Friday 5 August 2011

How Rigged Is the System.

We know that the stock market is rigged. We know that only thing that drives the stock market is greed. And now that S&P has downgraded the credit rating, explains why the market has been selling off for the whole week.

After the debt deal was done, it was natural to have a relief rally. But they knew that a possible downgrade is coming. And by mid-week they were 100% sure. And that is why the market sold off even in the absence of a trigger. People have been scratching their head and wondering why the sell-off when there is no actual bank or sovereign failure. And now we know.

Even today, after the NFP numbers, the market opened higher and within 5 minutes the market was in negative territory.  Then something happened and the market reversed course.

So what is the deal now? Have they been promised QE 3? We do not know and we are wondering if recession is upon us and that is why the market is selling off.

From Politico:" Rumors of a downgrade filtered through a volatile stock market, causing the Dow Jones Industrial average to swing by 416 points as it teetered between losses and gains to close the day up slightly by 0.54 percent."

And here we are trying to beat them and make money in the stock market? How naïve we are!


  1. Hello

    Just wanted to thank you for the hard work you are putting into this blog. I really look forward to reading your blog every day - very visual and very easy to understand.

    Please keep up the great work



  2. I should just write them a cheque now for my life savings; why prolong the agony? Gee, if I had inside information on what was going to happen tomorrow, I'd be the Einstein of speculation.

    I had similar thoughts all week; why is the market so putrid? Somebody knows something is coming. I thought it might be one of our European friends admitting it was hopeless. What still shocks me is the US$ moves up 4 cents against my loonie, but the market experts know the US is about to be downgraded. Why go into the POS paper that has the backing of mired governance and impossible to pay off debt?

    Must be the wrong trade.

    WoF, came here from slope of misery no hope, and read your thoughts each day. Very articulte and acute observations.


  3. The manipulative bastards are sunning the casino. That is why I think the market will go up from here, just to confuse people and suck more money in.

  4. World of Finance:

    First off, thank you for this blog. It is daily reading and an excellent source of intelligent cynicism.

    Question for you: 2 Emergency meetings this weekend. Do you see a 2008 like contagion effect, spreading from Italy and Spain occurring or this setup to obvious?

    Second, what are your expectations from the Fed meeting this week?

  5. If I may draw your attention to my 4th of August post "Did Christmas Come Early", you will note that the power that be ( FED, ECB ) and their masters will not give up so easily. Having just finished QE 2, Fed may not go for new bond buying immediately but they will again try to flood the market with liquidity.
    I predicted these emergency meetings last week and the outcomes are also obvious.They think they can solve the problems with liquidity and that is what they will do. The moment they stop pumping in liquidity, the whole thing will burst.
    It will burst anyway but they cannot stop trying to save it.

  6. Thanks for your response. Liquidity is already happening; i.e. Japanese and Swiss FX interventions.

    It seems that the market has forced the Italian and Spanish debt situation to the forefront. I no longer believe that more liquidity ends this crisis.

    It's put up or shut up time at the ECB. That is the state of the Union, whether it stays as is or dissolves is the current issue. Hence the G20 and G7 emergency meetings.

    I think they either print or default, and anything in the middle to less = default. Inflation versus deflation, now or never time.

    I would like to know if you see this situation as extreme and precarious as I do?