Source: Michael Ballanger for Streetwise Reports 01/20/2020
Sector expert Michael Ballanger considers the last week in the stock and precious metals markets.
Ever since Sept. 19, 2008, when Hammerin’ Hank Paulson appeared in front of the U.S. Congress on bended knee and begged those clueless politicians for a bailout—which he did successfully—the spread of moral hazard throughout the world has been a contagion that makes the Bubonic plague appear as harmless as the common cold.
That was, in fact, the day that shall go down in fiscal infamy as a most dangerous precedent was etched into the fabric and soul of the U.S. financial system. Not only did it set the behavioral course for the banker-politico alliance, it laid out as an insidious blueprint the operation manual for treasury departments and central banks around the world, the result being where we are today, a global economy teetering on an Mount Everest of debt with no solution on any horizon.
This week the investor class has seen the continuation of an advance in that began with the first whispering of the phrase “repo operations” in September, the realization of which did not manifest itself until late October, when I penned the missive “Q4 Guesstimates.”
As I wrote in September, “I have the feeling that the PPT, with DJT at the helm, is going to go all-out in making damn sure that we have a booming stock market going into 2020, so that his re-election chances don’t suffer from the ‘It’s the economy, stupid’ misfortune suffered by George Bush in his re-election run against Bill Clinton.”
That was written on Oct. 20, 2019, with the S&P 500 at 2,986, and with investor sentiment completely undeterred by the Fed liquidity binge. Fast forward a paltry ninety days and $400 billion in repo injections, and here we sit now, at 3,316. Upon reflection, the only words that come to mind are “mission accomplished”, a phrase used all too lightly by our leaders these days.
I was sitting in the big bay window overlooking the frozen expanse that is now Lake Scugog last night and was immediately reminded of just how much difference a year can make. This time last year, there were dozens of fishing huts standing all over the lake as temperatures were well below freezing for three solid weeks. This year, the lake is vacant of all fishing, snowmobiling and walking, but quite amenable to swimming should you be brave enough to venture out.