Bailing out the economy and the banking system has been such a brazenly corrupt, mendacious and, ultimately, doomed enterprise that one could almost forget for a moment how very clever the perpetrators are.  If we needed proof that these guys are the slickest behind-the-scenes spin doctors around, consider the following two headlines that ran on successive days atop the Wall Street Journal‘s front page. “Rate Rise Clouds Recovery” was the grim news that greeted us last Thursday, on day one.  The article described how, despite the Federal Reserve’s explicit strategy of buying as much Treasury paper as it takes to hold market rates down, particularly in the mortgage sector, rates are rising anyway, and steeply. In fact, 30-year fixeds climbed to 5.79% from 5.00% just two weeks earlier, suggesting that market demand for mortgage paper is drying up despite the Fed’s strategy of direct monetization of Treasury debt (a.k.a. “quantitative easing”).

But get this: On day two, as if to reassure us that Treasury’s borrowing is well under control despite the fact that the opposite is true, the spinmeisters co-opted the Journal‘s front page with this well timed policy leak: “Fed to Keep Lid on Bond Buys”.  Are we actually being asked to believe that, absent the acceleration of direct purchases of Treasury paper by the central bank, demand from other sources will suffice to keep rates from rising further?

 Just Like the Recovery of 1931

The key to having the public ignore the blatant contradictions in the two headlines is to have the news media conflate economic recovery with the spurious recovery that has been occurring in the stock market. The spinmeisters have been making as much hay with this deception as they can, even if the bear rally in stocks harkens directly back to an equally spurious recovery in 1931.  To assist in the public relations offensive, Fed spokesmen have garnered the fawning attention of a credulous news media.  Judge for yourself whether Wall Street Journal reporter Jon Hilsenrath has taken the bait. Here’s his lead from the day-two story noted above: “Federal Reserve officials are unlikely to significantly boost purchases of U.S. Treasurys and mortgage-backed securities when they meet in late June, but could make other adjustments in the face of rising bond yields and fresh signs of an improving economy [emphasis ours].” Of course, nowhere in Hilsenrath’s story do we get a clear idea of what these “other adjustments” might be.  But who needs such clarity when a vague picture of “economic recovery” supposedly will make all things possible?

This campaign of obfuscation is of a piece with recent news that ten of America’s largest banks would be returning $68 billion in supposedly unneeded TARP funds. To anyone who believes that the banks have indeed returned to health with the repayment of this token sum, we have a bridge to sell you.  

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Calling All Traders…

Ever found yourself sitting on your thumbs after the opening bell, waiting for the dust to settle?  If so, then you know how much harder it becomes to trade profitably as the day wears on. That’s because once a market has established an opening range, trading becomes essentially a frustrating game of second- and third-guessing other traders who are trying to second-guess you.

But suppose you were able to predict the high or low of the opening range beforehand?  Using your crystal ball, you could be waiting at the bell with your bid or offer, ready to pounce on what will later turn out to be at the high or low of the day. Wouldn’t that be a trick!

That is exactly what we attempt to do each morning, using the Hidden Pivot Method to spot predictive price patterns that may have occurred overnight. If you want to see how this is done, and how precisely, please join me for The Morning Briefing each day before the opening this Monday through Thursday. These 20-minute sessions will commence online sharply at 9:00 a.m. EDT. Our goal will be to identify trading opportunities for that day, with a particular emphasis on Comex Gold futures and the E-Mini S&P.  The Morning Briefing will be open to all, but to sign up you will need to register by clicking here.  See you Monday morning!