Tuesday, October 12, 2010

A Lot Of Disconnects

I was at the gym yesterday, and the TV sets in the locker room were turned to CNBC.  Folks were dressing, shaving and showering.  However, no one was paying attention to the blather on the tube.

The guest for the segment was doing his best to generate excitement for QE2 and how stocks, commodities and just about anything that moves were going to "melt up".  To paraphrase the analyst: "If $1 trillion doesn't work, then the Fed will do $2 trillion.  They will do whatever it takes to stimulate the economy."  Of course, the analyst didn't think any of this would actually help the economy, but he was pretty confident where the markets were headed.

As I looked around the locker room, all I could think about were the disconnects on many levels.

There is the disconnect between the average investor and this market.  People don't care like they used to and they are not interested in the markets no matter what.  Maybe they have heard it all before and been burned.  Maybe they realize that the guest has about as much of a chance of being correct as a monkey throwing darts at the stock tables in the newspapers.  Whatever the cause, the average investor showed little interest in the nonsense put forth by this analyst.

But I sensed another disconnect and this is the one between Main Street and Wall Street.  As you listen to the interview, the analyst is clear that QE2 is unlikely to work on Main Street, but that is ok, because it is going to work for Wall Street.  For the analyst, that is good enough reason for the Fed to move and mortgage our future.  There was no thought of the consequences of the Fed's action.  There is no thought what so ever that our markets are no longer transparent and open.  The only thought was stimulus equals higher asset prices.

Why should QE2 work at all?  QE1 failed to right the economy.  Why do we need to bang our heads on the wall a second time?  Oh silly me....that's right.  We aren't talking about the economy here we are talking about the stock market.  I suspect most investors are beginning to see through the charade that a higher equity market means good times ahead for the economy.  It doesn't, and this has become the biggest disconnect of all. 

Here is the video of Brian Kelly from Kanundrum Capital.


the bonocelli said...

Its a farce. Just as the war on terrorism is a farce. Everything in the US is a farce. You want the truth, you'll have to search high and low for it. So people don't bother with it. They do what they should. Ignored the entire fuc#ing mess. What else can you do? It so ridiculous!!

And maybe the bloggers ought to take more responsibility for once. Where is the call for transparency in bank acct sheets? the fed? the SEC? Good gravy..>I see massive amounts of insider trading and manipulation and downright fraud (UNG, VXX)...but where are the crook catchers?

They have turned the markets into a casino, more so today than ever. But everyone still plays the game in hopes they can beat the house. But, most do not.

Now we have rampant speculation in the Ag sector all on BS. Yeah, I know there are shortages. There are always shortages. But the USDA was puking their BS on how harvests were just fine and likely to be above average. Lo, and behold, the opposite is not true.

Now millions across this planet will either be malnourished or starve to death. Who cares right? No one. Because its more important to make money then save a life, or do the right thing.

The people are responsible. Not government, not the regulators, not the hedge funds. its the greed in everyone of us.

So, pull out all the stops baby. Invest every dime you got into commodities. It sure fire way to depopulate the earth, and that's what we all want.


dissatisfied with human nature

Guy M. Lerner said...

bono: well said

you just wonder where is the outrage; it is very simple to understand even for those who don't follow the markets; everyone knows and accepts that the Fed/ gov't is in propping up the markets; they say it on CNBC like it is fact when at least several years ago someone would have questioned such an assertion; this is the USA not some banana republic.....it is all surreal for sure