Kudlow Effect

Fed this week indicated they were holding off on QE3 just in case their real Constant Quantitative Easing All The Time Every Day Forever shows some stalling.  Buying time for corporate America to get their balance sheets in order by cutting jobs and gaming earnings has about run its course and now the Fed is bracing for the double secret elevation market move.  This is not widely known about but has been confirmed by three researchers studying the cause and effect that bullshit has on calming the nerves of people following business news programs.  Often referred to as the Kudlow Effect, it is an phenomenon observed when select pro business individuals or defrocked evangelists try to levitate a dollar bill by concentrating on the first time they were completely honest with themselves.  Needless to say the dollar has yet to be moved.  But, for the vast numbers of Americans, economic elevation is just as hopeless but has fools believing.

Duped

Markets set up participants by producing apparently recognizable patterns only to then present a completely different form and outcome.  The ability to fool investors and traders into profound directional gaffs is repeated without fail with slightly altered timing.  Dupes are always being created by chance and necessity.  

Corporations need dupes such as analysts in order to game earnings reports. The analyst's motto should be, "never have so many been so surprised."  

Business news programs with their constant blabbing help shape amateurish perceptions of cause and effect. Notions of market prowess are always be attributed to market participants in hedge and high frequency trading communities contrary to their less than stellar performances. The reality is high frequency trading is not driven by a sophistication of analysis but by an abject fear of risk.  In the end, the capacity for both speed and returns is finite.

Bernanke Company Store

Article in the New York Times about the purchases of large amounts of distressed homes by private equity folks looking to turn profits by making these homes rental units. Seen as an alternative to other current returns in the market place, these ambitious folks are buying blocks of homes at supposed deep discounts.

Turning the fragmented real estate market into a private equity liquidity block trade seems only natural given the too big to fail environment Bernanke has underwritten. These type of investment strategies come directly out of the Fed stimulus initiatives of pushing liquidity into privileged hands and while in effect restricting capital and rousting many Americans from their homes. The old saying goes that God must love poor people because he made so many so that He and his rich friends can have a good laugh. Real estate has definitely turned and much like the impetus which is driving over valuations in stocks, there is an investment frenzy currently underway spawned from tech stocks and now into the broader S&P 500. Gains in 2012 rival the bull rush in 1998 which of coarse was the beginning of the end.