The pundits trotted out the usual lame explanations for the stock market’s steep drop on Friday, with “anxiety about Fed tightening” topping the list. The irony is that the 400-point plunge in the Dow Industrials will have made the chances of a rate hike even more remote than they were before the selloff. Even then, any real tightening was about as likely as a Martian invasion, a point we’ve been hammering since the last rate hike more than nine years ago. Yes, we were wrong for one brief instant when the Fed raised the fed funds rate by a token 25 basis points. But anyone who argues that that constituted “tightening” is either an economist, a Wall Street analyst or some hack reporter trying to gin up what passes for news these days on the business pages. Will it take a further thousand-point decline in the Dow for these dimwits to stop obsessing about a rate hike that was never going to happen in the first place? We may be about to find out. In any event, the one explanation you will not hear on CNBC or Bloomberg for Friday’s avalanche — the correct one — is that it simply happened because it was time for it to happen. The stock market doesn’t need news to make it go up and down.
The Real Reason Stocks Plunged on Friday
- September 11, 2016, 11:50 pm
The market action you have seen for the last year or so is probably reflecting the world transitioning into Feudalism.
The Central Banks of Japan and Europe are now buying everything and anything with their fiat, and the concentration of wealth is reaching critical mass.
ZIRP and NIRP have been steadily draining the lifetime savings of an entire generation for almost a decade now.
And the current generation of workers is living paycheck to paycheck, or else they are on the Dole.
As this keeps up, and I am certain it will, you will see the average person locked into the class they were born into for life, with no upward mobility possible, except for the Kate Uptons and Brett Favres of the world.
The markets just lie there now for the most part, until a CB intervention causes a spike, up or down for 10 minutes, then, back to a flat line.
It is not the market of a healthy economy functioning in a healthy Democracy.
It’s just the Rich getting Richer, as they mop up the last pockets of Wealth still unconquered by them.
I recently read somewhere the CME might do away with the Live Cattle contracts, not enough volume in that market.
One by one, they will probably all shut down.
No need to hedge or discover prices when a few players own everything!
As for the Presidential election, it is starting to look like Hillary is going to implode as her health problems become too pronounced to cover up.
But, Mr. Trump, even with the best of intentions cannot be expected to reverse 50 years of systemic Treason, Corruption, and Greed, and then Restore the Republic.
That would require the 21st Century version of Gaius Marius, with a lengthy Proscription List, and 10 or 20 Legions at his back.
I will be happy if Trump can avoid Nuclear Combat with the Ruskies, and fight a delaying action for four years.
Sadly, that might be another Forlorn Hope.
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Couldn’t agree with you more, JJ. Out of last-ditch desperation, Europe’s central bank has become an even better monetizer than the Fed, purchasing any and all debt paper that Europe’s multinationals can gin up. Imagine being able to create corporate bonds simply for the purpose of having them bought by the central bank. This is Europe’s workaround for the problem of euroconsumers not being hard-wired to shop like Americans. Follow the money and you can see how anyone who advocates or endorses this policy would have to be a blithering idiot. RA