Sunday, January 5, 2014

The Sunday Funnies; Father Time Bernanke Passes the Printing Press Key to Baby New Year Yellen

Keystone provides a humorous cartoon for the Sunday funnies. Outgoing Fed Chairman Bernanke passes the key to the printing presses, that create the POMO pumps, to future Fed Chair Yellen. The Fed announced a token $10 billion taper to QE but in the next breath says ZIRP will continue forever. The ZIRP Forever created the end of year market rally. The Fed is destroying all price discovery in markets--no one really knows what any asset is truly worth anymore. In addition, both Bernanke and Yellen say there are no asset bubbles existing anywhere in markets currently. There is no velocity of money currently so inflation is on a milk carton and the QE only serves to hurt the U.S. Companies do not invest in capital equipment or employees and instead spend their cash and use the Fed's low rates to fund buybacks that artificially create a low PE in markets while pumping stock prices higher. The Fed policies make the rich richer, and the poor poorer, but they do not care since most of them are ex-GS or other too-big-too-fail bank employees. The game keeps the money in the family so-to-speak; the big shots act in collusion. 2014 is the Year of the Horse. Is it galloping to the glue factory?

Note Added 11:05 AM on 1/6/14: In honor of the Fed's buy back moonshine jug shown above, FDX announces an increased buy back this morning to pump their stock price +2%. No doubt that a pump and dump is likely on tap. Joe Sixpack and Ma and Pa Kettle, the retail sucka's, become excited seeing the pop in the stock so they run in to buy it just in time to hold the bag. The buy backs are obscene and shameful and all a result of the Fed's policies. A lot of people will likely be hurt moving forward. Watch your wallet.

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