Tuesday, June 09, 2020

Deep State to Powell: Stop Goosing Stocks Higher Or You'll Re-Elect Trump

Come on, Jay, you can always goose stocks back to new highs after the election.
Indulge me for a moment in some backroom speculation. It's absurdly obvious that the unelected, permanent, ever-expanding National Security State, a.k.a the Deep State, and its Democratic Party allies have been attempting to torpedo Donald Trump since the 2016 election took them by surprise. (Imagine doing everything that worked so well in the past and failing at the last minute. Ouch. Revenge is best served cold, n'est pas?)
The comedy-of-errors RussiaGate collapsed in a foul heap, the impeachment backfired, and so what's left in the Deep State quiver other than its usual bag of, ahem, accidents?
Some might argue that urban riots and civil unrest might be enough to cause Trump to lose the election in November, but this strategy can backfire just as easily as the previous Deep State strategies.
Assuming Americans will ultimately vote their pocketbook as in the past, the only sure way to sink Trump is to crash the stock market, the jewel in Trump's crown. This is blinding obvious, but the Deep State's political allies have been wary of shrinking the bloated wealth of their donors, and wary of a backlash from the wealthy who want to see Trump lose but not if it requires the personal sacrifice of surrendering any of the $548 billion they've gained in the recent stock market melt-up.
But with the election just months away, the pressure is now so intense that the Deep State is demanding Powell and the Fed stop the money-printing that's goosing stocks higher. Hints have been elevated to suggestions which are about to become demands.
Jay, we're sure you understand the importance of this election for the country, and so you'll understand why we need to see new lows in the stock market by September, October at the latest. Can you do your duty, or do we need to find someone else willing to serve the national interest at this critical time?
The Deep State has tapped Powell on the shoulder, and Jay has likely hedged his bets, demanding some political-economic cover for stopping the money-printing that's been goosing stocks to new highs (tech stocks) or gains for 2020 (S&P 500).
Presto, the bogus jobs reports is issued: good news! OK, Powell responds, that's good but not enough. So we can anticipate the wheels are busy turning in the appropriate agencies to issue a surprisingly hot inflation number. A sudden spike in inflation would provide the additional cover the Fed needs to withdraw the stock market's free-money lifeline.
Barring a hot inflation number, the Fed can always fall back on some other pretexts to turn off the money spigot and let the stock market start sliding into late October.
We can also imagine the Deep State tapping on other shoulders in town, reminding them of various skeletons in the closet and suggesting it's time to take one for the Deep State team. After all, what's a couple hundred billion dollars between friends?
Come on, Jay, you can always goose stocks back to new highs after the election. If Jay hesitates, fearing for his reputation as the rock-solid guarantor of new all-time highs in stocks, well, pressure can be applied on other players in various ways. Or it might even be suggested that Jay's health is looking rather iffy, what with the stress and all, and perhaps a resignation for health reasons can be arranged.
The pressure on the Fed to turn off the money-printing that's goosing stocks ever higher will be increasing as the election draws ever closer. The Deep State has lost every gambit so far in a humiliating string of failures, and killing the soaring stock market is the last best chance to torpedo Trump's re-election.
This is for all the marbles, kiddies, and the gloves are about to come off. If the tap on the shoulder wasn't persuasive, a punch in the gut might bring hearts and minds around to the desired perspective. After all, accidents can happen to just about anyone.
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