Three of the top men at the U.S. Department of Justice who have been involved in negotiations as to whether Goldman Sachs, for the first time in its history, will be charged with a criminal felony and hit with a multi-billion dollar fine, received large sums of money from the law firm defending Goldman Sachs in the criminal case.
TSP & Vanguard Smart Investor Posts
Understand today the inside money is selling high today into the Fed’s fire hose and new companies will make their money in the financial markets and probably never in the real economy. The retail money is pouring into the markets laughing at the old timers who have lost their touch. Now I agree there is a chance the central banks continue the madness, but something is going to break sooner or later – something big.
Global markets remain haunted by the specter of an unwind of unprecedented speculative leverage. When markets break to the downside, there is clear potential for another episode of derivative-related selling that would panic buyers.
Central Bank buying equities via the stock market does not help corporations, it merely protects the paper wealth of mostly the upper 10%. And that is the point of most of these programs.
We’re in the throes of an extraordinary upside global market dislocation. I do not recall such a ferocious globalized short squeeze – stocks, corporate Credit, currencies and EM sovereign debt. We can only imagine the behind the scenes fracas in derivatives trading.
We are in a hostile investing environment with poor long-term support for the current prices in the markets. The stock market is simply riding the Fed’s largest intervention in history. And every wave ends the same.
The global Bubble has been pierced, though unprecedented monetary inflation only exacerbates the epic divergence between inflating asset prices and deflating economic prospects. As I’ve written over the years – and as demonstrated rather conspicuously in March: contemporary finance seems to operate miraculously – so long as it’s inflating. It just doesn’t work in reverse. These days it’s even more frightening to contemplate how this all ends. The Scourge of “Whatever it Takes” Monetary Mismanagement.
It appears there are a lot of investors who do not know that stock prices get wiped out in bankruptcy.
Most retail investors have not experienced stocks and corporate bonds being wiped out in a restructuring. It will come as a shock to many. The reason a few mega companies are pulling the SP500 higher is a defensive move away from this restructuring risk.
Use common sense and look around. Earnings and cash flow determine stock prices after the corporate buybacks go away. The Fed is screaming DANGER and yes they “temporarily” provided liquidity (printed money) to halt the financial sell off. But they can NOT stop the economic damage that matters in the long run.