Yellen To Wall St: It’s Christmas In September So Buy, Buy, Buy!

So, here we are, the first day of Fall and just like the leaves slowly losing their luster before they wither all together and die, so too is the economy as The Federal Reserve – once again – chose inaction for action. All the hawkish implied statements, all the “They’re really, really, really, gonna do it in September!” has come and gone – once again – upon the furious wings of doves. I’m sorry, but this has now become so ridiculous – it’s bordering on maddening.

If one listened to the presser immediately following the rate decision given by Ms. Yellen, one couldn’t help but be dumbstruck as to think that they really might think we believe, or are considering, their prognostications are based in reality. The only true reality is, I almost couldn’t stop laughing as I typed it. And I know I’m far from alone.

First off starting with the press conference. One of the things I’ve had to hone over the years is the ability to read people, in real-time, whether it was for sales negotiations, contracts, hiring, etc. It’s an essential part of the business toolbox much like the need for a well honed bull#### meter. And the more I watched many of the exchanges, along with contemplating the reasoning of the answers, the more my meters kept pegging to 11. I’ll highlight just two for examples.

The first came oddly enough in the very first question posed in the Q&A by CNBC™ reporter Steve Liesman. The question was nothing out of the ordinary especially given the current circumstances (i.e., questioning Fed. credibility as they once again kicked the can.) However, what did seem rather odd was Ms. Yellen’s response. Not the content of that response, rather – the way in which she delivered it.

Her answer seemed in no way to be extemporaneous. It had all the hallmarks of an “in-advance, prepared question and response.” Here’s my reasoning (remember, “reasoning” for I have absolutely no proof):

First: It’s well-known that Mr. Liesman is an ardent supporter of the Fed. along with a seemingly favored (i.e., they know they’ll be treated with kid gloves) interviewer by the Fed. itself. Second: The question was the most obvious question, and the one that needs to be addressed first as to get it off the table (i.e., I’ve already answered that so let’s move on.) Yet, it’s the third part that solidifies the reason why my meter went to 11, and it was this: Ms. Yellen seemed to be reading the answer verbatim from a prepared statement.

Don’t take my word for it, watch it for yourself. Personally I was dumbstruck by the exchange, and especially by one who should understand “communication” and how the cottage industry of detailing and parsing the Fed’s wording, demeanor, and more is now viewed in today’s Fed. centered world. Or, did she do precisely what is demanded in today’s HFT centered market?

Under normal circumstances it would be far more important for any leader (i.e., Chair, CEO, etc) to have answered such a question directly, forcefully, and extemporaneously. Again, especially given that the Fed. had done nothing but send “hawkish” signals prior. Yet, the Chair delivered what can only be interpreted as “prepared remarks and wording” to what is posed as an open question live Q&A.

You would not do that if your intended recipients were carbon based. It just doesn’t come off as credible. However: that’s precisely what you would do if your intended audience (or the audience that strikes fear into your committee) is silicon-based e.g., the parasitic, algorithmic, headline reading, laser enabled, High Frequency Trading (HFT) outfits. Here – wording, and precise wording at that, is paramount.

The next iteration of this form of exchange came a few questions later from none other than who is now known as “The Fed. whisperer” John Hilsenrath of the WSJ™.

Again, here was a question much like Mr. Liesman’s: a must ask, and, the way in which it would be answered, again, has real implications. i.e., “Will you raise before end of year, and is November now off and December the real focus?” The response? No need to type it all again. Just insert from the first question and response here, in every detail.

Now I will say there are times Ms. Yellen does answer other questions where at times seems to be glancing at either notes, or a prepared “call back into mind” response note which are tricks of the speaking trade. That’s not what I’m calling attention to here.

What I am highlighting is the stunning coincidence that the two most probable important questions of that presser were one: asked by the two reporters, to many which are viewed as the most accommodating Fed. reporters currently, and secondly, those questions seem to be the only ones in the entire meeting that were answered as if reading from prepared text, with absolutely no follow-up questioning as to clarify or pull any more information forward. None. Yet, that last part isn’t that hard to understand. For they’ve all seen what happens when one does precisely that.

If my assumptions are correct, than the implications for not only the “markets” but for the economy as a whole are truly frightening. Why?

Easy: It would prove as I stated many times earlier: “Wall Street now knows it can manipulate Fed. decisions with deadly efficiency.”

Want proof? See Wall Street’s efficiency in real-time by looking at any recent index chart and the “markets” response to a well-known dove imitating hawkish calls (e.g. Mr. Rosengren) then to what was considered the last voice of the Fed. before their media “black out” time before the September meeting delivered by Ms. Brainard as she intoned why the Fed. should refrain from raising rates.

If that isn’t enough “coincidence” to make a point I offer up the time since as the “market” appeared to be in limbo (if you look at the two days prior to the announcement it would not be unreasonable for the average person to look and ask “Were the markets closed Monday and Tuesday?”

And here we are today, less than 24hrs later when the Fed. basically made the same announcement as it did the previous year: “It’s Christmas in September. You’re welcome.” We are now (once again) poised to make never before seen in history highs across the “markets.” (The Nasdaq™ already did that within minutes after the decision. Remember: nothing to see here, move along. Thanks for stopping by and buy, buy, buying.)

So to bring all the above into more context let me illustrate why this is all now become far more frightful in my opinion….

If one watched the above presser (and if you haven’t, you should, don’t just take my word for it) you’ll notice when Ms. Yellen is asked what is probably the most important question after the above two, she answers it far more directly when the question is posed, as to the allegation, that the Fed’s decisions to keep interest rates low are politically motivated. It’s here that helps solidify my contention of opinion.

Her response needs no notes, is directly addressed in demeanor, and some might argue quite curt.

Why do I make this observation? Well, here is where carbon based (e.g., humans) recipients of the messaging is paramount. If you hadn’t noticed the difference previously, now that I described it, it’s far too obvious to now miss. It’s conjecture yes, I admit that. Yet, my assertions are made via years in business and needing to read these things in real-time. Your conclusions are your own, as they should be.

So, with that said, it was the answers she gave to that last question that left me both slack-jawed, as well as foreboding.

In response the Chair defended and pushed back against the political insinuations. Yet, it is hard to square a few circles in the logic or reasoning given in her answers. To wit:

  1. If the November meeting should be considered “live” how much of a stretch of the implausible does it take to believe the Fed. would indeed raise rates (regardless of how small) one week before a presidential election?
  2. If the results delivered a Trump victory, does the Fed. truly believe they could raise then without shattering all credibility as to the “politically aloof” contention the Fed. emphatically tries to bolster? The ramifications from the electorate, never mind the elected, could inspire “torches and pitchforks” type movements.
  3.  If the results delivered a Clinton victory, does the Fed. believe they could raise without inspiring the “torches and pitchforks” scenario not coming from the electorate – but being led in procession by the elected? (For clues look to the former senator’s senior senator from N.Y. Charles Schumer when he indignantly advised the former Chair Ben Bernanke when he expressed maybe more help from the political class was what was needed more than more monetary policy. i.e., “Get back to work Mr. Chairman.”)
  4. If someone thinks Wall Street hasn’t parsed and concluded the answers to the above – there’s a bridge in Brooklyn they’d be happy to sell you options on. Just ask them.

I’m now firmly in the camp that not only will the Fed. not raise this year – they may not raise again for years. For they are not only “painted into a corner” via their own misdoings – they are chained there by Wall Street. They’ve missed the window (which myself and a few others have stated was years ago) and now that window is boarded shut in the very way the Fed. itself should have done to its own Discount Window years ago. Again: Now they’re stuck. And the only monetary policy tool available is to make Christmas a recurring holiday at every FOMC meeting going forward.

As I stated long ago, once you began hearing the Fed. refer to “the neutral rate” or the “natural rate” as a go-to defensive response to monetary policy, that was the clue that they’ve lost control and are just punting and praying. Period. But the result of all that can kicking is an ever-growing tulip-mania beholden Wall Street, and a financial repressed economy that’s having a harder and harder time of concealing crony-capitalism manifestations both large and small. (See Wells Fargo™ for the latest, but surely not the last. Remember the cockroach theory is all I’ll say to that one.)

But hey – It’s Christmas after all, right? Just ask Wall Street and look at these “markets!” Who are we to question anything different, at least, that’s what the mainstream financial media tells us. And they should know, right?

© 2016 Mark St.Cyr

Wells Fargo: Who Says Crime Doesn’t Pay

Unless you’re one of the few people still watching CNN™,  you may have missed what can only be one of the most scandalous in-house criminal activities to be uncovered at a bank. And not just any bank. It happened at none other than Wells Fargo™, which, up until the scandal was revealed, was the number one bank (as measured via its market cap) in the U.S. The scandal? Here are just a few highlights as reported. To wit:

“On Thursday, federal regulators said Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts — without their customers knowing it — since 2011.
The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.”

And to use CNN’s own words to describe it: “The scope of the scandal is shocking.”

How shocking you may ask? Fair enough, here’s a little more from their reporting…

“The way it worked was that employees moved funds from customers’ existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as “widespread.” Customers were being charged for insufficient funds or overdraft fees — because there wasn’t enough money in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers’ knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.”

As scandalous as all the above is, what is far more insidious, is the damage it inflicts (once again) upon the very fabric of free market capitalism, trust in laws, and last but not least: trust and belief in actual contrition. i.e., “No we’ve really changed, really!”

As I implied, that “trust” has just been obliterated by the very people and institutions that created the last crisis in the first place. e.g., Banks, bankers, boards, and the very CEOs that run them.

Yes, I said it: i.e., Not some intimate object such as “bank.” But the very people who work there; from low-level staff, all the way up to the top as made evident in this latest banking scandal.

Again, as egregious as these revelations may be. What has been far worse (in my opinion) is the way the bank (Wells Fargo) handled this whole sordid affair both during, as well as after the fact.

As reported by the WSJ™, CEO John Stumpf defended his firm with this gem of damage control retort. To wit:

“There was no incentive to do bad things,” Mr. Stumpf said in an interview with The Wall Street Journal. He called the conduct that led to last week’s settlement with federal and local authorities “not acceptable,” adding that the bank doesn’t “want one dime of income that’s not earned properly.”

Here’s a tip for Mr. Stumpf, (after all, it is what I do) if that’s the best you could come up with at that time, not only should your PR team be fired along with the 5300 others you’ve dispatched. But so should you. Immediately.

Not only did you not show a minuscule of righteous indignation – you seemed to bend-over-backwards as to defend the payment of (wait for it…) $125,000,000.00 as a parting gift to Carrie Tolstedt, who has been reported to have been the executive in charge of the unit where all this fraud took place. You know, the division where “sandbagging” customers continued long enough to have created its own internal moniker. Absolutely disgusting and shameful. Period.

It has been said that Ms. Tolstedt’s timing to exit was a result of “personal decision to retire after 27 years” with the bank. Geez, I wonder why. Yep, nothing to see here, move along. Just pathetic.

When asked about clawing it back? (Insert non-committal, illogical, double speak here) But if you need to hear what Mr. Stumpf thought about her back in July:

“Tolstedt’s team is a leader in building and deepening customer loyalty and team member engagement across the business, which today serves more than 20 million retail checking households and 3 million small business owners, and employs 94,000 team members.”

It would appear “sandbagging” pays, no?

I suppose everyone was rewarded, even those at the top by the “added shareholder value” produced by such a “team player.” Everyone that is – except the poor customers who trusted one of the largest banks in the U.S. to be watchful stewards of their money, and personal identities. No, it would appear they were preyed upon like minnows thrown into a shark pool. Glad we have all that Dodd-Frank type stuff enacted so people could once again “trust” the banks and their bankers. But I digress.

If the CEO (e.g., Mr. Stumpf) would have hit the news wires first in some form of scathing rebuke of not only the people involved, but the audacity that the people at the very top of this scandal (which, in my analysis, directly implicates him either by willful ignorance or just plain incompetence) could walk away veritably unscathed with $millions to-boot? There might, and I say “might” have been a chance for credibility of deniability. But now it looks far more like implicit, willful, ignorance more than anything else. i.e., “Hey, her numbers are good – don’t ask questions. By the way, have you seen our latest stock price?!”

Because of this, it is my sentiment, that both Wells Fargo, as well as its CEO, have added their images to be poster-child’s in the growing list of what crony capitalism produces.

What the CEO (i.e., a true CEO with an ethical backbone) should have done was to come out swing with something along the lines of the following:

“This scandal is not only repugnant, it is unconscionable that some of the employees, some that I personally trusted and regarded highly, have been found to have violated our customers trust, along with our own, with criminal activity.
I have recommended to the board, and our legal team, to do everything in our power to claw-back every single dime possible that we have paid out seemingly under false pretenses, whether they were in the form of salary or bonuses. And, I want every possible criminal charge brought forth against them that may be applicable. Yes, even those which may result with the need of time being served. Let me be clear: against everyone responsible.
This is a blatant urination upon the sacred trust that is supposed to be upheld when a customer, regardless of how large or small, deposits funds or opens credit terms at any bank. Not just Well Fargo. This is unacceptable and it must not go unpunished. And I won’t rest with anything less than the full repercussions that the law can provide.”

Did you hear, read, or see anything resembling 10% of what I just stated? Hint: Nope.

Read the above quotes I referenced earlier as a reminder. Makes you want to run out and open an account and dispense with any of that troubling, filthy vehicle known as cash that far too many so-called “smart crowd” intellectuals are touting you should do. Doesn’t it? i.e., Don’t trust cash – trust the bank. Only criminals care about cash.

The only problem that now appears with that logic? It seems those criminals are within the banks just waiting for one to “hand it over.”  That’s a reality which is now becoming downright frightening. Just imagine what Jesse James would think about all this. It’s down right laughable if it wasn’t so infuriating.

And, by-the-way, if you’re concerned about such things: you’re insulted or portrayed as some type of “alarmist” (or worse – you must be a criminal) if you dare argue against the idea of a cashless society and the inherent problems contained within the theory.

Take the latest insult to intellect as proposed by Ken Rogoff, a chaired economics professor at Harvard, and a former chief economist at the International Monetary Fund.

In his case against cash, Mr Rogoff likes to build his case for a “cashless society” around all the boogeymen an Ivory Tower can muster. James Grant of Grant’s Interest Rate Observer™ wrote a cogent, scathing rebuke of Mr. Rogoff’s thesis. Here is just one line, yet, notice how perfectly it fits into this whole story. (The entire article is a must read) To wit:

“Terrorists traffic in cash, Mr. Rogoff observes. So do drug dealers and tax cheats. Good, compliant citizens rarely touch the $100 bills that constitute a sizable portion of the suspiciously immense volume of greenbacks outstanding—$4,200 per capita. Get rid of them is the author’s message.”

That’s right. Mr. Rogoff want’s you to deposit that filthy cash into a bank as to keep it out of the hands of criminals. The issue?

Well as of today it seems if you followed his advice and deposited at, oh let’s say, Wells Fargo? What you did in actuality was to hand it over to some greedy, dirty, disgusting criminal within where it was used to fuel criminal activity and self gain for themselves.

What’s the take away from all this? Hint: If there’s going to be criminal activity (as far as academia is concerned) might as well have it inside the bank rather than outside. After all: Criminals hate competing with each other. Whether in digitized currency or actual.

To people like Mr. Rogoff it would seem when it comes to criminality – banks are exempt. I wonder how Mr. Rogoff would feel if it was his “cash” that was suddenly misappropriated when it came time for him to use his ATM card only to find “insufficient funds” displayed when he knew he made a deposit days prior? I would wager he’d want his account closed – and paid in cash – as opposed to a “check” or “balance transfer” if he just found out “the bank” had been playing criminally with his hard-earned money. Bet on it.

Now Mr. Rogoff and his ilk could care less what a person like myself has to say about their ideas. After all, we’re nothing but a bunch on illiterate, economically challenged plebes that need to be herded into doing what “they” believe is “best for us.” Whether it’s in our best interest – or not.

So to that I would like to remind this Ivory Tower set of exactly what transpires when the banking system that issues all those digitized ones and zeros goes into free fall because of the reckless nature of those within that system created. e.g., The Great Financial Crisis of 2008. You know, the one that’s not even 10 years past and is requiring central banks around the world to continue “spinning plates” that would make a circus performer blush as to keep it all from crashing.

In, or about, 2008 during the heat of the crisis with the markets gyrating widely, none other than Mohamed El-Erian then at Pimco™ (someone I have great respect for) said in a televised interview on one of the financial shows I was watching (I’m paraphrasing): “My wife called me and asked me what she should do. I told her to go the nearest ATM and withdraw as much money as possible. For we both had no idea of just how bad things were going to get.”

I just wonder how well Mr. Rogoff’s argument about “cashless” would have stood had he needed to argue that position to Mr. El-Erian during that period? i.e., “Hey Mohamed, tell her not too worry, cash is for criminals and low life’s. She or you don’t need no stinkin’ cash! Have faith, faith in the system, faith in the banks!”

I don’t know what the response might have been, but I bet it could be summed up today in two words: Wells Fargo.

Yeah, I guess those other two words you were thinking of (e.g., FU) might be more appropriate. For I was thinking the same. Yet, on the other hand; don’t they mean the same thing as of today?

© 2016 Mark St.Cyr

Did The Music Just Stop?

Back in July I wrote the following article titled “Just Keep On Dancing?” And In it I stated the following. To wit:

“If there was ever any doubt that the “markets” are nothing more than a HFT (high frequency trading) cesspool of central bank funded front-running; today is that day when all doubt has been erased.

Whether or not one accepts that fact is a choice they have to make for themselves. Only you can decide how long you want to “dance,” as there seems to still be music playing in the casino ballroom.”

Since then the “markets” have (reminiscent of 2015) made headlines of “new lifetime highs” screamed by financial pundits everywhere extolling the virtue of today’s stock markets. Yes, every tick or move higher was praised as coming directly from the “earnings beats” produced by today’s balance sheet engineers.

Who needs fundamentals (you know, like more sales and such) when you can state before the earnings season you’re going to sell a gazillion dollars worth of product. Then, by the time you need to show those numbers, you have reduced it from “a gazillion” to about a dozen, where you’ll now proclaim you sold 13 “beating” your now stated, although lowered, target. Yet, it still offers up the headline “beat” for the next in rotation fund managers to proclaim across their willingly and reflexively repeating media outlets.

For that’s all that matters. Rinse, repeat.

So now as we sit here today the markets are waking up to not only a 2%+ downdraft across most of the major indexes. The “markets” are suddenly not behaving as they have since the beginning of the year. It seems someone, somebody, or something (i.e., your friendly HFT’s) have decided BTFD is now risky business. Funny how that happens, no?

It would appear based on “fundamentals” owning stocks, bonds, and a whole lot more isn’t as wonderful of an opportunity to buy, buy, buy if the number one fundamental facilitator of all price action (e.g., The Fed.) just might close the “open bar.”

No one knows for sure, but when the crying “doves” appear to be wiping away their tears as the jukebox begins to play “We’re not gonna take it!?” The prudent begin to move toward the exits and call for rides.

In that July article I posted a chart as to show where we were then. Below is where we are as of Monday before the market opens. To wit:

S&P 500™ as of September 9. 2016

S&P 500™ as of September 9. 2016

As you can see, we really went nowhere. However, if one remembers all the headlines and proclamations touting “New lifetime Highs, Again!” over the last few months. It would be easily explainable why, when one looked at the above chart, you felt a little puzzled. After all, not only has the “market” basically gone nowhere since then. It now sports a selloff of over 2% – and the month has just begun. (The above is a monthly chart)

So the question is: Did the music stop on Friday?

If it did, then that red line I placed showing the rise based on nothing more than “Central Bank Liquidity” as the fundamental reason of that rise shows just how precariously high, and subsequently, just how precipitous of a potential decline is once again being placed “on the table.”

As I stated in another article “Wall St. Laughs As The Doves Cry” It appeared the HFT cabal was more than emboldened that the “liquidity bar” was going to remain open, regardless of any further rhetoric coming from the all too predictable Fed. members.

However, once a perceived dyed-in-the-wool Keynesian dove (The Fed’s Eric Rosengren) starts touting the idea that he too believes it may be time to raise rates, all while he does the equivalent of strutting across the bar-room, hitting the jukebox, and it begins to belt out a Twisted Sister song? As I said earlier – the prudent are going to begin heading for the exits.

That’s a fundamental you can bank on.

Now the only question is: How much further does this decline travel before the owner of this “bar” (Chair Yellen) proclaims once again…

“I declare September is off the table! Drinks are on me!”

Welcome to your fundamentally flawed “markets,” where the only thing that matters fundamentally – is the open spigot of liquidity.

© 2016 Mark St.Cyr

 

From My Perspective…9/11…Life and Death

In remembrance of  Peter Hashem…Flight 11,  Seat 20A…Struck the North Tower at 8:46:40 am EST.

This column is different for me, this one is a little more personal. Unlike my usual columns, this is to give perspective for not only myself, but maybe for you also.

The only thing I can say to start is: Life is precious. And when it ends for what ever the reason, at any time, chances are you will not have any control of the timing or the circumstances. So live to the fullest everyday, regardless of where you are in life, because the unexpected, and the horrific, can also happen to you, not just someone else.

When the tragedy on 9/11 happened, it changed many of us, if not all.

Like most, I remember exactly where I was. I remember also standing in line at my local bank moments after it happened, and watching the televisions while waiting in line in utter disbelief along with everyone else in the bank. For all of us…time had stopped.

The days and months that followed with the heroism and the outpouring of help and support is well documented elsewhere. Living in New England at the time, you either had gone to Ground Zero yourself to try to offer any help, or someone you knew had.

I owned a local Deli at the time. The owner of a company who supplied me with breads went back and forth to Ground Zero to pass out muffins and pastries to the rescue teams at night only to come back up to New Hampshire and then start his deliveries. No one complained, no one said how hard it was to do, no one was looking for credit. It was just done. It’s just the way it was.

On that day many of us changed. We viewed life a little bit different. It suddenly hit you with laser like focus that life is precious, and death can come at any moment, from anywhere. No longer was this an esoteric exercise. This was life at its core, and it was playing out in front of our eyes leaving no gray area to ponder.

You either got it – or you didn’t.

In honor of that tragic event I myself set new rules, new guidelines how I was going to go forward in life. I decided I would live life my way, by my rules, and if I were to die today, so be it.

I could say that because I was going ensure I was living, regardless of economic conditions. Not just trying to exist or simply get by like so many other do. That was not why we’re given life. It’s for us to live! Never let that be taken from you – by anyone. Period.

September 11, 2001 changed my life forever. It’s now hard to comprehend it’s been 15 years since. But as I said, in honor of that tragic day I decided to use it as a reminder that while on this Earth, I will live. Live everyday, take nothing for granted, take no one for granted, and live to today to chase the dreams of tomorrow. For if I do that one simple step, whether I reach those dreams or not…I will have lived.

For you see, Peter was not only someone who tragically died on that day. He was the younger brother of my close friends growing up. Life doesn’t just happen to someone else. It happens too us all.

We owe it not only to ourselves, but to them. Never forget.

© 2016 Mark St.Cyr

 

Janet – You Gonna Have Some ‘Splainin To Do!

For those who might not get the intended pun in the above title, it’s a play on words Ricky Ricardo (Desi Arnaz) would use when demanding his wife Lucy (Lucille Ball) as to explain whatever mischief or crisis she suddenly found herself in on the “I Love Lucy” show. I think it fits the bill today as to describe just what type of “mischief” or “crisis” the now Chair of the Fed., Janet Yellen may now find herself painted into. The only issue that’s not laughable for the comparison is the fact that Lucy’s escapades were fictional. Ms. Yellen’s are going to be on public display in an all too real reality – although it might be quite the spectacle rivaling anything on current reality television.

As I’m typing this it has been less than 48 hours since presidential candidate Donald Trump gave a speech in Philadelphia calling for a vast expansion of the military. Already there are arguments across the media about “how to pay” for such an expansion. As usual the main stream outlets are throwing “cold water” all over such an idea. After all, it’s easy to say “We can’t afford it!” Easy to say yes, but the problem is – the same outlets have praised how easily we could afford, and “can do more!” to cure the ills of this current economic malaise via The Federal Reserve and its toolbox of monetary magic.

Now let me say this directly, and as forcefully as I can so that there is no misinterpretation of what I’m stating here: I am not endorsing one candidate or another. I’m not saying I agree or disagree with either’s positions or proposals. That is for you to decide. What I am stating is a factual based retort that has ramifications for all of us because regardless of who wins, the facts are the facts, and it will be from the next victor of the “bully pulpit” that the current Fed. Chair will need to explain why she can – or – why she can’t do “X” when it was they themselves who are the ones that showed the world how money ex nihlo truly works.

As of today the Fed. has swollen its balance sheet to some $4,500,000,000,000.00 That’s 4.5 TRILLION (give or take a few Billion, but what’s a few Billion among friends, right?)

A few years back I made the argument that people (and the main stream financial/business media in particular) were throwing around numbers as if they were talking about nickles or dimes. A few Billion here, a couple more there, and pretty soon you were talking about “chump change” in the eyes of the media. $100s of Billions of dollars were discussed as if they were nothing but pocket change in the “larger scheme of things.”

It was to these ridiculous, incredulous, and outright callousness to remain clueless of what these figures really represented that I penned an article as to understand what these numbers truly represented. Here’s a sample of that argument. To wit:

“So here’s a quick example I used to give perspective. This is not – I repeat – not an endorsement of what I believe we should be spending our money on. It’s just an analogy so one could wrap their heads around the differing circumstances. For if we are talking BIG numbers, you’re going to need BIG things to represent them.”

“Bring up the subject whether they should or shouldn’t stop or taper and people seem to have no problem with spending or printing the $85 Billion month after month if that’s what it takes. Regardless if they understand what $85 Billion represents or not in any other form. It’s a fools way to look at it in my opinion. So here’s some perspective using items procured through the military.

If the Federal Reserve only cut their quantitative easing (QE) this month from $85 Billion to say $75 Billion. That cut would represent approximately the equivalent of building – FIVE – B2 Stealth Bombers. That’s per month. And that’s the reduction! Currently the Fed. is printing and pushing money into the markets as if we ordered (wait for it….) FORTY TWO brand spanking new B-2 Stealth Bombers – per month!

Let’s not forget Congress cut the building of the B-2 at a little over 25 planes down from the original 100 or so first envisioned because of costs. The Fed. today injects into the markets monthly the monetary equivalent to purchase double the existing force again – every month.

Want a better representation? In just 1 year, again just one year, the Federal Reserve has pumped enough money into the markets to have purchased, (Again, wait for it...) FIVE HUNDRED and TEN new B2’s. Remember – we now have somewhere in the mid 20’s. (I used 2 billion for each plane since that’s in line where they were when first ordered, however at that pace would a discount be in order? Just sayin’)

So again to make it clear – that’s just one year in planes. What would it be if we used say the most expensive and technological marvels on the planet? The Nimitz Class Nuclear Powered Aircraft Carrier.

Currently they have an approximate price tag of around $13 to $14 Billion dollars each. Based on the above math QE pumps into the markets the equivalent of purchasing SIX brand new state of the art Nimitz Class Aircraft Carriers – per month!

In just one year the same amount of QE dollars would purchase SEVENTY TWO. Again for a little perspective our current navy stands at around 19 commissioned ships. That’s both old as well as new combined. Once again in just one year, we could replace and expand our entire aircraft carrier fleet with the newest and greatest available nearly 4 times over.

Let’s just throw one more technological marvel in for the fun of it. One of my absolute favorite marvels the world has created. The submarine. Using today’s most advanced example aka “Boomers” or Ohio class. You could build approximately TEN per month at the pace the Fed. is injecting money.

At only $6 to $8 billion a piece that means in one year you could build nearly One Hundred and Twenty brand spanking new technological marvels. Again – in just one year. I believe that would replace all existing vessels also by multiple folds.”

Now let me reiterate what I just outlined here again as to get some perspective on not only the dollar amounts but, what those dollar amounts truly entail.

“In just 3 years the Federal Reserve has pushed into the financial markets via the QE programs the equivalent in dollar amounts to have purchased

510 B-2 Stealth Bombers,

72 Nimitz Class Air Craft Carriers,

120 Ohio Class Submarines,

and I still have nearly 2 more years of money to appropriate where ever or for what ever I desire. i.e., Two TRILLION is still in my pocket left to spend. QE and its equivalents are now nearing 5 years.

I still have plenty left to buy the aircraft, to man them or, the missiles to outfit them. Heck, that’s just if I stop here. So far there is no indication the Fed. is going to stop and there’s also talk that the new Chairperson might be inclined to spend more!

Maybe we should add a few M1 Abrams tanks just for the fun of it. They’re about $7 Million a piece so we can get Oh let’s say TWELVE  THOUSAND a month. Yes that’s 12,000 per month or One Hundred Forty Four Thousand (let that number sink in – 144,000) in a year. Sounds like a bargain when I state it that way doesn’t it? And I would still have a Trillion left if they stopped printing today.

But here’s the real crux of this argument and why I stated it as such. Sure it’s a little hyperbole and the math is not exact. We would never do now nor would anyone ever approve of such a plan. However, think of where GDP and the economic output as to where it would be today as to employ the talent needed to build those marvels. The engineers, the skilled labor, the steel, the copper, the mechanized equipment, the hotels, restaurants, and more to feed those that just supply the day labor, never mind the industrial backbone of supply that would be needed and more.

If one thinks there is a spin-off in trickle up or down money in housing or cars – just think about the economic impact building one of these marvels entails. At the above run rate you probably couldn’t have an unemployment issue. The impact would be far too great across far too many industries. Yet…”

So with current FOMC members stating that they need more “fiscal policy” along with some in the “Ivory Towered Halls” of economics/academia openly touting a “doubling” of its balance sheet (after all what’s another $4Trillion among friends, right?) should be considered to foster economic growth; there lies an even bigger question on the horizon for Ms. Yellen….

What exactly will the chair do when the call of “Ms. Chairman – get back to work” comes this time from the President with the “bully pulpit,” as opposed to just one of 100 senators relegated to CSPAN™ and Wall Street? Nan you just imagine the badgering that will be unleashed when something like “We can’t afford to do that.” comes up when it was done for Wall Street?

The new fall season for reality TV just got a whole lot more interesting from my perspective.

© 2016 Mark St.Cyr

The Fed Fiddles While Free Markets Burn

We’ve all heard the story of how the emperor Nero fiddled as Rome burned. Today, we use it an as analogy, whenever fitting, to show the callousness of either a person or entity when they are obviously engaged in wreaking havoc or utter devastation; all while caring none-the-least.

Nobody seems to fit that bill today more than central bankers. And to show just how Nero-esque they can be, it was none other than our own Stanley Fischer, current V.C. of the Fed. who displayed in an interview with Tom Keene of Bloomberg™ what can only be deemed as the most infuriating lack of compassion, as well as sheer imperialist intoned advice. Here’s a few “gems” from that interview. When it comes to negative rates? To wit:

While the Fed isn’t “planning to do anything in that direction,” the central banks using them “basically think they’re quite successful,” Fischer said Tuesday on Bloomberg Television with Tom Keene in Washington.

“We’re in a world where they seem to work,” Fischer said, noting that while negative rates are “difficult to deal with” for savers, they typically “go along with quite decent equity prices.”

So what is one to infer? Easy: Fed too savers and the prudent: Screw you – buy stocks.

You don’t need to take my word for it. If you’re a saver, a retiree, an entrepreneur who just sold your business, a pension fund recipient, an insurance policy recipient, __________(fill in the blank) You know all too well the harsh reality of what the Fed. and others have wrought to these markets and their once stable products.

No, you’re now told to wipe those tears with those now negative yielding, once safe repositories for one’s wealth – and plow it into stocks. You know, where the Fed. believes things are pretty “decent.”

That is, until their next policy error. Then? Who knows. Although, with that said, what I have no questioning of is this: The ones who clearly don’t have a clue are the very ones now sitting back giving some form of altruistic investing advice. e.g., central bankers.

As bad as all the above is, what is even more concerning is that the Fed. (as inferred by all the latest Fed. chatter) is that they are absolutely clueless as to just how damaging they have been over the last few years. They have gone from self-imposed saviors of the world economy – to destroyers. And the evidence of that is now making itself known, much like the iceberg did for the Titanic. i.e., It may be too late to do anything other than see just how bad this is all going to end.

Based on what you may ask? Well, to my observations it can all be summed up in one word, and it too has to do with shipping. e.g. Hanjin™.

The issue with this story is two-fold. First: Not only is this story being brushed aside in an “Oh well, a shipping company went out of business.” story by the financial/business media. The second is: nobody seems to grasp the underlying destruction that may result in both business to business confidence and subsequent other damages it will have across the global supply lines in ways that will effect everyone – and the central bankers will be left powerless to do anything to quell it. For they are the cause, not the remedy.

The reason why this latest developing revelation (and it is – just starting) is so crucial to understand is this: It’s not about a company – it’s about how all companies will, or will not, send products to market going forward.

For if a company can no longer have surety that products will reach their destination, and they will be paid when they arrive – everything stops. And by that I mean everything. In other words; the company that produces the raw material, the company that produces the product, the middlemen, the retailer, and on, and on.

And when one of the worlds largest shipping companies with cargo aboard goes belly up stranding everything at sea, ports, yards and more out-of-blue? Everyone (as in every business) is now suspect.

Rates, letters of credit, insurance, and a whole lot more will most assuredly begin to go not only through the roof; some might not even be available going forward.

This is a direct response and result to central bank interventionism. For the pricing models, and market signals that would normally be present in a free market capitalistic environment have been either obliterated, or perverted so much to the point prudent business people can longer decipher market signals. And if you can’t see with some clarity – you just no longer take chances and sit on your hands. Even if that means lay offs, scrapping projects mid stream, and a whole host of others.

Central banks have destroyed market fundamentals. Pricing models that have worked, and been honed for generations, have been laid to waste by current central bank QE (quantitative easing) interventionism. And now those market forces are coming home to roost. And the premier of those forces is: Trust. i.e., getting paid.

Once there is even the slightest hint that that “trust” may be in question? All bets are off. And there isn’t a damn thing any central banker is going to be able to do about it if (or when) it happens. Period.

If central bankers are feeling frustration after flooding banks with trillions upon trillions of dollars and they still can’t get people to borrow or the banks to lend. Disruption in the “trust” when it comes to business to business transaction will make the first look like child’s play. And trust me, in practice? It is.

Pricing mechanisms along with their practical applications for hedging, price discovery, and more have been completely obliterated. And Hanjin is just another in an ever-growing list that many not only in academia haven’t a clue about, but also, those in the main stream business/financial media also seem oblivious to it’s all too real upcoming ramifications.

Want some proof? Just look to cattle futures. Or should I say – don’t look? For that market is all but been obliterated. After all, why make markets when all you need to do is take that money with little to no risk (at this moment) and BTFD in a “market” that’s more corralled than a stock yard? i.e., anything “branded” with a central bank bulls-eye on it.

That is – until beef begins swinging to-and-fro in ways that make going to a grocery store a decision on whether to bring your wallet – or a wheelbarrow?

Without stable markets to hedge livestock, vegetables, fuel, and more – don’t think for a moment some farmer or rancher is going to just “risk” raising or growing what everyone takes for granted to keep the shelves full. They won’t. And you’re already seeing the damage. It just takes time to work its way though when the decision, for the next decision, to raise, or plant has to be made.

For some markets (such is cattle) that time is now. But the results won’t be fully understood till later when there isn’t as much available, or worse, it possibly costs far more than most can afford. But hey – buy stocks right?

What most don’t understand (particularly those in academia) is just how quickly everything changes in business and commerce once the “trust” of being paid begins getting questioned. You don’t have to look all that far back for real life examples to see just how devastating, as well as how quickly, everything can go awry. I know for I was in the middle of it trying to conduct business during one of the most tumultuous times of the last few decades. e.g., During the Savings and Loan crisis of the late ’80s early ’90s.

During this period one of the most businesses hobbling things that manifested was the ever-changing terms of not only outright business credit, but also the terms on one’s revolving line of credit used to pay things like receivables (i.e., the bills) and you know that other little recurring expense – payroll.

Whether you, or your customer would be able to meet those obligations was at first, a monthly challenge, then weekly, then daily as terms via one bank to another changed from one day to the next.

An example went something like this, and this is from first hand experience, not speculation….

First you received a phone call out-of-the-blue and were told by your bank that your credit line on receivables, which were allowed for receivables 90 days old or less, were now reduced to 60 days.

In effect, what this did was this: Let’s say you had a customer that paid you 90 day terms like clockwork, never had a late payment, and did business with you at a rate of let’s say $300K per month.  You now just lost $300K in working capital. And that’s for just one of you accounts.

To make matters worse, these changes were implemented immediately, as in today, not tomorrow, not next week, not next month, but right there and then.

And the response when you questioned (or screamed?) “Sorry, those are the new policies, and if you want to pay your balance off and find another bank? We understand.” And there was an unmistakable tone (or hope) that that was exactly what you would do. But it didn’t stop there.

Then, just like the previous, you received a notice that 60 was now 45. Then 45 became 30, then 14. Till in the end, you could no longer afford or manage being in business. Remember, this was taking place at first over months, then it was weekly, to near daily. But it wasn’t just you. It was also the same at your customers. And as they too succumbed to the same thing happening to them, the banks themselves then started shuttering at an alarming rate. Hence the now “Savings and Loan crisis” moniker.

Any business that relied on credit terms (which was just about most small businesses) was crushed out of business. Meat and provision suppliers closed, restaurants closed, and on, and on. If you were working in any downtown during the crisis you know just how fast businesses you deemed as “main stays” of a downtown and more closed in rapid succession. And guess what? It was none other than “the Fed.” who supposedly came in to rescue what basically they created. Hint: Does “The Committee To Save The World” ring any bells?

Back in 1999 when the Fed. was much like it is now riding a wave of media inspired congratulatory press as the “markets” were still riding the bubble created that would set the stage for one of the largest market collapses in history. e.g., The dot-com bust.

It’s quite possible I’m completely off base on this, and in many ways I hope that I am. However, I just see this latest Hanjin disruption much like when I made the case about why one should be prudent when it came to commodities far before the ensuing collapse when I penned “The Scarlet Absence Of A Letter Of Credit.” One doesn’t need to be a commodity trader to remember what happened next.

Again, maybe all this angst when it comes to these most recent manifestations should be taken in stride. After all, as Charles Prince of CitiBank™ famously stated (paraphrasing) “While the music is playing – you have to keep dancing.”

Yes, that may be true, for it is unmistakable via Mr. Fischer’s latest remarks that both the Fed. and others are quite content at bowing their monetary fiddles.

All while free market capitalism burns at the altar of monetary imperialism.

© 2016 Mark St.Cyr

Just A Note To Prove A Point

Over the years I have pounded both the lectern, as well as my keyboard on the fact, without central bankers – there would be (and still is ) no market.

Making this type of statement when you’re in the company of Ph.D’s, fund managers, or wide-eyed entrepreneurs who see themselves as the next “Zuck & crew” is not only not fun, it can be downright nauseating to say the least. The rebuttals and more as to argue otherwise, as I’ve stated ad nauseam, border on nothing more than wistful fairy-tales.

So with that said (and all that I have said previous ) I now offer de facto proof from one of the most heralded reporting agencies by those very doubters and arguing aficionados that what I’ve been stating is the correct side of the argument. To wit:

From Reuters™, today August 30, 2016: Swiss Central Bank Steps Up Stock Buying Spree.

And the money quote:

“ZURICH, Aug 30 Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

The tech giant’s founder and CEO has other ways to control his company: Zuckerberg holds most of his stake in a different class of stock. Nevertheless this example illustrates how the Swiss National Bank has become a multi-billion-dollar equity investor due to its campaign to hold down the Swiss franc.”

To reiterate what I’ve consistently stated, all while being relentlessly, and near mercilessly ridiculed for even making such an argument. Again, to wit:

“The only thing that matters in business today is whether or not your company is on the buy sheet of some central bank. And just how does one expect to compete when you have a great product or service, but your competitor’s bonds or stock is on that buy sheet? Your debt offerings will be left withering in the wind as your competitors get bought hand over fist with money printed ex nihilo! This is precisely how crony capitalism is fueled and expanded.”

I was going to put this under the F.T.W.S.I.J.D.G.I.G.T. archive. (for those who say I just don’t get it…get this)

But this one stands on its own.

© 2016 Mark St.Cyr

Wall St. Laughs As The Doves Cry

Over the weekend I wrote an article pertaining to the now viewed “hawkish” statements being reported via the main stream business/financial media. In that article I made the following statement. To wit:

“The mainstream financial/business media was all a-buzz as if they had just heard the hidden meanings contained within some lost relic of antiquity. It was near laughable if not for the implications it truly contained. i.e., The Fed. is not going to move; they are pigeon holed by their own hands; and not only do they know it; but so does Wall Street.”

If you listened, read, or watched any of the dissecting, as well as the parsing, the only take away was: “They just might move and it’s apparent with the immediate selloff that Wall Street believes they might also!”

Some were near apoplectic that both Yellen, and Fischer, two dyed-in-the-wool Keynesian devotees, would together, at the same venue, strike what the media was hearing as “hawkish tones.”  It was near comical in my view.

As I said in the above statement, and to reiterate: “The Fed. is not going to move; they are pigeon holed by their own hands; and not only do they know it; but so does Wall Street.”

The media didn’t just unlock some deep hidden meaning at Jackson Hole. No, what’s obvious, and what they reuse to see, is that the Fed. not only won’t move – they can’t! And they are showing just how pigeon holed they truly are with what can only be seen as desperate measures like setting up a Facebook™ page as to help get the word out about their good deeds. It borders on pathetic in my view.

If you want any more proof as to just how feckless the Fed’s credibility has become as it pertains to its “messaging” – just look at the “markets” as of this Monday. As I’m typing this the markets have once again soared since the open and are now some 13 or so points higher (using the S&P 500™) and is within spitting distance of another new, all time high. Yeah, “hawkish” sentiments inferred, indeed. What a joke.

Or, should I say – the joke is now on the Fed?

As the HFT cabal laughs all the way to the bank.

© 2016 Mark St.Cyr

Pigeon Holed At Jackson Hole aka When Doves Cry

This week was all a-buzz in regards to what would, or would not, be said by various voting members of the Federal Reserve’s FOMC (Federal Open Market Committee.) It is today’s equivalent of a business/financial media reality show. Everything is scripted, orchestrated, and presented to have the appearance of spontaneity. The issue is – it fails miserably.

Want proof? Look at Friday’s market reaction as two of the most prominent and ranking “doves” (Vice Chair Fischer, and Chair Yellen) made what many declared in the press as “hawkish” tones.

That reaction? The “markets” (using the S&P 500™) went from being up 15 or so points within spitting distance of another new, all time high – to close down about 3 points. The horror!

This was attributed mostly to Mr. Fischer (supposedly) throwing cold water that a rate hike in Sept. was off the table. To paraphrase: “He believes the case for an increase rate has strengthened.” But of course, there was the Chair herself, when asked if not only a raise in Sept. was possible, but also another before year-end she said (paraphrasing) “Yes, but we won’t know until we see the data.” My response? But of course: “the data.” Today’s policy maker equivalent of “but then again.”

I have never witnessed such tea-leave reading into the parsing of words which are nothing more than a deliberate delivery of “Yes, no, maybe, of that you can be sure.” in my lifetime.

The mainstream financial/business media was all a-buzz as if they had just heard the hidden meanings contained within some lost relic of antiquity. It was near laughable if not for the implications it truly contained. i.e., The Fed. is not going to move; they are pigeon holed by their own hands; and not only do they know it; but so does Wall Street.

If Wall Street thought there was even a chance that the Fed. would indeed move in Sept., let alone, once more before the year-end? You would have seen a selloff which at the very least would be calculable using whole percentages. Never mind moves that need to be stated in the hundredths (e.g., .16%) while remaining nearly just as close to all time highs.

Now the tone seems (or being whimpered) that these very same Fed. members that relished their omnipotence over the last few years, are now openly pleading with policy makers as to help them with this monetary burden of holding up the “markets” and economy single-handedly, and enact legislation via opening up the spigots of the tax-payer purse.

The real issue for the Fed. is that print, front-run, and pocket economy now being enjoyed (and employed) by the HFT cartels can be placed squarely at their (The Fed’s) doorstep. The “markets” are now unquestionably nothing more than an algorithmic, headline reading, front-running cartel of circuit board, laser enabled traders. And they now know just how beholden this Fed. is to now making sure no market turmoil is allowed to take place.

And the panic of the Fed. to this realization is growing ever clearer, if, one pays attention.

An example of this and just how feckless the jawboning of Fed. officials has become was on display in no other laughable place of desperation than Facebook™(FB.)

Yes, the Federal Reserve, the singular most powerful monetary institution currently on the face of the Earth decided in all its wisdom what was needed for the public to help better understand both the Fed., as well as its current policies and actions was to create a FB page. Think about that for a moment. The Fed. is reaching out to give the most ill-informed, misinformed, and uncaring part of society the ability to sit back and postulate further Fed. intentions via reading an assortment of curated content.

What an utter display of tone deafness, as well as clueless. And that’s the real problem.

The Fed. creating a FB page is one of the most sheer moronic things I’ve seen by such an agency or institution. It reeks of an “Ivory Towered” environment flailing around desperately in search of any and all ideas, even those they have absolutely no understanding of. But even worse: are possibly employing them out of desperation because, as the thinking goes, “Well that’s what I hear people do these days.” It’s pathetic. But what may be worse (if there even could be) – is the possible reason for it.

The Fed. is now so backed into a corner it may have finally come to their attention what many of us have been saying for quite some time: “Not only won’t they move – they can’t!”

Currently the only ones moving these “markets” to-and-fro are the HFT’s front-running any and all orders which are placed out of necessity. And when it comes to the big players? (i.e., the Icahn’s et al) Can you say Short? e.g., they’re selling – not buying. And they’re being quite vocal about the why, which is not making the Fed. comfortable.

The headlines coming across when reported on the biggest names on Wall Street are not anything like those once enjoyed by the Fed. i.e., “Market conditions are not healthy because of X,Y, or Z.” No, now the quotes you hear coming from the television screen or other media is that the biggest names on Wall Street are shorting or calling for a market free-fall based precisely on: The Fed. and their reluctance to have moved on rates prior.” i.e., “When this all fails – It’s all The Fed’s fault!”

And that chorus is growing louder and louder by the day, and it’s not sitting well with The Fed. I’ll wager.

There’s no way the Fed. can move regardless of “the data.” They’ve waited far too long, and there’s no one to blame but themselves and their incoherent messaging.

Now it’s the Fed. that must react to the HFT’s version of “Do you feel lucky?” For as soon as there’s what it believes is a credible move on rates? Say goodbye to liquidity, as well as any semblance remaining of Fed. credibility.

Oh, and as for the political class riding in to help alleviate any of that burden? Let me just finish with what was told to the former Chair when he alluded to any such notion. To wit:

“Get to work Mr. Chairman!”

Yes, indeed. Just a friendly reminder of who works for who. Other than that, go right ahead and raise in Sept. You know – because “the data” supports it.

© 2016 Mark St.Cyr

The Disgusting Silence Fueling Crony Capitalism

“There’s a kind of hush, all over the world tonight. All over the world you can hear the sounds, of lovers in love….”

Those lyrics (by Les Reed and Geoff Stephens performed by Herman’s Hermits 1967) pretty much sum up what can only be called the coziest relationship big business has ever had with governments and their duly appointed central bakers, since the time of kings and their crony riddled courts.

Free market capitalism; the very heart, soul, and driving engine that has propelled technology, medicine, transportation, manufacturing, efficient markets, and so much more is not only under assault; it is being left out to hang like some dried, dead leaf by the very people who should be at the forefront for its defense. i.e., CEO’s and business leaders of all stripes. Yet, so far – the silence is deafening.

If you turn to any business/financial main stream outlet, the only thing you’ll hear is either: what will Janet say tomorrow. Or second: how will the “markets” react. What you won’t hear is how an un-elected group of policy wonks, who have never run a business in the private sector, will decide the fate of much of the global economy via a dictate much along the lines of “Yes, no, maybe; of that you can be sure.”

The markets will react in their now typical reflexive manner via HFT (high frequency trading) algorithmic, parasitic, front running enabled programs, vacuuming up Billions of dollars across the global markets for the sole purpose of doing nothing more than enriching themselves, and the leeches which enable them.

To state these markets have anything to do with actual business formation is ludicrous. I used to call them “casinos” but I now feel I’m insulting casinos. After all; at least there you know what you’re getting into.

Today, pension funds, insurance providers, and any other business that needs the stability and safety of a stable and secure market product are left in dire straights. Savers, retirees, and small business people alike either can’t retire, stay retired, or sell their businesses allocating their funds to a stable product. But as bad as that is, it’s not the worst in my opinion.

What is absolutely disgusting is the deafening silence coming from big business in general, and the so-called business trade associations that say – they are the voice of business. i.e., Chamber of Commerce™ et al.

You hear a lot of , “Business climate blah, blah, blah.” “Financial climate blah, blah, blah.” “Employment climate blah, blah, blah.”

What you don’t hear is anything resembling: “And that is all secondary to the crony-capitalism running rampant within the business community. For the very fact that companies are allowed to just financially engineer their balance sheets, and be rewarded for that engineering via funds to purchase their stocks or bonds, or have others do the same using the Fed. (and others) as their piggy bank creates those very conditions of business apathy, stagnation, and more. Yet? (insert crickets here.)

Where are the voices from the business community? Where are the so-called “business leaders” that should be standing up and decrying at every conference or interview “The Fed. (again, and others) needs to get out-of-the-way. They are the ones inflicting this stagnation via their stranglehold to an “emergency” policy stance!” But they won’t, for their bonuses require that things stay just the way they are. After all: you get to blame a boogeyman you have no control of, while at the same time, much like the Fed. you can engineer earnings “beats” far easier than if you tried to actually sell a pair at a discount.

GM™ should be now known as “a division of FORD™.” Yes, it’s an over-simplistic, hypothetical. But the point and the argument stands. Want something more recent? How about VW™? We know the ECB is in there buying them and more, much more. And we haven’t even talked about Japan.

People will say “The Fed. isn’t doing that here.” That’s somewhat true, they are not openly stating such. But indirectly through other sources which benefit directly from the Fed’s largess? It’s unquestionable, as well as undeniable. And business leaders know it.

If you build a company that deserves market share, yet can’t compete because your competitor is being kept afloat, for their bonds or stock is on the radar of some central bankers buy sheet is not only unfair competitively – it’s damn well un-American. Well, at least as it used to be seen. Today? We’re all part of the “global economy” is the rallying cry by many of today’s business leaders that are just salivating at the chance of being on that list.

From my point of view – it’s disgusting. And it should be argued against at every possible moment. Especially by those at the top. Then again, maybe I’m just part of a dying breed. But I doubt it.

Next month I’ll be giving another speech at an entrepreneurial center where I’ll be confronted by a hall full of onlookers with questions that fall around “What I just don’t understand today is ….” Where I’ll have to go through the painstaking process of pointing out what they thought they knew about business – is no longer. For business fundamentals at certain levels no longer apply.

The only thing that makes me feel that maybe, just maybe, there’s hope for free enterprise, and free market capitalism going forward is from the reaction of those in that hall once we conclude. For it is they that then go silent, and are legitimately pissed off.

And all that furor is directed directly at undermining those cronyism infested business models.

© 2016 Mark St.Cyr