Central Bank Stock Pool

All the paintings on the tombs
They do the sand dance don't you know
If they move too quick
They're fallin' down like a domino
--Bangles

Discussion of why and how central banks could send stocks soaring from here. Central banks can't let stock prices fall in a over-leveraged financial system that makes the 2008 backdrop look like a Sunday school picnic. In other words, CBs are 'all in' and believe that they need high stock prices if they are to have a fighting chance at holding their Keynesian fantasy together.

As these pages have discussed, the 'how' involves a variation of the old stock pool arrangement. At least two colluding players trade buying and selling stocks to each other, hoping that they can lure others into the game. All the while, prices spiral higher.

I believe that central banks, including the Fed, have been playing this game. It can work in low volume situations until outsiders lose their risk appetites and begin to sell. Or until colluding players soak up so many shares that Everyman no longer associates stock prices with economic well being.

The question is whether we're on the cusp of central bank stock pool irrelevance.

position in SPX