STAFF NEWS & ANALYSIS
Dominant Social Theme: The good times are back. Just look at the stock market.
His most recent article seems to have made a stir, puncturing a favorite elite market meme: The market is going up because the economy is recovering.
Crudele attributes markets' ebullience to direct interference of central banks and other interested and powerful parties. Here's more:
Ed Yardeni, a longtime Wall Street guru who isn't one of the clowns of the bunch, said flat out last week that the market was being propped up. "These markets are all rigged, and I don't say that critically. I just say that factually," he asserted on CNBC.
Yardeni's claim is the most basic one: that the Federal Reserve won't do anything that will upset Wall Street and, in fact, is doing all it can to help the stock market.But there are other recent claims that come closer to the bull's-eye, even if the archers don't quite see what they are hitting. The Wall Street Journal carried an intriguing story on March 11 about how the Bank of Japan was "aggressively purchasing stock funds." (The Journal is owned by News Corp., the parent of The Post.)"By directly underpinning the market, [Bank of Japan] officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation," read the report with a Tokyo dateline.
The reasons given for the Bank of Japan's interference, as we can see, are altruistic in some sense. Forcing averages up is going to give the average Japanese investor a sense of excitement that may encourage him or her to invest as well. The economy will improve. Prosperity will expand.
Crudele uses the Japanese market rigging to generate other speculations on how market manipulation works in the biggest sense. It's his theory that the Bank of Japan and perhaps other central banks around the world are dipping into US stock markets.
The idea is that the Fed might be reluctant to take such actions for fear of discovery, but that other collegial parties might be involved.
Such contracts (think S&P futures) are an easy way to move markets up and down – usually up. Crudele counsels that market losses these days are usually followed by S&P futures buying. "It almost always occurs," he writes.
Our point for well over a year now is that this latest Wall Street Party has been orchestrated via money printing and regulatory adjustments that have had the effect of forcing averages up.
We've been consistent, pointing out that these manipulations provided investors with a significant window of opportunity, provided they were properly hedged and practiced appropriate asset allocation.
Is the current market downturn the end of this manipulative effort – if that is what it is? Such time related speculations are difficult to predict, indeed. But even a deep retrenchment would not necessarily end this faux bull market.