(From Sep 29, 2015 VRA Update)
In my most recent updates I've written about two concepts;
1) Bear market rallies are sharp and fast...and we are perfectly set up for one. The market has bottomed and the move higher could be furious.
2) Someone has to be right; either the FED and their ongoing prediction that they must raise rates this year, due to a strong and growing economy. Or, the current bear market will be right...and the action globally has been suggesting anything BUT a growing economic situation.
But there's another issue for us to consider as well, and this one is based on a lesson I've learned well over the more than 30 years I've been following the markets. And folks, this is an issue that you will hear almost NO ONE talk about...certainly not in the mainstream media (MSM).
The PPT...It's Real, It's Global and it's in the US
The PPT is the "Plunge Protection Team", or the "Invisible Hand", depending on your favorite conspiracy theorist (that would be me, in this case). My first introduction to the PPT came in 1987, following the market crash that almost brought down the investment markets.
In close knit circles in NY, it was almost whispered in dark hallways...but what became clear to me was that some of the brightest minds on Wall St believed absolutely that there was a small group of traders employed by the Federal Reserve, and their job was to ensure that the stock market never reached a level of panic that could snowball into out-of-control, free fall mania.
Today, even while it's never discussed publicly on CNBC, in the WSJ, or other MSM outlets, literally NO ONE that I know/respect doubts the existence of the PPT here in the US. Globally, it's a known fact that mirror image groups in China and Japan exist. In fact, both China/Japan make it very clear that they are active in the equity markets on a regular basis...buying stock for public pension funds and public "entities".
Why do I bring this up today? I've personally seen the PPT at work. Of course, I could never prove this, but when you've done something as long as I've done this, you don't need hard evidence...their fingerprints are all over the weapon, regardless.
Here's why this matters...now. Anyone that is closely following the goings on, both here and globally, know that things are getting VERY close to collapsing. Economies like Brazil and Venezuela are in shambles. China, for the first time since it became the "Chinese Miracle" is teetering on negative growth. Japan, and its negative birth rate and 250% Debt/GDP, could literally have a black swan collapse at any time. Here in the US, junk bond prices are near free fall...led by energy co's that appear to have no way of refinancing their mountains of debt.
Then, there are the geopolitical events of our time. Millions migrating to Europe and elsewhere. The Middle East reaching epic levels of strife. ISIS threatening the world with nuclear terrorism. Falling oil prices have created an historic level of financial uncertainty in countries like Russia, Saudi Arabia, and the previously mentioned Brazil and Venezuela. I could go on and on...
Finally, anyone even mildly paying attention has to have noticed the absolute collapse in commodity prices...sending the clearest of all signals that the global economy is in very real trouble.
Yet, The FED Continues to Say All is Fine.. and That They MUST Raise Rates
Here's my thinking. Again, someone must be right. I am monitoring this very closely, but in the short term, I wouldn't at all be surprised to see a fast and sharp bear market rally higher. Then, in light of the worlds financial nightmare, don't be surprised to see the PPT do their thing...buying stocks on any serious pullback and working their butts off to bring global markets/economies back from the brink.
It was important that I send this to you today. I remain bearish on stocks longer term...because I am bearish on the worlds economic picture. Having said that, stock prices don't always match the economic realities...at least in the short term. My job is to make sure we are positioned correctly, so that we can continue to beat Mr. Market.
When will I become TRULY concerned about the market collapsing? When gold catches a serious bid, that will my first major clue. Gold has always been the best market insurance, and no doubt, it will going forward as well. In addition, should junk bond prices continue to fall, that's a tell-tale sign of real concern (you can follow this by watching junk bond ETF, symbol JNK).
Until then, I continue to watch for signs of the PPT...once they decide that stocks have bottomed, we have an opportunity to make a fortune...on the upside.
Until next time, thanks again for reading...stay frosty.