Beyond Ridiculous!

In yesterday's Tomorrow Monthly Op-EX   I warned,

"We also have 3  F_E_D speakers tomorrow, the recent Kocherlakota and Williams (Doves) who have come out against raising rates this year and James Bullard who has moved the market at least 3 times up and down and has ZERO problem turning from a dove to a raging hawk in less than a month as he did in September with "We should be willing to remove accommodation" at the September highs, then   "A logical response at this juncture is to delay the end of QE" at the October lows and 30 days later to a 180 degree about face with "Inflation expectations have rebounded since mid-October".

Really? The F_E_D's forecasts for inflation are so liquid they change every 3 weeks?

 I believe Bullard is one of the finest examples of my theory which I think he proves, The Plunge Protection and Market Correction Team".


The point of my article, The Plunge Protection and Market Correction Team is not that the F_E_D just works as a "Plunge Protection" team, but pushes the market in any way Wall Street has set a cycle for.

For example...

These arrows on the SPX daily chart are the dates James Bullard has spoken and moved the market. In EVERY CASE, there was already a cycle set up just like now, in every case Bullard said what smart money needed him to say to make their cycles profitable. At the far left, we had called September 19th's highs a head fake well over a week in advance as distribution was in place for a move lower and Bullard comes out as a hawk with,

"We should be willing to remove accommodation" (talking about ending QE3 at a time when some where suggesting the F_E_D might extend it). This sent the SPX lower by almost -10% (-9.85% at the lows), the Russell 2000 -10.5%, the Dow just shy of -1500 points.

At the white arrow at the October lows, suddenly Bullard is a dove, with the statement at the white arrow on October 16th,

"A logical response at this juncture is to delay the end of QE" . You may recall this is the base set-up that we forecasted was going to produce a "Face Ripping Rally", the base was set up a week in advance of October 16th. The SPX moved +11.5% higher just on a closing basis alone.

At the next red arrow as we were entering a stage 3 top and already seeing distribution, and about 4 weeks later, suddenly Bullard is once again a hawk and the inflation expectations that worried him so much that he thought the F_E_D should delay the end of QE, had suddenly shifted 180 degrees... I didn't even know you could make inflation projections in so little time as there's not much data available over a single month. Bullard says,

"Inflation expectations have rebounded since mid-October".

NOW WE KNOW THE BOUNCE CYCLE IS SET UP, I'VE SHOWN IT A GOOD PART OF THIS ENTIRE WEEK, BULLARD SPEAKS TODAY AND CAN YOU GUESS WHETHER HE'S A DOVE OR A HAWK?

Let me help you...

• *BULLARD: FED COULD RESUME UNCONVENTIONAL POLICY IF NEEDED
• *BULLARD SAYS LESSON OF QE IS IT WORKS `FAIRLY WELL'

Translation: Without saying anything about the F_E_D re-starting QE (and while Yellen seems to be clearly telling the market to get ready for rate hikes, not policy loosening, Bullard "suggests" without ever having said it, that the F_E_D could re-engage in QE.

I know you can say, "He didn't say that", but what he did say is exactly how the market will interpret what he said, it's called plausible deniability, the Bush administration was excellent at it during the Iraq WMD episode- giving the impression of supporting something, while being able to absolutely deny you said anything of the sort. Even "fairly well" can be taken either way!

...And JUST AS THE OP-EX PIN IS ENDING AND THE MARKET IS FREE TO MAKE GOOD ON THE BOUNCE IT HAS SET UP!!!

Perhaps we need to add a 5th lever to our list, JAMES BULLARD! He's certainly the most effective lever.