Obama Government supporting miracle stock market rally with taxpayer money?

It is becoming clear that the FED is not disclosing to the Congress much of the government's manipulation of the economy. Democrat Cummings says treasury secretary Timothy Geithner should testify before Congress about efforts by the Federal Reserve Bank of New York to limit American International Group Inc.’s disclosures of payments to banks. That is correct… that the FED has been doing secret payments that could explain the markets.

All the money seems have been leaving the US stock market and going into the bond and foreign markets. So where has the money come from to sustain the 50% rally in US stocks? Did the FED buy into the US stock market?
Facts:
1.OUTFLOWS from U.S. stock funds occurred all 0f 2009
2.RECORD AMOUNT ($311 billion) of new stock offerings (includes IPOs, secondaries, and converts, but particularly a large offering of secondaries in the second half of the year);
3.Announced cash Mergers &Acquisitions, as well as corporate stock buybacks, AT THE LOWEST LEVELS FOR ANY YEAR THIS DECADE.
And
1.U.S. stock funds: $32 billion Outflows
2.U.S. ETFs: $18 billion OUTFLOWS
3.International stock funds: $26 billion INFLOWS
4.International ETFs: $35 billion INFLOWS
5.U.S. bond funds: $370 billion INFLOWS
6.U.S. bond ETFs: $39 billion INFLOWS See:

http://www.forexhound.com/article/Stocks/Stocks/Charles_Biderman_of_TrimTabs_Claims_US_Government_Supporting_Stock_Market/174316


Trim Tab thinks the US government could be buying US index funds to prop up the balance sheets of the banks. Banks with greater than 20:1 leverage can be completely wiped out by a 5% loss. The average US stock lost 50% to 75% by March 2009 before the miracle rally on wall street that occurred while the private sector sold US stocks to but treasuries, Foreign stocks, and corporate bonds.
See Warning: http://www.youtube.com/watch?v=ucZBrQVCzBc

The Obama leftists are not going to be happy if they find out they are propping up Wall Street and Wall Street is toasting leftist economic incompetence with new bonuses for the Obama secret windfall stock profits.

World Outlook
China raised their central bank interest rate to try to stem rampant inflation of domestic prices as China shifts towards more of a consumer society. Asian economies seem to be stagnating. If the malaise continues a sharp market correction is anticipated.

The FED issued a warning yesterday to banks telling them to prepare now for higher interest rates. Higher long-term rates are outside FED control because they depend on the market. And the FED also warned that short-term rates would rise when they begin draining the cash out of the economy. This has an immediate negative effect for the stock market. Banks are going to be reluctant to give housing and other longer-term loans. This will dry up mortgage loans and refinancing very rapidly.

Market Outlook:
Monster Worldwide, an online careers and recruiting firm, said its employment index fell in December to the lowest level in five months. The index was 119 in November and 115 in December and is 12% below the 131 mark a year ago. The Monster figures came a day after the ADP National Employment Report that showed an 84,000 loss of private sector jobs in December.

Since November, commodity prices have risen even while the dollar has appreciated in value indicating that price inflation is beginning to kick in. The difference between two-year and 10-year Treasury yields widened to within 4 basis points, the most in at least 20 years as the Federal Reserve signaled it will hold its target interest rate at a record low. The much higher future rate indicates future inflation risk is higher than perceived future deflation risk. But there is a long way to go before inflation kicks in. For that reason precious metals and commodity prices will bounce upwards and fall back many times before the climax is hit and the FED tightens down rigorously similar to when they popped the bubble in 2000.

The Institute for Supply Management’s factory index rose to 55.9. 50% means as many $orders rose as declined. Anything less than 50% is a contraction in manufacturing. The Christmas season accounts for almost 50% of annual non-commercial sales.

Spending on construction projects dropped 0.6 percent in November, to the lowest level in more than six years, the Commerce Department said today in Washington.

The National Association of Realtors' index for pending sales of previously owned homes - a forecasting gauge of housing-market activity - slid 16% in November. That represents the first decline in the index in 10 month, and more than triple the size of the drop analysts had expected.

Service related employment declined again in December. FOMC minutes of last month debated increasing and extending asset purchases anticipating a weakening economy as stimulus ends and new taxes begin..

Yesterday:
New unemployment claims filed last week increased to 434,000.

Friday, Jan.8:
December unemployment report: The overall jobless rate held at 10 percent. The report was that 85,000 jobs were lost in December, considerably worse than expected. However the number of workers who have been unemployed longer than 6 months rose by 229,000 to 6.13 million.

Market forces January 8, 2010

The NYSE just reached its previous high but did not establish a new high and still can be interpreted as a head and shoulder sell signal if the neck resistance level (of the head and shoulders formation) breaks down. That reflects both the price change and volume of shares being traded. The modified MACD indicator still has a sell signal. The US market has been relatively flat for six weeks.

Charles Biderman, founder of Trim Tabs Research, a firm that keeps track of liquidity flows into and out of the market says the government has been investing in American stocks and artificially caused the recent rally to create the illusion of a recovery. Biderman said, “We cannot identify the source of new money that pushed stock prices up so far so fast." He says the money didn’t come from companies, retail investors, foreign investors, hedge funds, or pension funds. Socialists are known for taking ownership to get the changes they demand. It is likely the US government would buy the market index funds so as not to distort individual stock prices. It means the stock market recovery will be capped until the US government sells what they have bought. By draining money out of the economy the government may be planning to take the 50% profit from the stock market rally beginning very soon. If it were done rapidly the stock market would collapse. So instead we should expect a general long-term cap on the markets.

Asian markets were up over night; Hong Kong up 0.1%, India down -0.4%, South Korea up 0.7%, Taiwan up 0.5%, and Japan up 1.1%.

European markets are mixed with the average in a range from 0.6% to -0.5% this morning about half way through their day.

US pre-market futures down about -0.2% today at 9:00 AM EST.