Did central bankers make a secret deal to drive markets?

Re: Did central bankers make a secret deal to drive markets?

PostBy: lsayre On: Sun Sep 11, 2016 6:47 am

Lets look at this question another way. Can a central bank even exist without distorting what are intended to be markets for honest price discovery? And clearly, post 2008, with up to tens of $trillions of excess liquidity fabricated from thin air, and with massive interest rate suppression, can the case for correlation between central banks intervention and market valuation distortion be made even more strongly?
lsayre
 
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Re: Did central bankers make a secret deal to drive markets?

PostBy: rberq On: Sun Sep 11, 2016 9:07 am

lsayre wrote:Can a central bank even exist without distorting what are intended to be markets for honest price discovery?

Don’t know. Very broad question. Make it the subject of your PhD dissertation and get back to me.

lsayre wrote:… post 2008, with up to tens of $trillions of excess liquidity fabricated from thin air, and with massive interest rate suppression, can the case for correlation between central banks intervention and market valuation distortion be made even more strongly?

Wasn’t that the whole point of the intervention, to improve the economy? And now you are complaining that it worked? Economic improvement naturally helps the stock market. Your phrase “market valuation distortion” seems to imply that “distortion” is by nature bad. When I had pneumonia, antibiotics caused a health distortion in my body by killing off the bugs before they killed off me. Sometimes we WANT distortion.
rberq
 
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Re: Did central bankers make a secret deal to drive markets?

PostBy: lsayre On: Sun Sep 11, 2016 9:46 am

rberq wrote:Wasn’t that the whole point of the intervention, to improve the economy? And now you are complaining that it worked? Economic improvement naturally helps the stock market. Your phrase “market valuation distortion” seems to imply that “distortion” is by nature bad. When I had pneumonia, antibiotics caused a health distortion in my body by killing off the bugs before they killed off me. Sometimes we WANT distortion.


My contention is that if the economy was permitted to recover from our 2008 depression without central bank interference we would likely have had a real recovery by now and been much better off for it in the long run. Now it appears that the worlds central banks are trapped in a cycle of forever more having to artificially stimulate the economy, and yes I do perceive this as being a bad thing. It is bad because it is (and central banks are) the application of the principle that the end justifies the means.
lsayre
 
Stoker Coal Boiler: AHS S130 Coal Gun
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Re: Did central bankers make a secret deal to drive markets?

PostBy: rberq On: Mon Sep 12, 2016 3:21 pm

I can't dispute that the market pays attention to the Fed. Friday one of the Fed governors said he wouldn't be surprised to see rates raised in September, and the S&P slipped down 2 1/2 percent. Today a different governor said we must be "prudent" about raising rates too fast, and the S&P is back up by about 1 1/2 percent. :o I'm not sure what the actual mechanism is -- are folks weighing risk vs. return for different interest rates, or are people borrowing money to buy stocks? I suspect the latter...
rberq
 
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Re: Did central bankers make a secret deal to drive markets?

PostBy: coalnewbie On: Mon Sep 12, 2016 3:33 pm

It's a long story but basically the Fed has boxed itself in, is irrelevant and now for the next 20 years we become Japan while interest rates stay where they are or even go negative. Unbridled govt spending taking debt from $8T to $20T supporting the 47% has really screwed us.
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Re: Did central bankers make a secret deal to drive markets?

PostBy: rberq On: Tue Sep 13, 2016 11:39 am

More good economic news today, so of course the stock market is taking a plunge. Really perverse short-term reasoning: if the economy keeps improving, the Fed will raise interest rates, so we better sell our stock now. In the olden days (pre-2008) good economic news led to the market rising. :shock:
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Re: Did central bankers make a secret deal to drive markets?

PostBy: lsayre On: Tue Sep 13, 2016 12:40 pm

This time I believe the stock market is plunging because our government seriously botched its crude oil supply figures, and found that our stockpiles are 16% greater than they thought. We are in a major glut situation due to their negligence. The oil price is falling due to the glut and taking the US stock markets with it.
lsayre
 
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Re: Did central bankers make a secret deal to drive markets?

PostBy: lsayre On: Fri Sep 30, 2016 1:00 am

Janet Yellen is considering letting the Federal Reserve directly purchase US corporate stocks.

it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions.
Janet Yellen

http://www.zerohedge.com/news/2016-09-2 ... e-spending

You can almost smell the end of fiat money coming.
lsayre
 
Stoker Coal Boiler: AHS S130 Coal Gun
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