© UnknownNew York State Attorney General, Eric Schneiderman
On March 30, bestselling author Michael Lewis appeared on 60 Minutes to summarize the findings in his newest book, Flash Boys, as follows: "stock market's rigged." Michael Lewis was talking about stock market manipulation by high frequency traders.
Increasingly, the U.S. bond market is delivering almost the same message as Michael Lewis. The U.S. Treasury market, which is experiencing a flight to safety (that suggests a slowing economy, lower corporate earnings and thus a lower stock market in the future) is essentially saying that the current composite wisdom of the stock market is either nuts or the market is, indeed, rigged.
Stocks have been setting new highs of late while the yields on the benchmark 10-year and 30-year Treasurys decline. The 10-year Treasury began the year at a yield of approximately 3 percent and closed on Friday at a yield of 2.49. The 30-year Treasury started the year at a yield of approximately 4 percent and closed last week with a yield of 3.33 percent.
Strong economies produce a higher demand for money and, thus, rising interest rates. For stocks, which are wedded to earnings, to be rising while Treasury yields are falling shows a serious decoupling of market logic.
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It aint' necessarily so.... been reading these types of articles... main point usually comes down to the fact that momentum based in complacency trading, thanks to the Fed's market friendly injection of easy money, means that markets can continue to go up until they don't... of course. It seems to be the 'blow off' phase right now, and all the charts do point to the inevitable downside soon, a few weeks perhaps, as the money flow isn't flowing in the economy, just these Fed-friendly areas of the markets, fracking loans and the like. One chart I found rather telling, was how those in the 'smart money' (trading)crowd, utilizing this easy money from the Fed, has been exiting the market in recent weeks, something they always do shortly before the market takes a dive... and that pullback from high margin levels has beeen a very good indicator in our 'modern' era.
Doesn't take much to pull out that proverbial rug under such conditions, but momentum always takes things further than we imagine they should, especially given the favorable winds in a rigged contest of market manipulation. Another interesting story was how an investment bank choose not to extend a loan to one of their own companies as they usually do for the acquistion of a competitor... interesting break in the usual flow... another 'sign of the times'.
I look forward to seeing what kind of sideshow is put on to distract attention... like with the usual scandal at the VA being forgotten as that war weary US POW walk-about soldier has been retrieved in exchange for a handful of terrorists, who are needed to assume their old positions of manipulating the show in the Afghan theatre... seems that soldier started waking up and realizing he wasn't the patriot he thought he was. Though, leaving your guns et al behind and walking out alone towards Pakistan, doesn't sound too thought out.... but maybe he'd just had enough?