Something Wicked This Way Comes. Is It The Fed? Is It The President? Is It The Treasurer?

Make no mistake about it, there’s real fear and panic out there as markets are dislocating to the downside…. But note that on many charts we are showing 2008/2009 like conditions, something that is entirely inconsistent with the earnings and economic data we’re still seeing: It’s almost as if markets are pricing in a financial crisis that has yet to occur.… I see slowing growth and concerns about a coming recession, all of which is true, but I’ve yet to see evidence of a financial crisis. ( Zero Hedge )

Now there is a spooky line. Yes, it is looking like 2008 looked after it was obvious we were entering a financial crisis in that Stearn Bear market when Lehman Bros died like a dinosaur in an extinction event. It is almost as if the markets now are pricing in the fear that the Fed’s Great Recovery Rewind is going to take us back into the same recession that their Great Recovery attempted to take us out of. (And, of course, it is.)

The Dow lost 1,655 points, or 6.8 percent, last week. That was the Dow’s worst week of trading since October 2008 during the financial crisis. The S&P 500 also lost 7 percent for the week and is now down 17.8 percent from its record reached earlier in the year, putting it on the brink of a bear market. The Nasdaq Composite Index is now 22 percent below its record reached in August and is in a bear market. (CNBC)

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Stocks are heading for the worst month and year in a decade right on Christmas Eve. Yes, the market’s are pricing in something the economic data doesn’t fully support — yet — because investors see the shadow of something wicked coming their way. Santa isn’t just bringing lumps of coal; he’s bringing a coal-eating, petrol-drinking, fire-breathing dragon.

“What’s all the running about everyone?” the little boy asked as the shadow of the great dragon slid over him from behind. “It’s a bright sunny Christmas Eve day! We can still play!”

Or as the revised motto (tag line) on this site now says,

“It was such a Great Recession, we’re heading back for more.”

Make no mistake about it, something wicked this way comes; and if you don’t eat it, it’ll eat you. However, that something wicked is more than just the crazed establishment players I listed in the title; it is the monster these menaces are creating with all their squalid, slimy, filthy, shabby, seedy, wretched, broken-down, decaying, skeevy ideas and their peculiar interactions with each other.

Joe Ross from Lansing, Michigan [CC BY-SA 2.0 (], via Wikimedia Commons

The Fed’s great trade-off

The stock market will stop going down when the Federal Reserve gets bright enough to realize their dragon-shaped, hot-air balloon ride over Jurassic World, known lightly as “the Everything Bubble,” will only fly as high as the Fed’s burner allows. Less heat, equals lower flight. Actually sucking the hot air out of the balloon equals rapidly lower flight. Until the Fed gets smart enough to comprehend how its own bubble flight works, their balloon ride is going to end down in a land with lots of bity things. Right now, the Fed is flying into cold dark skies, and the scary music is coming from Steven Mnuchin’s weekend missive to America, which indicates the pilots of our economy clearly don’t know how to fly their own balloon!

My belief has always been that the Fed is overconfident. Like all central planners, this consortium of banksters believes it can run the world better than a free market can. The Fed believes it has magically created a recovery that will endure — a balloon that can fly over all troubles without continued bursts of fuel. That means the Fed will do the wrong thing until the downward momentum of the market’s decent is enough to destroy the whole fake economy the Fed has built around the stock market, which the Fed referred to as “a wealth effect,” meaning pump up stocks and everything will follow.

The question that remains is, “When they turn the burner back on, will the downward momentum toward the glooming trees already be so great that the Fed’s balloon will be flapping like a flag until the gondola crashes into the forest before the balloon has time to reflate? Call it “reflation trade.”

Apparently Steven Mnuchin, Trump’s Secretary of the Treasury, is also afraid the Fed is overconfident and has lost control of its long flight out of recession because he just leaped in on Sunday in a major and unsettling way. I just came across the following, which I put in a comment to my last article, “This Bear Ain’t Playin’ Games with the Bulls,” and then decided it merits its own article here.

Here is how close we are to the day of reckoning I’ve been saying would start this year. Think about these emergency calls made by the Chief Treasurer (on a Sunday when he is on vacation,no less) to what is casually known as the “Plunge Protection Team (PPT)” and to many CEOs outside the team and even to the FDIC, and it will send a Crichtonesque shiver up your spine:

“Update: With everyone suddenly freaking out over whether (and why) Mnuchin really made the kind of “liquidity test” call to bank CEOs that was reserved for the depth of the financial crisis, moments ago Mnuchin himself tweeted out details of his Sunday call (from Cabo), the gist of which is that Mnuchin was checking bank liquidity levels for “loans and other market operations” with the CEOs of the 6 largest banks, and even more importantly, on Monday Mnuchin will hold a call with the President’s Working Group Financial Markets, better known as the Plunge Protection Team. In other words, what was expected to be a sleepy Monday half-day session, is about to get a lot more violent.” (… )

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Gary Anderson 2 years ago Contributor's comment

Perhaps Mexico will hold Mnuchin hostage for the Chinese. China is the growth engine for the world. If that ends we may as well just have a great big war. Happy Holidays. Trump must go!

David Haggith 2 years ago Author's comment

Kind of like The Mnuchin Candidate. I like the concept!

Gary Anderson 2 years ago Contributor's comment

Or perhaps we are all Mnuchin Candidates, kidnapped and brainwashed by Trumponomics!