Captain Morgan and His Life of Lies ~ The Risk Averse Alert

Wednesday, March 30, 2011

Captain Morgan and His Life of Lies

Gee, maybe those oh-so-behind-the-curve bond ratings agencies ought downgrade sovereign debt everywhere, that QE III thru infinity might be more greatly assured ("Most economists say a bailout [of Portugal] is all but inevitable." Oh please, oh please, oh please.). Then, those among the bankrupt employing these useless screws might gain another week to feed their yet more wildly overvalued equity stakes to the thinning herd of suckers willing and able to buy the crap.

Ever the Team [Fraud] player, the Fed's announced intention to put lipstick on its Goldman pig probably is better seen cosmetic psychological surgery on a fantasy that quantitative easing soon will be ending (this possibly to forestall Trichet's effort to force the issue?). I would sooner predict the worst blizzard ever to hit New York City this coming July before suggesting the end of QE is even a remote possibility. All talk of strong demand among yield hungry suckers for the Fed's Maiden Lane II stake aside, effort to bolster appearances that QE is a success — another "mission accomplished" courtesy of the politically hapless — most effectively serves to grease the works with sophistry necessary for imposing the next round of Uncle Ben's hyperinflationary happiness.

Speaking of which, Jamie Dimon's stab today at becoming "King of the Sophists" in denying claims QE is causing global inflation was revealing. Just how vulnerable is JP Morgan Chase when the company's CEO is compelled to add this new bit of nonsense to his "no one saw the sub-prime mortgage crisis coming" defense of the industry back in '08 speaks of a firm whose life ultimately depends on the Big Lie. If nothing else, JPM's decade-and-running reign as dead money apparently has found the right captain to go down with his ship. (It stands to reason, too, that, in the post-industrial, information age, the warning "loose lips sink ships" would take on new meaning.)

So, the battle for additional quantitative easing is on, notwithstanding all idle chatter suggesting QE's end has arrived (this, of course, being rationalized with a weak dose of the "global recovery story"). Now, let's take a stroll down memory lane...

Just how was grease applied, that QE 1 and 2 could be imposed with scarcely any resistance? Were not both committed during moments of grave financial peril?

And now, with continuing efforts to bolster all manner of sophistry rationalizing this insane policy (this, of course, that it be indefinitely continued, as indeed is necessary) amidst growing resistance to the policy's hyperinflationary destruction of excess capacity, such as is leading to chaotic, physical economic breakdown ... well, how do you suppose QE III might be imposed notwithstanding the policy's increasing detractors?

If you answered by way of some grave financial peril, then welcome to what very well may be that overdue occasion's precipice...


It is becoming increasingly apparent that, something "Lehman-like" soon could unfold in the euro-zone. So, attention to conditions at the Euro's epicenter seems a reasonable point of analytical focus. Thus, my attention these past two days on the German DAX index.

And today an alternate view than was presented yesterday. It is inspired by a conspicuously suspect technical backdrop coinciding with the market's advance over the past two weeks, such as to the average, hope-filled sucker might register as an indication of underlying strength, but to the well-seasoned Elliott Wave geek in fact is better thought ill-placed in the context of all manner of confirmed technical weakness preceding it.

Just to reiterate this point of view (as was developed in a Date With Doom), fearless complacency is being revealed, and this is a condition typically in place when stocks are on the verge of collapsing. Notwithstanding the further extension these past two days of ill-placed technical strength, the conclusion to be gathered from this remains quite the same. Indeed, its implications seem only more stark.

Leave it to Shemp, then, to make it a point today to express his view that, "this market isn't complacent." Duly recall he was bullish in June 2008, too.


Not yet being sure what Elliott wave count since 2/18 top might best be applied to the NYSE Composite index, its performance in relation to that former line of support noted a couple weeks back nevertheless presents a fitting complement to the current state of the German DAX index, here, prospectively, at the precipice of collapse.

There is one thing, however, that came within a hair of blowing up this view that, a crash could be imminent...


The capacity of those bankrupts whose insatiable need for capital enough to delay their day of reckoning finds these pushing around global corporations well known enough to bait a shrinking supply of able suckers who willingly swallow belief that, in a company's global presence is their investment capital's safety today resulted in the Dow Jones Industrials Average rising to within less than eight points of its intra-day high on February 18th (12,391.29). As improbable as this might seem, any breach of this high likely would necessitate a rejiggering of my Elliott wave view toward the market's advance since late-June 2010 bottom. Were this to occur, the market's levitation probably will extend into summer.

Of course, there are countless reasons to believe the market's hard turn lower is at hand. Likewise, the Elliott Wave Principle makes clear that, second waves often retrace the entirety of the preceding first wave, so the relatively better performance of the Dow Jones Industrials Average versus broader measures these past two weeks just might be a fitting, subtle quality distinguishing the present moment as one fraught with extraordinary vulnerability (explaining the greater attraction for established names with a global presence).

Indeed, all the more was this distinction revealed via RSI (top panel) from mid-January to February 18th top. Presented then was a most unusual technical disposition finding the Dow Jones Industrials Average's relative strength far more pronounced than was the case for broader based indexes. You might say that, suckers were revealing themselves by this manner in which their attention was more greatly given to those select issues widely perceived "blue chip" and safe.

Being rather tired of the thinly veiled ruse that, through and through, has well-characterized the market's advance off March '09 bottom, the prospect of its continuance nevertheless is acknowledged. Yet recognized, too, is prospect that, the ruse's date with destiny could be immediately at hand. No doubt, the market's technical state reveals profound complacency supporting an outcome that, virtually is guaranteed to catch the vast majority with their pants down were collapse to unfold stat.

Fast Money
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