Is This Complacency, Idiocy, Or Both?

Submitted by Mark St.Cyr,

If one listens to the financial media mavens give their detailed analysis of late, you would have thought the The Onion™ decided to try its hand at TV and radio.

Since last Friday as they anticipated the most recent “jobs” report with bated breath to be announced, into this week that just ended. I have been left slack-jawed more times resembling the cartoon characters I grew with up as a kid. However, at least back then the cartoons were trying to be funny. Today, what is being touted as “serious insightful analysis” is so much more comedic – its tragic.

As I awaited this months version of the report. I had playing in the background one of the financial shows that were parsing, and mincing the usual data points. When suddenly I heard a few statements that made me do the double-take of “wait…what?”

As usual the schpiel is basically the same or formulaic on all of these program types. The host plays the sounding board as the guest plays “the seer of all that’s unseen by us mere mortal schlubs.” On this day in particular; replace “mortal” with “idiot” and you are closer to the truth of how you, or I, are looked upon by these masses of the so-called “smart crowd” perusing Wall Street today.

And just to clarify; the word “idiot” is in quotes not in some air quote manner. Rather: that is the exact word used to describe people like myself (and maybe even you) that question their insight. So if you’re reading this – now you know where you may stand within Wall Street’s loving and caring mind. (I know it’s satire) For question their glowing analysis of dog crap? And it’ll be your nose they’ll attempt to rub in it. Elitist insight at its best.

One of the reasons given why this guest could tell “the economy was doing much better than perceived” was: As he traveled about the country to places like the West Coast, and a few others. (The list was what anyone with half-a-brain would understand are at the epicenter of a pick your bubble flavor expansion) From his observation “These places are doing very well!”

As I listened to the list of places that were ticked off where they had visited (as to speak.) One thing was quite obvious to anyone who was actually listening. The examples were from what one would infer to be: Silicon Valley (proper.) New York City (proper) etc., etc. My reaction was along the lines of, “Well – Golly! Who’da thunk that!”

It makes one wonder exactly who do they think (or believe) we are when we hear these words of insight. I just can’t for the life of me understand the arrogance of so many on Wall Street today that take to the airwaves or print and talk down to others (especially those of us that presumably are their customers!!!) when anyone with a miniscule of business acumen can see they are nothing more than bloviating meme-of-the-momement pontificates. And people like this have the audacity to literally call people like myself (as well as you dear reader) “idiots” or “data deniers.”

I could go on to list even more revelations in absolute meaningless insights I bared. I mean truthfully; how much financial “insight” or “analysis” to notice that places that are currently in a real estate or Silicon Valley bubble are doing “Very well?” Idiotic would be an understatement.

How about what’s happening just outside these areas? Never mind 100, or even 50, rather, just 25 miles outside? Do they not want to venture (or speak) there? Or, is it for just as their analysis implies; as in that untold or unmentioned dirty little secret. i.e., Mom and Pop have no cash left to invest – so why bother going to a financial desert? Which so happens to be spreading almost as fast as the desert is reclaiming California. Both with no relief in sight on, or over the horizon.

After all, just venture to any mall, Sears™, JC Penney™, Macy’s™, Walmart, McD’s™ and a cadre of others you’ll find just outside, and it’s hard too miss they’re having serious issues with either half filled shelves, sparse foot traffic, falling sales, revenue killing markdowns, adjacent retailer vacancies, or worse: the pre-vacant with their “going out of business sale” signs that stay up till the very end giving every other business within eye-shot an uneasy feeling to ponder daily. i.e., Am I next?

They’re not “doing very well” as their neighbors like Tiffany’s™, or Louis Vuitton™ might seem to be just a stones throw away. But one has to be willing to go for a burger outside of town rather than the steak at the hotel. Or else, well you know.

As stupefied as I was listening to all this dribble, just when I thought I heard it all, the coup de gras of “wait…what?” was spoken.

In an explanation for clarifying their now informed insight, the reference given for what we all need to contemplate today is: “What the Fed. thinks is now bad or good, and what they’ll do about it.” i.e., “Does bad still mean good for stocks, and is worse still terrific?”

I’m sorry. Maybe it’s me. However, weren’t we told by this crowd “to not believe the data – we were idiots?” For if that data is to be believed: What in the world does The Fed. have to do with stocks? Unless of course the undeniable truth is, that since QE halted 6 months ago – the markets have done little more than zig zag in a pattern reminiscent of (you guessed it) the birth of QE itself. Meaning: The Fed. is the market. Period.

All you need to know is right there. For years people like myself and a few others were labeled as “idiots” or “data deniers” when we made the case there is no “market” in equities if not for The Federal Reserve and its interventionism. And for years we were told “the data states otherwise.” And now we are being told (or sold): All that matters is that the data remains bad, for if not, the Fed. may react in a way that fells the market! Again – you can’t make this stuff up. Personally I had to make a conscious effort as to not spew my coffee.

The data (we said) if looked at through an eye of “truth be told” rather than the Three-Card-Monty version of “specious to be sold” there is no fundamental, financial, or any other reason these markets are to be at these levels (never-mind never before seen in history highs) other than a financial bubble being blown and fueled by the Fed. to proportions; that an impending “pop” could result in making the last crisis look like a cake walk.

Now, suddenly (just to reiterate it’s only been some 6 months since the spigot of QE was shut off) as the markets have gone nowhere fast. Their “analysis” is now changing faster than a “double seasonally adjusted” data point. And we’re the idiots?

Now persistent sell offs (which for years were all but forgotten) are followed by out-of-the-blue volume-less miracle rallies fueled by HFT stop seeking algos in the “most shorted” arena of stocks driving the main indexes from the ledges of scary cliffs – back to the heights of euphoria.

This has now become common place as opposed to the one way market of just 6 months ago. Yet, this in turn still supplies headlines for the main stream media such as “Dow rallies impressive triple digits” or “The markets set another record today” on ___________ (fill in the blank with anything you wish like “a cat was petted today” because it just doesn’t matter. And will probably be closer to reality than what you’ll hear from the “experts.”)

But the headlines mask the onerous implications underneath. For zag-zag patterns enable just what they imply: zigs to euphoria followed by zags to a portending abyss. It’s when the next zig after the last zag fails to show is when all heck breaks loose. And the last time we saw this type of action? QE1 was implemented. Not too worry though because – “This time it’s different!”

Remember, if the economy was doing as well as we were told the “data” states: Why do we still need interest rates held as zero? Again – If housing is so swell, and employment is near statistical (cough, cough) full employment. And the markets are once again within their never before seen in the history of mankind highs. A raising of 1/4 of 1% is cause for concern? If not outright panic?

Think this through with me…

Why should anyone be concerned about the markets if the Fed. raised rates a miniscule 25 basis points? Or why should one ever question the omnipotence of the Fed. to save the markets at anytime regardless? Are they omnipotent or not?

Just look at what was expressed via this Friday’s market reaction to the impending concern, as well as more probable than possible Euro Zone train wreck that could very well be coming apart at the seams. Not only with an exit by Greece, but also a default on their debt. Debt that by all accounts is intermingled with far-reaching tentacles within the financial markets, currency area, CDS markets, and more. All while Spain, as well as Italy look and ponder their own issues concerning the EU and more.

Our markets not only didn’t care – they didn’t even shrug, blink, or wince. Talk about complacency. This is complacency turned up to 11!

I ask again: How can it be implied that the markets are too fragile to deal with an unexpected raise of interest rates to (gasp) 1/4 of 1%, if all the “data” we were told has been showing signs of all this “improvement?” Or better yet: How can all that good data we were told (or sold) to accept as “truth” now mean it’s bad for the markets? Is this idiocy? Lunacy? I can’t tell, I guess I’m just too dumb to figure it out.

And that reminds me. For if memory serves me correctly. We were told at the end of last year, as they began to contemplate this year. They (The Fed.) were most likely going to be ready in June based on what the “data” was showing then. And June came and went while they’re now singing the line “See you in September la, la, la….”

At the end of last year as we were transitioning into this one. All the hand-wringing was about a possible rate hike in June based on the improving data. Now that data showed (to both the Fed. as well as demanded by Wall Street) June needed to be off the table and Sept. is more likely of a probability. (key word again – “probability”)

Some interject another reason for no hike at this past meeting was in reaction to the whole Greece thing, and the impending possible ramifications. However, we’re also told (by nearly every next in rotation fund manager on TV or radio) the impact to the U.S. for anything Greece related would be near nil for “We’re just not that exposed.”

Let’s see: The Federal Reserve does have limited exposure I guess. I mean, they only deal directly with  “a few” European banks like those that are listed on the coveted “primary dealer” list. But is it lost on this so-called “smart crowd” those lowly few just happen to be the biggest banks in all of Europe! With probable derivative exposure of countless trillions of not only €uros, but Lord knows what else.

Yeah, I guess they’re right. Nothing to see here. Move along, thanks for coming by! It’s not like our banks or markets may have intermingling exposure of trade derivatives, currency swaps, or anything like that I guess. What could possibly go wrong?!

Talk about convoluted, nonsensical logic chains. And we’re referred to as “idiots” if/when we refuse to accept such nonsense as fact!

So now I guess the question still remains: How does any Ivory Tower prognosticator, or Wall Street talking head, square all these circles?

Simple – they don’t. They just act as if it they didn’t or won’t happen. Or, just continue to act as if we’re too dumb to answer.

This is complacency, idiocy, and more – all turned up to 11!

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