The Heads I Win, Tails You Lose Market.

Posted by: madhedgefundtrader Post date: 10/11/2010 – 07:15 Ben Bernanke has privatized the upside of the global stock, bond, currency, commodity, energy, and precious metals markets, and socialized the downside, with his much publicized move towards quantitative easing. While former Treasury Secretary Hank Paulsen spoke about a bazooka in his pocket, Helicopter Ben is hinting that he has a 100 megaton thermo nuclear weapon. Navigation PollsDonate To Zero HedgeRecent posts Shopping cart View your shopping cart. User login Username: * Password: * Create new accountRequest new password Zero Hedge Reads Angry BearBearish NewsBoom Bust BlogChina Financial MarketsChris Martenson’s BlogContrary InvestorCoyote BlogCredit WritedownsDaily CapitalistDaneric’s Elliott WavesDealBookDealbreakerDr. Housing BubbleFalkenblogFibozachiFund My Mutal FundGains Pains & CapitalGlobal Economic AnalysisGonzalo LiraImplode-ExplodeInfectious GreedInvesting ContrarianJesse’s Café Américain Market FollyMax KeiserMinyanvilleMises InstituteNaked CapitalismOf Two MindsPension PulseShanky’s TechBlogThe Daily CruxThe Mad Hedge Fund TraderThe Market TickerThe Technical TakeThe Underground InvestorWall St. Cheat SheetWashington’s BlogWealth.netWhen Genius Prevailed Home madhedgefundtrader's picture Submitted by madhedgefundtrader on 10/11/2010 07:15 -0500

Ben Bernanke

If you recall, I predicted a six month bull market in global equities on September 1, inviting much abuse at the time (click here for “My Equity Scenario for the Rest of 2010” at http://www.madhedgefundtrader.com/september-1-2010-3.html ). My logic then was that once the market spent six months sucking in bears into expanding their positions, it would quickly reverse and race to the upside.

The triggers would be better than expected corporate earnings, and the removal of the midterm elections as an unknown. What I did not expect was the Bernanke assist. After spreading gasoline everywhere with zero interest rates, Ben has now slyly produced a book of matches.

As you can see from the chart below, the stimulative impact of his strategy began to work almost immediately. Monetary inflation took off like a rocket in September and is about to punch through the threshold to positive numbers. Emboldened “double dippers” were pooh poohing this prospect only four weeks ago. Those few of us long enough in the tooth to remember real price hikes can tell you that monetary inflation is the certain precursor of  the real kind, where the prices of actual goods and services go up.

The net net of all of this is that we may see the broad based rally in the prices of everything continue far longer than we realize. It makes the 1220 target for the S&P 500 I put out only a few weeks ago look conservative (click here for “Bring on the Bernanke Put” at http://www.madhedgefundtrader.com/september-27-2010.html ). We may get some profit taking and a dip going into the midterm elections. If we do, get on board the money train for a year end ride.

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at http://www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

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by I_Am_
on Mon, 10/11/2010 – 08:55
#640690

Just stealing the opening spot. Nothing else……………

Login or register to post comments by chopper read
on Mon, 10/11/2010 – 10:30
#640884

i thought that was funny.  okay, back to work. 

Login or register to post comments by I_Am_
on Mon, 10/11/2010 – 08:56
#640691

Just stealing the opening spot. Nothing else……………

Login or register to post comments by I_Am_
on Mon, 10/11/2010 – 08:57
#640694

Just stealing the opening spot. Nothing else……………

Login or register to post comments by Hans Gruber
on Mon, 10/11/2010 – 09:00
#640697

First post for a newbie. I understand how HFT skims a bit of money off of the retail investor, but am I missing the larger picture? Watching this crazy september into october market and I can’t help but think that there is collusion going on between the TBTF banks. If GS sells SPY to MS for price x, then MS sells back to GS for x+1, then GS sells back to MS for x+2, ad infinitum, they can raise the price level of SPY to anything they want for essentially no cost, but increase their book value/reserve levels. Do people here think this is happening? Is this what is implied with the HFT that I just didn’t get until recently? How do you hedge it (other than PM and agriculture commodities), or do you just ride the wave? I have a friend who always bets with the house at craps because it’s the best odds in the casino. The rest of the table glares at him all night, but he always eats a free steak dinner in vegas… 

Login or register to post comments by Payne
on Mon, 10/11/2010 – 09:01
#640702

So you were right for the wrong reasons?

Login or register to post comments by chopper read
on Mon, 10/11/2010 – 10:31
#640890

better to be lucky than good!!

Login or register to post comments by MiningJunkie
on Mon, 10/11/2010 – 09:10
#640712

Wow. Quite a revelation! Anyone with grey hair involved in the 70’s ramp-up in all U.S.$ – denominated assets knows that one must NEVER UNDERESTIMATE THE REPLACEMENT POWER OF EQUITIES WITHIN AN INFLATIONARY SPIRAL. It is also helpful to be humble. 

Don’t confuse inflationary monetarist printing-press-driven bulls markets with brains.

A trained chimp could make money with Uncle Ben in charge of the inkjet.

 

 

Login or register to post comments by Pondmaster
on Mon, 10/11/2010 – 10:03
#640815

MHFT-

From what I am seeing ,I agree with you .

Long inflationary commodities !!!!

Food #1

Fuel #2

PM ‘s #3

Agri #4

 

 

Login or register to post comments by Widowmaker
on Mon, 10/11/2010 – 10:32
#640891

The joke is on all those who think there is actually a coin.

This is just the “you lose” market.

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