Might the thinly veiled joke that is persistent, irrational talk of Fed tapering—an impossibility given nearly five years of perpetual increase in quantitative easing—possibly become signature "the joke's on you" directed against the bankrupt children of the Fed's zero due diligence regime instituted under the leadership of King Ponzi Greenspan? Might Confetti actually taper, say, a cool $15 billion per month in Treasury purchases starting next week, and so send rates soaring into year end?
Not unless some so-called "SIFI" has ordered it. What's an abused pawn to do but follow the lead of the hand that moves it? Even if it means this now captured Fed pawn will be broken over the course of being removed from the chessboard, Confetti will just have to take it, as ordered. (So much for the Fed's "independence," which is the real joke today's desperate circumstance exposes to anyone not sleeping.)
It appears prospect of significantly rising rates having potential to considerably upset hopelessly insolvent bailout junkies is being perceived a real threat here. After all, garbage at the bottom of the capital structure has barely budged off the books of bankrupt albatrosses desperately holding on for dear life, and yet we see over the past nine months, and more so over the past week, increasing options premiums revealing heightening fear among market makers suggesting confidence in capacity to infinitely levitate the objects of hyperinflation-induced exploitation of a broken price discovery mechanism is waning.
Yet whether any surprise awaits next week's Fed meeting might be a less pressing concern in contrast to the fact emerging markets are again coming under pressure. Combining evidently increasing risk some surprise trimming 2013 performance bonuses might be threatening, along with a hedge fund community that, for the fifth straight year is underperforming, we might just see a highly correlated attempt to forestall trouble into the new year miserably failing. The next nine days of trading going into December options expiration could prove interesting and, indeed, the most volatile of the year.
* * * * *© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
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