My Central Banker Can Beat Up Your Central Banker!

Stock-Markets / Stock Markets 2011 Jan 22, 2011 - 02:00 PM
By: Barry_M_Ferguson

Another week - another gain for the Dow. The S&P was slightly positive but what’s up with the Nasdaq? It was actually down a few percentage points. While the other indices were rising because the economy was getting better, the Nasdaq was falling because the economy was not getting better. Go figure! Was Bernanke only buying the senior indices this week? Isn’t that all that matters? I think the chart below explains things quite clearly.

The chart shows the time frame from the QE2 announcement and the effects of the Fed’s manipulation. The major US indices have been rising since September 1, 2010. They will likely continue to do so through June of 2011 - the end of QE2. The Shanghai Composite, however, initially rose with its compadres but has not been able to sustain the rally. Why not?

Here’s where we can see the new era very clearly. Investing is most certainly not tied to fundamentals anymore and it is also completely detached from investing skill, intelligence, and knowledge. Today, all that matters is central bank manipulation. If you will, the US is saying to the rest of the world, “My central bank can beat up your central bankâ€