Thursday, May 5, 2011

Flash Crash Anniversary

Tomorrow is the one year anniversary of the Flash Crash, when the equity markets plummeted quick and hard before popping right back up.  The "Flash Crash" move started with the Dow already down around  500 points.  Then, in a matter of seconds, it lost another fast 500.  The world of finance appeared to be falling apart at the seams, but then something unprecedented happened; the 500 point drop popped right back up from the depths of despair as quick as it had moved down, and the day ended only down 500 (500 is rounded in all cases).  This, the day was named, "the Flash Crash".

Now with the US mafia having everything from terrorism to finance under control, or rather, having control of everything, the anniversary will be used to prove Neo Keynesian economics is working.  Equity will rise dramatically in corporations like WFM, JWN, UNP, ZIP, NKE, GOOG, MSFT, XOM, and other large capital corporations.  After all, the people are at the benefit of the corporations, since their pensions and all important 401(k)s rely on them.

This will have the real assets up too, since the leverage begins and ends with what is real.  Silver will move back to $37, gold to $1500, and platinum to $1800, which is the middle of all three's respected three day ranges.  Oil will peak up to $102.  The dollar will trade flat, because the Euro is also overweight.  In fact, all fiat will trade flat.

Of course, this trend is the long one in line, as equities and the real assets have moved in tandem for two and one half years now.  Corporate debt will continue to relish the fact that the Central Banks must hold up the State Treasuries of the world.  Without the monetization, rates would rise, increasing the debt burden, and this would kill growth.  At the same time, no one will buy bonds unless rates rise, so QE to Infinity and debt monetization will continue, because it must.

While the debt continues to be monetized, the fiscal policy will continue to be a charade, and the spin machine will wash away fears of the debt ceiling and any other problems.  The US has reigned in terror, and it can do no wrong, so of course its economic monetary policy is justified.  The fight for a new world order will go on as long as it has to.

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