The one economic ‘bouncing ball’ that has a special glow to it is the one that sports Federal Reserve fingerprints.
That is the one which is imprinted with special insights for understanding what moves and what supports the markets. The Federal Reserve is attentive and active in ‘managing’ and maintaining a healthy stock market.
Be assured of this – the Fed cannot, and will not, chance a major stock market implosion. They have to keep the market riding ‘high in the water,’ as the old saying goes.
The Fed knows that an old-fashioned, gut-wrenching 30% or 40% drop in stock prices in the present debt-laden environment could snowball into a severe deflationary crisis.
The potential fallout: Commercial loan defaults. Housing market defaults. Consumer loan delinquencies / defaults. Bank failures.
Derivative triggers and counterparty defaults. Commercial bank insolvencies. Worker lay-offs. Social welfare strains. Rising government deficits – state and federal.
Pension funds – ‘deep’ underwater.
It could turn into a real mess in short order… and take a long time to dig out from.
The Fed is ‘riding shotgun,’ and will not let that happen. Many economic pundits are critical, but the Fed is simply playing the cards it has been dealt. They have few choices.
ZeroHedge recently posted evidence: we first exposed proof of the conspiracy fact that global Central Banks are indeed trading US equity futures,
And followed that up with: Congressman Confirms Foreign Central Banks Buying US Stock Futures Is Good For Liquidity
The steady, even-tempered climb in the market over the past 3-4 years shows the Fed’s shepherding ‘influence,’ albeit with brief, healthy, periodic market ‘burn-offs’ to release some of the ‘hot air’…
Conditions have been ripe in recent weeks for another ‘hot air release.’ We are now seeing that drawdown. If the past 3 years are any indication, then the Fed will likely put the brakes when they believe we are at an ‘inflection point.’ At the bottom end, DOW 16,500 – if the DOW should happen to sputter all the way down to that level..
Whenever the Fed decides to step on the gas pedal, it will be rally time. The Primary Dealers and other astute observers will pick up on the Fed’s discreet telegraphing signals, and they will hop on board quickly to ride the wave back up the charts.
The Fed does have one good choice at its disposal, however, that it has not exercised. And this choice would strike at the source for a genuine, comprehensive economic solution, rather than just performing symptom management.
The Fed could move to restore financial health and economic liberty at ‘ground level’ in America. Reignite economic growth. Scale-back government. Generate massive budget surpluses.
The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen The Leviticus 25 Plan 2015 (715)