How Are Fantasy Sports Like Our Fantasy Stock Markets?

What do we have to be thankful for?  

We should be very thankful that even a horrific terror attack on a major Western city becomes yet another reason to rally the markets.  Oil prices shot up 5% yesterday but we rallied just as hard as we do when they fall - one is good for XOM, CVX and others and the other is good for consumers, whose confidence fell 10% between October and November and that was BEFORE the terrorist attacks we are not at all worried about.  

Sure, what do consumers know?  Their spending barely makes up 70% of our GDP so why pay attention to their mood when there are stocks to buy, right?  Economic Confidence is also fading fast and confirms the poor consumer numbers but hey - we're only 50% lower than we were last December - I'm sure we'll be fine if we just ignore it...

Norway's Consumer Confidence is also fun to ignore:

Investors probably don't know anything either so we can also ignore State Street's Investor Confidence Index as it re-tests the year's lows.  

See - isn't it fun to ignore things!  Even Europe is ignoring things as their markets are fully recovering from yesterday's drop this morning.  How silly of us to think that any market sell-off would be allowed to stand!  

Clearly our leaders are too TERRIFIED to let the markets even have a normal correction for fear that we all melt-down like China, which has been struggling since October to get it's act together (we're short FXI at $41):

Nobel Prize-Winning Economist, Joe Stiglitz has agreed with my premise (see Friday's post)  that Mario Draghi is full of crap and that his is merely "papering over the cracks that are caused by the faulty design of the currency bloc."  According to Stiglitz (and myself), Draghi's assurances that he will do "whatever it takes" to boost the Euro-Zone's economy simply distracted markets from a deficient system.  

The euro area’s “flawed structure that does not allow adjustment will have significant consequences, there will be another euro crisis,” Stiglitz said in Lugano, Switzerland, on Tuesday. “Europe was saved last time by Draghi’s statement he’ll do whatever it takes -- that was what I call a confidence trick.”

“If push comes to shove there will be nothing there behind that assertion, particularly given the political economy,” he said. There’s a “real risk of the next bout of the euro crisis -- the likelihood that they muddle through is very high at enormous cost of continuing stagnation.”

Joe and I had a very nice time sitting together at the Buttonwood Conference in New York a few years back and I can tell you he is one smart cookie!  His semi-socialist views make him a pariah in US economic circles but maybe that will change under President Sanders...  

As you can see from the chart, the Euro is breaking down below $1.06, the lowest it's been since 2003 and the next stop is $1.00 and perhaps even 0.90 as currency traders are not as forgiving as stock market perma-bulls, perhaps because you actually have to exchange your currency for actual goods and services while a stock certificate is nothing more than a fantasy ownership of a Corporation in which you have no say and no right to any of the assets or profits - essentially you are simply paying for the right to pretend you own something - just like the fantasy sports leagues they are trying to shut down because they are a scam.  

The difference is the stock market is a scam that has gone on for so long that no one dares to do anything about it.  In reality, stock certificates are nothing more than another form of fiat currency that have been printed by our Corporate Masters which we, in turn, barter and trade for without putting any real thought into what they are actually worth.  

And what do the fantasy sports leagues do to build interest in their product?  They partner with network television and real sporting events to generate enough viewer interest to bring money into the system where they take a nice skim off the top.  There are even revelations of scandals that make it very obvious the game can be rigged but it doesn't matter to the average fan - they just keep playing anyway because everyone likes to think they can get rich for doing nothing more than picking the right team.  

How is this different than stocks other than the fact that the stock market boosters have spread over the years from small segments at the end of news shows to weekend stock shows to now 3 major 24-hour stock networks that do nothing all day BUT promote stocks and stock ownership to the American people.  How can they prosecute fantasy sports if they are not going to prosecute fantasy stocks?  As Stiglitz notes, we now even have to have fantasy economies to support the fantasy stock prices - when will it end and will it end well?  Food for thought...

Happy Thanksgiving, 

- Phil