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Monday, May 8, 2017

“MODERN PORTFOLIO THEORY”: SWISS VERSION!

“Let the Swiss show you how it’s done!”

Well, the “horse” is out of the barn now, and it ain’t ever going back in; and while we’ve known for a long while that 1) the BOJ overtly manipulates its own stock market via the Nikkei & Topix Indices, 2) Norway’s Brent crude oil slush investment fund [a/k/a Sovereign Wealth Fund] has been playing stocks for a long while and 3) China openly manipulates the SHCOMP stock index futures market almost daily, for the most part they all have kept it “local” for domestic policy & political reasons. How long did you think it was gonna be before for one of the other big central banks in the world “stepped over” the line and began to openly manipulate U.S. stocks?

Over the weekend, we learn that none other than the Central Bank of Switzerland, the Swiss National Bank [SNB]… yes, that’s right … the lovable secretive Swiss, who no doubt learned some valuable lessons in money management, corporate hegemony, leadership & manipulation, and of course pure greed from the Nazi’s next door a few decades back … the same SNB whose then Chairman Phillip Hildebrand resigned in disgrace in early 2012 when it became known his wife was trading USDCHF [Dollar/Swiss] through an offshore bank [“and see my shocked face cuz she never had a losing trade; obviously she never read the Wall Street Journal like Cankles Clinton did in her cattle futures caper”.] … fast forward just a few short months so that people’s memory can fade the stench, and it’s the same bunch who “hush hushed” that currency debacle with the EURUSD in January, 2015 that almost destroyed half the worlds FX brokerage houses … so yea, THIS IS THE SNB who now, according to 13-F filings with the SEC, is one of the largest hedge funds in U.S. stocks in the world.

In Q1 of 2017, the SNB bought approximately $17 billion in U.S. stocks for their own account, concentrated in technology [NDX100] and the Dow30; now you know why the indices aren’t going to be breaking down [short of a geo-political event like nuclear war with N. Korea or something on that order] anytime soon. These guys show up and bid stocks “silly”; throw in the “Plunge Protection Team” and the corporate buyback scams [directors giving themselves a raise by voting to use the companies money to reduce shares, thereby decreasing outstanding shares and raising EPS, so that the stock price can rise and their stock options can become more valuable … “yea, that scam”!], and you can forget any meaningful and/or sustained break [for the younger generation, the history books refer to “bear markets”; that would be months maybe years where stock prices fell anywhere from 20% - 60% in value] that is going to see the Dow30 or the SP500 going South. And lo and behold, outside of a day or two, maybe a week to 10 days at the most, these last few years have not seen any type of correction in the indices; AND NOW YOU KNOW WHY.

For the Swiss, here’s how this SCAM works; 1) use your central bank power to hit the “Cntrl-P” button on the mainframe computer and create Swiss Francs “out of thin air”, 2) take these fresh new digital Swiss Francs and sell them in the FX arena for real U.S. Dollars; this has the effect of keeping the USDCHF down [thus theoretically helping Swiss industry, mainly the giant pharma companies like Bayer, A.G.], 3) take these Dollars and buy stock in Apple, Google, Facebook, Microsoft, Intel, Exxon Mobil, and most of the rest of the Dow30, 4) no matter what happens, keep buying more with “play Dollars” you created and then exchanged for real ownership in U.S. multi-national companies, and 5) watch your hegemony and portfolio value explode upward.

So, in this world of trillions in QE, who wants some stupid U.S. Treasury, JGB, or ECB bond due in 20 years that pays nothing [if not negative], when you can effectively own a substantial [if not down right majority] part of the globalist SKYNET EMPIRE DEATH STAR for absolutely NOTHING IN TERMS OF COST? My only shock is that somebody didn’t think of this before, cuz when you analyze what the Swiss have done, and are continuing to do right now today, there isn’t anything but “upside” with absolutely no “downside”. To wit, 1) by printing money and creating Swiss Francs to sell for Dollars, you make your currency less valuable … something the Swiss have been trying to do for decades … they use the money to buy stock, not to fund dumb ass Libtard social programs where they get “zip, zero, nada, zilch” return [“Psst! Policy makers in the U.S. & Britain, are you taking notes”?], and 2) over time they become the largest owners of the world’s most valuable companies with literally no domestic downside exposure if any or all of said companies become the next Kodak, International Harvester, or typewriter company that marches into oblivion; “they bought everything with printed “GINNED UP” money for Christ’s sake! If it all blows up and turns to bat guano, so what? Other than egg all over their lovely Swiss faces, exactly how does the average Swiss citizen get hurt if SHTF? Given their history, the Swiss can handle ‘face meet egg’ rather well I’d say”!

So, take all of the econometric and financial chart porn being fed to the masses by CNBC, Blloomberg, the august Wall Street Journal, Investors Business Daily, Fox Business News, Reuters, Zero Hedge, and all the others and throw it away cuz it’s meaningless. And if you’re the Swiss, and you wanted to amass huge stakes in the world’s most valuable companies, wouldn’t you want to amass shares when anything & everything looks horrible? Wouldn’t you want to gobble up the selling? Are things always going to be bad into the future; well, if not, then the long term view is the one that counts … SO BUY MOAR NOW! “Well guess what? They did last quarter to the tune of $17 billion”.

Which by now, ought to give you a hint of the question I asked a blog or two before; namely, “is the FED engaged in crude oil futures manipulation to prop the price up, cuz crude oil affects not only sentiment, but also energy shares? [My own personal view is that they do, using offshore tax haven IBC’s, and then having those domiciled legal entities open trading accounts at JPM, GS, HSBC, & others too be sure. They’re funded under the “OTHER ASSETS” section of the FED’s balance sheet (at last look over $400 billion in value) and the margin money via “Cntrl-P” goes right to the brokerage house.] Is this nefarious effort guided by the ‘NATIONAL SECURITY’ mantra or some other bullshit by the Treasury Department under financial security legalese?

How many other companies [remember the Federal Reserve System is PRIVATE!] do you know of where their balance sheets contain ‘OTHER ASSETS” [with no explanation of what “Other” means] in excess of $400 billion Dollars, like it’s “paper clips & postage” money? “Well, ne neither, and it’s my belief this is one of the very big reasons why the FED always adamantly opposes outside audit of its books; you simply can’t be allowed to know the details of how the banking cartel controls & manipulates the company you work for, the products & services you need to live, and therefore by proxy your meaningless life”!

When every major central bank in the world is “in the tank” with every other one; when they’re all sailing on the Titanic and effectively control the flow of 90% of the world’s money, the question isn’t one of “how is this going to end” [“if the whole world is on the Titanic, and it goes down, is there anybody left to care that it’s gone down”?] , it’s the realization of “this is only the beginning .. you ain’t seen nothing yet”! And suddenly, after the realization of what I’m writing today sinks in, it will dawn on you… slowly, then quickly … a number of critical factors are in play that you haven’t given the slightest thought to or thought they could ever manifest in “free markets”; namely, while everything is rigged and you’ve suspected this, today the proof is here and to ignore it is delusional folly.

I’m going to say this now … “FX IS DEAD! It’s a group of totally controlled and manipulated outcomes, where central banks team up with each other to keep FX rates within bands; a little up, a little down … take these buy stops out, take these sell stops out … nothing in these markets makes any sense. And I offer as proof positive the EURUSD, where for the last 2 ½ years it hasn’t gone ± 10% against the U.S. Dollar, even with 1) continued violent terrorist attacks, 2) bond market collapses, 3) the Greek crisis, and 4) Italy’s imploding debt crisis. Gee, somebody tell me how this is possible”?

And whaddaya know, all this with the EURUSD just happens to coincide with the bullshit the aforementioned Swiss started at the start of 2015 when they “unpegged” the EURCHF from 1.20; and in another great “coincidence”, this just happens to be the time when the SNB really “steps ups” the purchasing of U.S. stocks. “For Christs sake, why own stinkin’ Euros and not only prop up but trust that bum Mario Draghi, when we can print money and eventually own Apple! Charles Ponzi & Bernie Madoff please take the calls from SNB Chairman Jordan”!

So the list continues, cuz if you think the world’s central planners are gonna let gold & silver go up, there’s more Haitian industrial swamp land for sale [cheap!] I can offer you. I don’t care what Goldcore, Sprott, Kitco, and all the others say, unless there is literally blood in the streets and world government’s fall, gold ain’t going anywhere! Sure, they let it fluctuate a little, but they aren’t going to let it appreciate over 1350 -1400 anytime soon and the floor for it is probably somewhere between 1100 – 1150; enjoy the $200 range for the next 20 years as they kill this market 1 retail spec & institutional account at a time.

All of which brings me back to the stock indices; how many more weeks, months, or years will it be before the FED admits to buying up shares in the indices to control policy outcomes [namely “stability”]; here’s another question, “are the Swiss doing what they’re doing with the FED’s ‘blessing’, or does the FED even care”? Ok, if they sprinkled their “holy water” on it, are guys like Warren Buffett being given “inside information” so to speak when he goes and buys additional billions in stock … like Apple for instance? … which just COINCIDENTALLY I’M SURE happens to be the LARGEST HOLDING of the SNB & one of Warren’s largest holdings as well?

Well, a whole lot of “uncomfortable” questions for a Monday, as we come in to trade with the indices at record highs on a Friday melt up in the last half hour. Meanwhile all the guys over on ZH, literally pulling their collective hair out and going half insane with a “Crusades” zealotry not often seen with “this shit just has to go down … has to”!! Only it’s not going down … well, not the “bear market” down a lot of them want … sure, it can go down fractionally, and the illusion of an “open & free” market can be maintained for the masses … but when you got central banks like the SNB lining up every day to buy 10,000 share blocks of Apple and almost nothing happens with negative earnings or guidance forward, it’s somewhat tough to get the rest of the investment world to join your “shorting party”, seeing how most of the ones who joined before are metaphorically dead and there aren’t a lot of folks left who want to join the ranks even if they had any money left. And while most will nod their collective heads in agreement that the SNB shouldn’t be doing this, these very same people will be the first ones in line to “piggyback” for any kind of profit and then shout out “hey, let’s do this again tomorrow”! So, all you guys showing me all those charts of “doom & gloom”, this is what you face and it ain’t a pretty picture for you going forward as far as I’m concerned.

Turning to today’s market … well, apparently Macron hasn’t saved Europe or France judging by the response of EURUSD or the DAX30, but at least they got the “momo” players to bite at the Sunday open and buy the highs. U.S. markets see a couple of FED Pie Holes speaking early, but other than that nothing in the way of economic reports or news items; some disappointment from the election hangover will probably see some selling at or near the open, but after that things should return to “normal” and any/all election ramifications a thing for the history books.

Here a little past Noon in New York, and I don’t even know where to begin to describe today’s trading action cuz there isn’t any … saying it’s pathetic is an insult to pathetic. But, in the context of what I described above before the day started, it all makes perfect sense; ”OK Skippy, you be the first one to start selling those 10,000 share blocks of Apple and 20 other blue chip stocks and I’ll be right behind you … promise (or maybe not)”!

First trade of the day, and for the time spent in this thing, I’d rather have been not in it.



Oh yes, the setup was Ok, just that the market action totally sucks, and when you have a “volatility” methodology [algorithm] and there isn’t any, it becomes a flip of a coin rather quickly. Quite frankly, the few bucks I made in this thing; I don’t care if the Dow30 goes up 500 points this afternoon cuz the action stinks right now. And if it’s any consolation, it isn’t any better in anything else with maybe the exception of EURUSD cuz of the election unwinds. The SP500, for it’s part, the slowest I think I’ve ever seen it trade in all the years I’ve followed it; volatility may have been lower at some other point in time in the past, but I can’t recall it ever being this bad. Summer of 1992 was bad, but in context to where the index is now, it was more active even then.

I’m gonna tell you all how this ends; maybe not the top “top” cuz who really knows, but at least an intermediate top for the time being. Whether it’s today, tomorrow, next week, next month … whenever … this is how it ends: “with no news whatsoever and the market seemingly cruising on autopilot to go higher, suddenly after 2 P.M. EST or EDST selling starts to come in and at first the indices drift lower; but, there isn’t any “come back”, and at some point the selloff picks up steam and into the close it gets “monkey hammered”. After being up, it ends the day down -150 to -200 points + on the Dow 30. Over night it attempts a weak rally, but by the next days New York open it’s already down -150 points or more; and that folks is how it ends. The lesson here for you to tattoo on the inside of your eyelids is “not to buy the breaks after 2 P.M. in the Dow30; if you do, you could be in for a very nasty surprise on the downside.”

Here in the early P.M. in New York, everything is simply a glacial drift with intermittent spurts; quite frankly, there isn’t enough action to know what anything means. When you start having 1 & 2 index point M1’s on the candlestick charts, minute after minute, what exactly can you discern from this, when after 25 minutes the index has moved 5 Dow30 points? There just isn’t enough information to draw any type of trading conclusion. Here after 3 ½ hours, the Dow 30 has about a 30 point range; and except for the latest little burst up, that would have been 25 points; hell, there are plenty of days where the Dow30 has a bigger opening M1 than that!

But, and this is important, cuz it keeps you from going “nuts”; “put this kind of action that you’re seeing all in the context of what the SNB & others are doing, and it all makes perfect sense. While it’s easy to look at chart porn and become bearish, it’s much harder to remain patient & disciplined, and wait for the inevitable breaks that will of course come into the indices”.

Well, this just in, according to ZH, the SP500 hasn’t been this “quiet” since 1964; “yea, that’s a little before my time, so I have no perspective on that”. But, the VIX is on the 9 handle, and that’s about as low as it gets, and still being able to call this a “trading” market. Oh my goodness, is it 2 P.M. already? Man, time flies when things are “flyin’ around” don’t they? The only saving grace is that I get to live in the Caribbean and don’t have to commute into Murder, Illinois to trade.

Finally for today, file this under the category of “It’s as if they know what I’m writing”: here the full link at ZH.
[  http://www.zerohedge.com/news/2017-05-08/apple-share-soar-above-800-billion-first-time ] After today’s blog post, why should Apple stock ever go down again?

PAMM/MAM spreadsheet directly below.
 



Time to hit the beach … I’m outta here … until tomorrow.

Have a great day everybody!
-vegas
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