This year's market closing is a lesson in mediocrity at best with the market moves being dictated by the large volume of program trading. Making new highs in the market is dependent upon new retail investor's money. I just love the excited looks on the teleprompter's face as the market nears 11,000 for the Dow Jones Industrial Index. The teleprompter's enthusiasm which is so infectious almost makes me think we went back in time to 1999.