FED and Shoulders - Massive Bear Setup in Stock Indices Amid depression-level unemployment, the stock market is nearing all-time highs. But how and why?
THE FED!
The Federal Reserve is funneling money into corporations via buying corporate bonds. Corporations then take this money and buy their own stock, hopefully netting out those who can see the writing on the wall.
The average age of a Baby Boomer is 66 - retirement time!
How do we retire a generation when the stock market is at 2000-2008 levels or lower? The FED indirectly provides the liquidity with printed dollars. Boomers will not think about putting Trump back in this November if they go into retirement without cash.
For corporations to also benefit from all this free money, do they just buy their stocks and hold? Is it not the rational choice to convert their new stock inventory to cash for themselves as a matter of survival? Will the FED be there to keep buying? Do we in fact live in a world without consequences? As a false bull wave hypnotizes the masses, those with cash to buy stocks 'since the market is going up' will provide this liquidity to corporations.
Market participants will lose faith in a market where price discovery becomes compromised. Market cycles and pandemics cannot be printed away.
When numbers come out at the end of this and subsequent quarters, when real prices rise, when stimulus checks don't make it to consumers, the bottom will inevitably fall out. It will inevitably and indirectly be the FED who bears the losses in the stock market, as opposed to the boomers. Or that's the idea anyway.
Significant buying opportunities ahead, as soon as the FED stops fiddling. That, or we see an end of public markets in the United States. When the government enables corporations to buy their own stock, risk free, with magic money, what are the big-picture implications of that?
