Rally or Mirage? Making sense of the nonsense.

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/

Joe Ellis

When you live a lie sooner or later you are going to crash into the truth & that is going to be very painful.


Bankers Are The Enemy

Why would you even try to find any legitimate reason for the actions of central banks?
The Fed is a privately owned bank that, unconstitutionally, has control of the currency.
Everything central bankers do is obviously for the benefit of themselves and nothing else. Just listen to what historical figures, who were in a position to know, have said about banks:
Napoleon Bonaparte:
“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
Sir Josiah Stamp (President of the Bank of England in the 1920′s, the second richest man in Britain):
“Banking was conceived in iniquity, and was born in sin. The Bankers own the Earth. If you wish to remain the slaves of Bankers, and pay the cost of your own slavery, let them continue to create debt.”
Mayer Amsched Rothschild:
"Permit me to issue and control the money of the nation and I care not who makes its laws.”
Thomas Jefferson:
“Banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
We can never expect anything remotely resembling fairness from bankers. They are the enemy and have been for centuries. The only question is how to get rid of them.


U.s. Defense Secretary Threatens Congress Over Ukraine War Funding!

Jimmy Dore ep https://www.youtube.com/watch?v=sm4G0-f6MCo

1 Like

The Bankruptcy Boom


Doesn’t Really Matter, Because Soon We’ll All Be On The Menu


Fake News

It’s interesting to hear you guys try to make heads or tails of the “”market””action.  We’ve learned from you that it’s all fake.  You invented the double quotes around what once was a free and fair exchange.  Once we subscribe to the concept that the “”markets”” are manipulated, we can conclude that the prices are fake, the info is bad, and the signals should not be trusted.  Therefore, handicapping the action and guessing direction becomes almost fruitless. And I’m surprised you’re even trying to bring logic into the mix.
I touched on a lot of theses concepts in my recent VIX and CME comments, and I like keeping things simple.  First things first - given all the fakeness, nothing should surprise.  We can easily make a case for this rally based on a few over-simplifications: 1. The crowd was caught offsides.  Most everyone knows about the fragility, the debt, and the leverage, and the global chaos and wars are no secret either.  For this reason, it’s easy to make a case on the short side, and many big name market wizards have been vocally talking trash and shorting the market (Druck, Dalio, Gundlach, and more).  2. The lack of liquidity will most always exaggerate moves.  The players and participants continue to grow in size, and many of these players and positions have outsized their respective markets.  Therefore, market impact will always be a challenge, and god-forbid these behemoths start sharing ideas and carrying similar trades.  3. The year-end benchmark fallacy.  Many market participants are tied to the calendar year-end for marking and reporting purposes.  Therefore, this lack of liquidity problem is magnified around “the turn” (calendar year-end), as people don’t wanna get caught.  This causes many to trade with this short-sight goal which can certainly add chaos to any movement in prices. 
This is our lane.  With the masses focused on the reward side of the equation, we choose to look at RISK FIRST.  We make a case that risk management is all that’s left after all the machinations and manipulations.  Some ideas that can make their way into this solution set RHRN (Right Here Right Now):
BUY VOL: with the VIX decimated and at the same time, a lot of the risks feel just as large today as they were last month, we can easily make a case that owning optionality at record low implied volatility is a great value play.
HEDGES: prices up and vols down.  Sounds like a great time to hedge with options.
REBALANCE: stocks randomly up and commodities continue to trade like shit, how about we sell some stocks and buy some oil or commodity related anything to get our portfolio weights back to where we like them.
SPECULATE: with a tightly balanced portfolio to begin with, we are in good shape to take some speculative bets.  (RANDOM EXAMPLE AND THIS IS NOT INVESTMENT ADVICE) With vols way down and oil trading well below Oct. 7th levels (beginning of the war), let’s combine a couple bets in one and speculate on some longer-term calls on oil.
Just trying to play the hand we’re dealt.  Enjoy



 When central bankers talk, financial markets listen—intently. lewdle


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Ed Dowd

That was very interesting about Ed Dowd’s followers increasing. I am someone who mentioned his book to a previously brainwashed person over the holidays.