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Stocks Bear Markets and Interest Rate Hikes, Oh My!

Stock-Markets / Stocks Bear Market Aug 28, 2015 - 11:17 PM GMT

By: Barry_M_Ferguson


The latest bear market has arrived and the Fed will raise the fed funds rate in September. There. It is written.

The conventional ‘bear market’ assumes two things. First, the major stock indices fall 20% from their recent highs. Two, there is a market. Both of these adages are now false in the new era.

Since the Chinese government now controls all things related to stock prices, uh, I mean the US government…, uh, I mean the federal reserve bank (FRB), numbers and percentages are no longer relative. Central bankers are now all the same - manipulative, stimulative, and mendacious. Data are just tools used to manipulate us. Now that the Chinese plunge protection team (PPT) and the US PPT have morphed into the same animal, we must realize that central bankers have assumed control of pricing for all which we servants buy. Therefore, comparisons of numbers and percentages of the new era of the ‘nanny-state’ in which we now find ourselves are no longer relative. Central bankers use numbers to control us and to manipulate us. Period. Past metrics are irrelevant. The way we know without a doubt these days when we enter a bear ‘market’ is when the television propagandist shills of higher stock prices all the time are screeching about ‘the best one-day rally since…’.

The truth is, all of the best single day gains of all-time for stocks occur in the 1930’s and the 2000’s - bear markets. Now we are confronted with Wednesday’s (8/26/15) stock carnival gain followed by Thursday’s carnival gain that are the best since…, whenever! The bear market is here.

It is interesting to note that the week started out with the largest point plunge of all-time on Monday in the first five minutes of trading only to be arrested immediately by the PPT and then boosted some 900 points back up. The PPT comes alive in bear markets. The interesting part is that realists and knowledgeable investors know that we are all living in the most gigantic bubble of all-time. Once again, the bubble has been engineered by the FRB. Therefore, bubbles burst and prices fall. What happened Monday and why was it significant?

Sellers know that they are public enemy number one to the FRB/PBoC. Chinese authorities threaten to jail would-be sellers of stock and the FRB threatens to financially ruin sellers by bulldozing prices higher no matter what. So, sellers must be quick and prudent when going about their work. The Fed members emerge from their covens to attend their annual Sabbath in Jackson Hole, Wyoming at this time of year. As such, sellers know these sorcerers are in travel mode (and not sitting front and center at the NYSE) on Monday so none of us should be surprised to see a stock plunge on this day. But, in the age of electronics, these masters of manipulation managed to inject enough billions to drive the stock indices back up.

Thus, my second premise is there is no longer any such thing as a ‘market’. The term ‘market’ suggests that buyers and sellers come together to agree on a price for goods bought and sold. This is the process that keeps the economy in equilibrium. However, since true markets will sometimes attempt to set prices lower, central bankers must now intervene as lower prices conflict with the goal of these nefarious bankers. Central bankers stoke inflation so they can increase the money supply of which they control thereby making them rich and the oafs poor. The PBoC in China has learned their lesson well from the FRB. They are now in full tilt manipulation mode as they are doing everything in their power to prop up their stock index including buying some $20 - $30 billion a day in stocks. Ditto for the FRB although they just lie about it. China has become so artificial now that they should consider changing the name of their country to ‘aspartame’ (the artificial sweetener).

So, how many of the best single days of all-time occur in the worst bear markets of all-time? All of them. We are evidently in a bear market now.

What will the FRB do with interest rates? Since these evil sorcerers think they can lie their way through everything (and they can due to the profound ignorance of their servants - just watch financial TV to see real morons in action), they will deny the existence of the bear while they use stolen money to manipulate numbers. Yes, they prop up stocks but what about economic data?

Indeed, the data is bogus as well. For instance, no one on the planet believes the ‘unemployment’ number that the US prints. No one seems to be able to comprehend the fallacy of unemployment falling as employment (worker participation) falls faster. No one seems to be able to comprehend that while we are told that home sales are on fire, home ownership in the US has fallen to the lowest percentage in the survey’s history!

But nevermind. The Fed is intent on raising rates so they will just produce happy economic numbers by using Voodoo. GDP was up in Q2 to 3.7%. Unemployment is 5%. If they need inflation to be rising, then inflation is rising. The wild card is the stock carnival. The FRB will not raise rates with a plunging stock carnival. Therefore, by the eye of a newt and the ear of a bat, or whatever incantation Aunt Clara (Janet Yellen) might use, stock prices must rise. There is nothing to see here. That bear running down the street is just a pathetic lost soul. Economic nirvana is achieved! Let the interest rates rise in September!

Besides, the Fed tells that that everything is just fine. Why would we not believe them?

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2015 Copyright BMF Investments, Inc. - All Rights Reserved
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented.

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