Do you like poorly crafted movie sequels? It seems like there hasn’t been an original movie blockbuster in forever. The money making formula in Hollywood appears to be: take a movie that made money on the first go, slightly change the plot, and then release the sequel, the prequel, the 3-D version until they’ve milked every last dollar out of the original idea. “Finding Nemo” in 3-D would be the latest version.
Sadly things aren’t all that different in the markets. Friday’s market action played out from the same tired script with only a slight twist.
The morning story board kept the S&P 500 lower with the German Finance Minister talking about booting Greece from the European Union. By the time we got to act two, the Central Planners had gotten in the scene, because we know that the audience wants action! Broody art films or character studies don’t sell tickets.
The plot twist happened when questions were released from two days earlier when Ben Bernanke said to Congressional questionnaire that he will basically continue with QE3. Of course the timing was cinematic-ally suspicious to say the least. Perhaps the Central Planners waited for a dip below 1,400 to goose the market. But one wonders; how is this NEW news?
But this movie doesn’t have one hero (or villain depending on your perspective). The Euro Central planners came out in full force too, with more “unnamed sources” being quoted by Reuters that there will be open ended LTRO. How convenient.
Investors, like movie goers, want happy endings. The masses are addicted to the temporary high of monetary intervention so they continue to ignore very real downturn in global economic indicators (like the morning’s durable goods data, ex-transportation) and happily wait for a completely implausible romantic comedy style finish.
Can we please get a new director to rewrite this tired script?
All the debt remains painfully real; it is only the collateral that is illusory.
Trade well and follow the trend, not the so-called “experts.”
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
ES 1415.00 / 1413.00
YM 13244 / 13230
NQ 2776.50 / 2770.00
President & Founder- Trading Advantage