Your Daily Rescue Update

by Chris

The truly boring part of this Kabukli theater known as the equity markets is seeing the same nonsense over and over again.

As usual, after a day of heavy selling, “someone” did not even wait for the “”markets”” to be closed for more than five minutes before applying heavy buying pressure to the (relatively) thinly traded equity futures.

One way to visualize this is to line up a variety of global equity “”markets”” and note that they all suddenly rise at precisely the same moment.

Again, if there’s some sort of a fundamental reason for US industrials, large caps, small caps, Japanese, German and European equities to all suddenly rise and fall at the exact same moment, I am completely clueless as to what that fundamental thing might be.

These are your “”markets”” and the central banks both created them and now own them.

It’s interesting to read that the Swiss National Bank might have been cutting its expsoure to US equities, especially APPL, because that bank, out of all of them, is privately owned with the share structure belonging to the cantons (45%) the banks of the cantons (15%) and private individuals (40%).

With over 100% of GDP exposure on its balance sheet, if the SNB “went down” there would be horrific losses to the Swiss people.  With its ultra-heavy exposure to FAANG stocks, the SNB is just asking for it here.

It was all fun and games while the SNB printed money out of thin air, used it buy US equities, and then received actual US dividend payments (thought to be ~$1B per month) which it then distributed to the cantons and Swiss people holding SNB shares.

It will be decidedly less fun when all of that goes into reverse.

Coupled to the flipped 60/40 exposure of pensions to equities over bonds there’s a trillion and one reasons for rescues.  It’s never a good time to suffer the consequences of past actions.  It’s for the benefit of “the people.”  Maybe it’s even “God’s work” that’s being done.

Whatever the excuses, these simple facts remain; when blowing the bubbles the wealthy got wealthier, and during the attempts at gently deflating the bubbles (which is what these mini-rescues represent) the insiders get even richer becuase they know the rescues are coming (or they are doing the work themselves).  Always the same.  Noble excuses, private gains.

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