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Up the Escalator, Down the Shaft 1/5/21

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As of this morning, the ES fucutures, representing the broad big cap US market, are at a price level it first reached on December 4.  Reminds me of the old stock market adage, up the escalator, down the elevator. 

One day, we're gonna get the shaft. 

Without the elevator cab. 

Those daily oscillators aren't looking too sprightly either. 

tvc_09b878171206a37d67c8a3ce9abe69d5.png

At the moment, the ES has settled on the centerline of the channel that began forming from the November 9 peak. A little lower here and they should plunge right to the bottom of the channel now around 3625. Of course, they might hold at the current level, which would mean base building toward a new high, and possibly even a breakout from the channel. 

I cover those exigencies here.

Meanwhile, our usual hourly bar chart perspective is maddeningly uncertain. Could be a 2-3 day cycle low with the rest of the 5 day cycle down phase still to come. Or it could be something else. I can't tell. It's just too ambiguous. The parameters to watch for a sign would be downtrending resistance now around 3700 at 7 AM in NY, and support at 3680. Breaking out of that triangle should signal the next significant intraday move. 

I'll have a Liquidity Trader update for you a little later. This is the most recent

Ciao for now! 

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As of this morning, the ES fucutures, representing the broad big cap US market, are at a price level it first reached on December 4.  Reminds me of the old stock market adage, up the escalator, down t

From Zadar, Croatia,  Good night and Good Luck

Let me suggest that it is possible, I say probable, that within two years the Fed will be buying stocks just like the BOJ. That is the message I am getting from the appointment of Yellen as Treasury Secretary because after all she has already voiced support for this.  With a stock market backstop this will free the Fed to let rates rise at least some, without the occasional panic trillion dollar print operations which are so unseemly.

 

 

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21 minutes ago, Jorma said:

Let me suggest that it is possible, I say probable, that within two years the Fed will be buying stocks just like the BOJ. That is the message I am getting from the appointment of Yellen as Treasury Secretary because after all she has already voiced support for this.  With a stock market backstop this will free the Fed to let rates rise at least some, without the occasional panic trillion dollar print operations which are so unseemly.

Do you have a quote from Yellen on that, and why, as Treasury Secretary would she have influence on the Fed's legal ability to do that, which they could under the exigent circumstances mandate. 

Thing is, the Fed doesn't need to buy stocks. The dealers do the dirty work for them. Fed has the perfect setup. They can claim that they're not responsible for the bubble or wealth disparity. They want nothing to do with having the smoking gun in their hand. Better for someone else to hold it. 

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The way they have it, they can commit the crimes, but their fingerprints aren't on it. No one understands that the Fed is directly inflating the markets. It's amazing that after 20 years, the academic and media eConomic establishment still ignores this basic fact. Classic willful ignorance.

Wall Street, particularly the dealers, understand the game perfectly well, and are more than happy to play their role and get their guaranteed skim. 

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https://www.cnbc.com/2020/04/06/yellen-says-the-fed-doesnt-need-to-buy-equities-now-but-congress-should-reconsider-allowing-it.html#:~:text=Menu-,Yellen says the Fed doesn't need to buy equities,Congress should reconsider allowing it&text=“I frankly don't think,Yellen told CNBC's Sara Eisen.

Yellen went out of her way to bring this up and as a former Fed Head all her words are carefully considered. This wasn't said off the top of her head. There is real intent here.

Examining motive is always tricky so it can be argued forever. But here goes.

The reason to do it would be to boost confidence of course.  

The legal ability of the Fed to buy stocks in normal or exigent circumstances isn't certain. Probable sure, but it would likely hit the courts at some point and since courts always defer to bankers eventually they would get an OK but that's all so messy.  So much better if the Fed was given permission via legislation.  With a D administration and Yellen out in front passage would be certain.  

While the racket works great via the dealers, in the exigent circumstance of some panic or liquidity freeze, the mechanism could break down.   

 

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2 hours ago, Jorma said:

https://www.cnbc.com/2020/04/06/yellen-says-the-fed-doesnt-need-to-buy-equities-now-but-congress-should-reconsider-allowing-it.html#:~:text=Menu-,Yellen says the Fed doesn't need to buy equities,Congress should reconsider allowing it&text=“I frankly don't think,Yellen told CNBC's Sara Eisen.

Yellen went out of her way to bring this up and as a former Fed Head all her words are carefully considered. This wasn't said off the top of her head. There is real intent here.

Examining motive is always tricky so it can be argued forever. But here goes.

The reason to do it would be to boost confidence of course.  

The legal ability of the Fed to buy stocks in normal or exigent circumstances isn't certain. Probable sure, but it would likely hit the courts at some point and since courts always defer to bankers eventually they would get an OK but that's all so messy.  So much better if the Fed was given permission via legislation.  With a D administration and Yellen out in front passage would be certain.  

While the racket works great via the dealers, in the exigent circumstance of some panic or liquidity freeze, the mechanism could break down.   

 

If the mechanism breaks down, how will they buy it? 

The mechanism won't break down. The Fed is the mechanism. The dealers are just strawmen. The Fed funds them to whatever extent it needs to to keep them in business. 

I don't see this as a meaningful issue. 

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Wow. EUR getting sticky at $1.23. A few months ago, I was nervously watching $1.18, thinking that if it got through that, I'd be paying $1.25 really soon. 

This sucks. I'm gonna be living in a trailer down by the river. 

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