Pouring Buckets of Ice Water on the Fed’s Delusion

Just two weeks ago President Obama said it would be unlikely if we had a case of Ebola virus in this country.  On Tuesday the Center for Disease Control and Prevention confirmed the first known U.S. Ebola virus case.  No doubt, it didn’t take long for the unlikely to happen.

From what we gather the infected adult traveled from West Africa to Texas on September 19.  Several days later, on September 24, he started developing symptoms.  After first being turned away from the hospital and sent home on September 26, he was finally admitted for treatment on September 28.

During this time he came in contact with a number of others…including five schoolchildren.  Enterprising individuals used the occasion to buy shares of biotech companies working on Ebola treatments.  Tekmira Pharmaceuticals Inc. surged over 30 percent.

Speculating on Ebola treatments could be a profitable bet.  Perhaps it’ll also bring about a vaccine in short order.  You can never underestimate what a flood of cash and creative minds can come up with.

Here at the Economic Prism we are more practical.  Rather than buying biotech shares we recommend buying Berkey Water Filters.  You’ll at least have access to clean water should there be a panic.

Sick Market

For the human animal is easily influenced.  Homo neanderthalensis can be stirred up to a frothing mob in no time flat.  A grinning crowd can become foaming at the mouth in just the blink of an eye…trampling each other in a mad dash to the exits.  Have you seen the stock market lately?

The broad barometer of the mass delusions of man seems to have contracted its own virus.  Just two weeks ago it was vigorous and strong.  In fact, on September 29 the DOW logged an all-time high of 17,350.

Now it is doubled over…puking its guts out.  Maybe the market’s been infected with Ebola.  Maybe something else has gotten it ill.

Who knows?  Investors may finally be coming to grips with the fact that this economy’s softer than a politician’s spine.  Or they may be wondering how can the economy grow when hardly anyone’s working?

In addition, quantitative easing will likely conclude later this month.  Without the Fed’s funny money distorting financial markets, the Grand Canyon sized gap between share prices and the economy may finally be reconciled.

Pouring Buckets of Ice Water on the Fed’s Delusion

These are merely guesses and conjecture, of course.  No one really knows if the stock market will go up or down.  Moreover, you should be suspicious of those that pretend they do.

Sure we like to make our own assessments and predictions.  But we don’t take them serious and neither should you.  Rather, for fun and for free we close our eyes, tilt back our chair, and gaze toward the heavens.  Eventually we get a hunch of what’s to come.  A faint inkling of sorts.

Obviously, you should always be suspicious of what we come up with.  We’re suspicious of our own guesses.  Above all, you shouldn’t base your investment decisions upon it.

The point is, we’ve been expecting the market to go down now for so long we can’t remember the last time we expected it to go up.  It’s been at least several years – or more.  In other words, we’ve been wrong so many times, and for so long, any authority on the matter we ever had is gone.

But eventually we’ll be right…and this may be the start of it.  A lot of fraud and deception was perpetrated by the Fed over the last six years to bring about the stock market’s permanently high plateau.  Buckets of ice water are now being poured on that delusion.

Sincerely,

MN Gordon
for Economic Prism

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