This Market’s Being Manipulated

Showing what’s behind this insane 7-month market rally

1. People and economy are dying from Coronavirus, but the market’s up…

The stock market is way up since late March of this year, as the above graph shows.

Great news, right?

So the president would like everyone to know:

But the president, and the obedient stock market, would like you to ignore a few things.

US coronavirus daily new cases has accelerated like the stock market itself, breaking records, and leading the world:

Despite the surge in cases and deaths, the president is doing nothing about the Coronavirus. And as a result, the economy has taken a tremendous hit. That means corporate earnings are way down. And the stock market in a normally functioning market exchange, values companies based on their earnings and future projected earnings.

Those earnings will remain depressed as long as the Coronavirus is not being aggressively controlled with science-based health policies like mask mandates and distancing and quarantining protocols.

Since this administration is doing none of those science-based pandemic controls, the stock market should not be anywhere near these elevated levels. It should be at least 50% lower than where we are today.

2. There’s nothing to see here — look away, look away!…

Recall when the markets plunged back in February and March of this year due to the start of the Coronavirus pandemic. Was Trump focused on a science-based control of the virus?

No. Trump continued to ignore the science and the virus. Instead, he was pissed at the market’s plunge and was hell-bent on manipulating the stock market — and doing anything to make it go up:

Trump has welcomed the interference of the Russians and of Putin in his election. The Republican senate’s dismissal of the House’s impeachment has only emboldened this criminal who even stated correctly that he could stand in the middle of Times Square and shoot someone, and he would not lose his supporters. Which the GOP senate confirmed by being his lapdogs.

Trump has made it clear, he will do anything, illegal or not, to steal the election. The central measure of his performance, according to his small reptilian brain, is the stock market. Not the health of the people of America or the resultant health of the economy. The stock market.

The stock market is this President’s idea of what getting elected is all about and is, bizarrely, his symbol of masculinity. So, when he saw the big droop in the market, he frantically called for his market Viagra.

What is the best way to prop up an old sagging market? You flood the market with cash. And when you add cash to the market you lower interest rates… this was Quantitative Easing (QE) initiated by Bush and continued by Obama in order to support a flagging economy — but one of the unintended consequences of easy QE money was inflated asset (including stock) prices.

Stock prices go up because when you add cash to the economy, interest rates (the price of money) goes down. When interest rates go down, people look for other places to earn returns, and the natural place is the stock market and other assets, anything besides cash.

But this President is not trying to rescue an economy. An economy filled with suckers who have to actually work every day for a living. He doesn’t care about regular Joes. No. This President desperately wants the stock market schwinging up and rigidly to the right. So, any interest rate easing from this administration is all about that asset inflation. Not about the economy and the people.

And who controls money supply and interest rates? The Federal Reserve. This was the body that implemented the Bush and Obama QE policy. And who runs the Federal Reserve? Jerome Powell. And who appointed Jerome Powell as Chairman of the Federal Reserve? Our ever so wisely elected President “I could shoot someone in the middle of Times Square”.

Is there any evidence of lower interest rates? Check this out — the inter-bank rate which is what banks charge each other to borrow:

Notice the dramatic drop in interest rates right when the stock market has been on a tear?

Interest rates are a secondary effect of the Fed pouring money into the market — is there evidence of a large increase in the money supply?

Notice the tiny little steps up in the money supply right in the middle of the 2008–9 housing recession — and the one a year or so after? Those are the massive QE responses to flood the market with cash to try and restore people’s jobs and the economy. Remember the yuuuge stink the Republicans raised about QE and the cash flooding the market? Do you see how tiny that cash infusion into the economy was? And all the noise some people made about it?

Now look at the amount of cash that Trump and his Fed lapdog, Jerome Powell, has dumped into the economy in 2020. See that yuuuge step up in cash? That is called manipulation.

So now we know this administration is artificially inflating the stock market by increasing the money supply, thus lowering interest rates, and forcing market players to re-direct away from investing in cash towards the stock market.

In any other universe, in any other reality, that market manipulation is a crime, and the perpetrator is in jail.

3. What else is happening while stocks are tweaked up by Trump…

With less than 5% of the world’s population, we have almost 20% of the world’s deaths and cases:

In the next chart marked in gray vertical bars are the two recessions and market crashes from the Dot Com and Housing Crashes. And you see unemployment surging up with each. The Housing Crash was the most painful unemployment disaster our country experienced since the Great Depression of the 1930s. And what has pole-vaulted right over the debacle caused by the wisdom of crowds who thought home prices would never decline? Today’s unemployment caused by the pandemic which was exacerbated by the ineptitude of the President elected by the wisdom of our crowds.

The crowds are at least vaguely aware of the growth of the economy, because when the economy tanks, so does the market (because future returns for the immediate future tanks with the economy). When the unemployment rate skyrockets like in the previous graph, what do you think happens to the economy as measured by gross domestic product — driven mostly by every day folks like you and me buying toilet paper and cereal and gasoline. You got it — it is like a mirror image:

But stock investors demand growing earnings from the companies they invest in. How have corporate earnings done this year?

See the cliff to the right? Crowds, clearly, are not wise. But they are also not stupid. When they realize that earnings are going to keep declining, they’ll realize they are left holding the bag. They’ll eventually bail.

And the stock market will be kilt dead.

Be warned, this market is being manipulated by Trump who’s delusion is that the market should be up right now so he will get re-elected, and has done everything in his power to inflate the market. Stocks should not be anywhere near these levels. Be forewarned and be careful.

Good luck out there.

4. Thank you…

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