As we go from Thursday overnight markets into Friday morning’s opening bell concerning the global [United States] stock market.
As we move along into Friday morning let’s do a quick recap of what transpired today on Thursday. The Federal Reserve and central banks [Le Chiffre] went into the international market arena with hundreds of billions of dollars REPO funds, promising four trillion dollars of quantitative easing for the month of March, and the usual financial sorcery of magic bullets [which were all duds on arrival]. They entered the international poker game all confident that there was no way they could lose and with a strong poker face through bluffing thought they could get a stranglehold on the international markets by the end of Thursday afternoon. What ended up happening instead as they virtually entered the international table is that everybody called the FED’s bluff where in an instance lost everything of actual financial leverage that they originally had. Below is a video that can best describe what happened with the Federal Reserve playing as Le Chiffre at the international poker arena today on Thursday. Think of it as a funny and symbolic way of describing today’s Thursday international markets.
And of course Thursday’s market charts reflect this grave and desperate circumstance. The poker face and bluff of the Federal Reserve did not work where instead it backfired horrendously.
So now what? Cut more rates? Well that didn’t do anything at the beginning of the month when they originally cut 50bps, it won’t do much either if they cut by another 85-150 now. Quantitative Easing? It certainly didn’t do anything for them today with discussions of up to four trillion dollars worth of quantitative easing. REPO markets? That certainly didn’t help them today either.
That just leaves us with one more fall back plan or position and that is the Federal Reserve to buy stocks directly but contrary to what most people think that would be a sign of absolute financial weakness and not strength where it just reeks of desperation. If none of the above works concerning propping up the United States stock market, what exactly comes next? No matter which option that is chosen I can most easily assure you it’s all downhill from here.