Welcome back to this week’s edition of Finance University.
Recently, I stumbled upon an intriguing and somewhat alarming aspect of our financial markets that I felt compelled to share with you. It was about the fact that foreign central banks are such great customers of the Chicago Mercantile Exchange that they get very special high-volume discount pricing. Hmmmm. What are they doing there at all, let alone in high volumes? Why do no central banks report any CME products on their balance sheets?
Inquiring minds would like to know.
Now, let’s try to make sense of this. The central banks, traditionally silent market spectators, seem to have preferred buyer programs, a fact not widely known or discussed. But why? Why would a foreign central bank receive discounts when trading in vital commodities like natural gas, agricultural products, or even silver in the U.S.? It raises an open-ended question that gnaws at the very fabric of our financial understanding of what markets are and how they are supposed to function.
What’s equally baffling is the recent market behavior. We’ve witnessed a rip-roaring rally in global stocks, defying the traditional tenets of investing. German stocks, for example, just hit an all-time high amidst their economy’s deindustrialization and weakening. This isn’t just a random spike; it’s a market trend that seems to turn conventional wisdom on its head. Such unprecedented market movements in the face of economic turmoil beg the question: What’s really driving these markets? I think we all know; our markets have become ““markets”” which have become relegated to two distasteful functions, (1) promoting official narratives and (2) funelling more wealth to the already obscenely wealthy.
As we peel back the layers of this financial enigma, we find ourselves in an almost upside-down world of investing. The classic rules don’t seem to apply anymore. Investors, lulled into a sense of complacency, are betting big, driven by a belief in the infallibility of central banks. But, that’s the game and there’s really no choice left but to play the game as it is. So buckle up and settle in as Paul Kiker and I dismantle and reconstruct the situation in which we all find ourselves.
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This is a companion discussion topic for the original entry at https://peakprosperity.com/rally-or-mirage-making-sense-of-the-nonsense/