With the central banks, led by the Federal Reserve, supporting financial markets, including stocks, along with corporations selling bonds to repurchase their own stock to the benefit of only a few, as capital spending and productivity decelerate further from anemic levels and as insiders play the Chuck Prince game of dancing until the music stops., all while the fundamental economic underpinnings have seriously deteriorated–there is only one ending that is certain..the Mobius Wheel of wealth creation for the 1% will eventually be snipped. This time, without direct government nationalisations, even those in the lofty heights of the money pyramid will find that they are left without a chair. The inevitable happens and the sustainability of the current monetary regime is inevitably going to lead to disaster. The batteries are running low and the fuel is spent.
The stock market is rigged. (If you did not know this by now, keep your head where it clearly is already.)
When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.
But that’s not happening anymore. The dirty secret is out.
With stock prices rushing far ahead of economic reality over the last six or so years, more experts in the financial markets are coming to the same conclusion — even if they don’t fully understand how it’s being rigged or the consequences.
Ed Yardeni, a longtime Wall Street guru who isn’t one of the clowns of the bunch, said flat out last week that the market was being propped up. “These markets are all rigged, and I don’t say that critically. I just say that factually,” he asserted on CNBC.
Companies are selling bonds like madmen. This year through Tuesday, investment-grade and junk-rated companies have sold $438 billion in new bonds, up 14% from the prior record for this time of the year, set in 2013, according to Dealogic. This quarter is already in second place, nudging up against the all-time quarterly record of $455 billion of Q2 2014.
About $87 billion of these bonds funded takeovers, a record for this time of the year, the Wall Street Journal reported. The four biggest bond sales in that batch were for healthcare takeovers, including the Actavis deal whose $21 billion bond sale was the second largest in history, behind Verizon’s $49 billion bond sale in 2013.
Actavis had received orders for more than four times the bonds available, according to CFO Tessa Hilado. “You don’t really know what the demand is until people start placing their orders,” she said. “I would say we were pleasantly surprised.”
Brandon Swensen, co-head of U.S. fixed income at RBC Global Asset Management, couldn’t “see anything on the radar that’s going to slow things down materially,” he told the Wall Street Journal. His firm expects rates to “remain low.