Monday, August 29, 2016

High Plateau Drifter: The Market is Being Propped Up Until Nov 8

If the S&P500 rallies during the three months prior to a presidential election, the incumbent party has won 12 out of 14 times this condition has occurred. similarly, in 7 of the 8 elections where the S&P500 fell over the three month period the incumbent party lost. The overall predictive record for the S&P500 is 86.4%.

We all know that correlation does not necessarily mean causation. However, the deep state is unlikely to take the risk of a market plunge over the next two months. Of course, this sets up a potential short trade on the near certainty that artificial and temporary support is occurring and will end around Nov. 8. We know about the massive buying of SPY calls, forcing delta hedging by the writers. And we hear daily from ZH how the S&P500 is rising while the macro of earnings is plunging as if a recession had already started. It looks like perfectly predictable oligarch driven political demand. On the surface it looks like the government is not directly involved.


The Fed can't just buy common stocks directly without incurring significant political risk, so then who is carrying the load for them? The answer is the Swiss National Bank which is buying many billions of U.S. stocks, offsetting most of the steady selling by retired boomers who must sell to maintain their life styles.

But then the real question is what sort of dollar based transactions has the Fed entered into which effectively lend the the Swiss National Bank the money to do this for Hillary?

I have two months in which to place my bets that the divergence between S&P500 and macro ends around Nov. 8 with the SPY heading lower, and will be placing that bet.


whydibuy said...

Full tin foil hat conspiracy.
Well, at least he left out the space alien angle and the bildersberg world domination group. Or maybe he was referring to them in the "deep state" ( OOOOOOOOOOO, shadowy powers ) comment.

I love it. Rocket fuel for a bull market move.

High Plateau Drifter said...

Yup!! The stock market never goes down!! 2001 thru 2003 never happened nor did 2008-2009!

Anonymous said...

Nobody denies the market is propped up. Why should they stop after November 8 though, especially in the event of a Hillary win?

High Plateau Drifter said...


You pose and interesting question. I suspect that the urgency and the players will change around Nov. 8, and that it will be bumpy, particularly if Trump wins. Regardless of the outcome, I would expect a short lived spike down as the those pressed into service for political reasons move to the sidelines.

I should note in this respect that Trump will be far more dangerous to the establishment as the civilian owner of a dominant media franchise than he would as president. He will become a dominant media star. Roger Ailes is in his employ, and it is clear that, if defeated, he will attempt to buy Fox News, and if rebuffed, set up a competitor and drive it out of business.

He is using this presidential campaign to map the demography of his potential audience, and his campaign staff is ideally suited to manage content, marketing and polling for that content. Say what you like about Megyn Kelly, she is no fool. The soft ball interview with Trump was a dead giveaway. She knows what is coming down the pike and, win or lose, will benefit.

No matter what happens, Trump wins!

What I cannot understand is how the establishment can believe our government will survive if half the population considers it hopelessly corrupt and hostile to the middle class.

League of Women Voters said...

There's absolutely no way that the real rulers of the US will let a populist win:

Whether they print money and buy stocks, as HPD has indicated, to keep dumpy suburban moms from going populist, or whether they have Homelandsicherheit just reprogram the voting machines, the Cunt will be president from Jan 2017 - whenever her health crisis reaches its logical conclusion.

Fox News was always neocon propaganda.

Whether Trump guts it or starts his own channel, a populist media franchise that can explain the rulers' crooked schemes (to the downwardly mobile middle class who can't read good) is going to be a powerful weapon.

CP said...

Trump could threaten to start his own channel, use that to leverage Fox into selling Fox news for non-recourse Trump paper.