Tag Archives: federal reserve

Stock Market: In the Bag?

So is whatever spooked Dennis Gartman on Friday behind us now?  The dovish Fed story is getting played today.  It’s the ‘beat the crap out of ‘em and then wash-rinse-repeat’ market.  Longs, shorts, everybody into the spin cycle.  All because this market is still 100% enthralled with these clowns and that makes it difficult to manage.

SPX held support (60 min. view below), Semiconductors never lost the uptrend and now the Fed comes with some dovish love making for the market.  A bounce at the least was in the bag.

spx

But the SPX did hold at support as everyone should have noted and so people who missed the downside kick off should not have been shorting it above support.  Only on a breakdown should the market be shorted; a breakdown followed by shortable bounces.

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Forward Guidance

Guest Post by James Howard Kunstler

Guess what? There is none. Rather, the Federal Reserve practice of Delphically divulging its intentions ought to be understood as the master pretense of US economic life — the delusion that wise persons are actually in control of anything. The result of this guidance continues to be the mis-pricing of everything, especially the cost of money as represented in the operations of debt, and hence the value of everything denominated in money.

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QE, Uncertainty & CPI

Guest Post by Doug Noland

Equity market internals have turned increasingly unsettled.

In last Wednesday’s press conference, Janet Yellen upset the markets with her comment suggesting that the Fed might commence rate adjustments as early as six months after it concludes its latest QE program. Several officials have since tried to reassure market participants that the Fed has not moved forward its plans to raise rates. Even hawkish Fed officials went to pains to communicate that rate moves were not in the immediate offing.

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How the Fed is Hurting Seniors

MarketWatch has a nice article clearly laying out the ways that Grandma’s savings are compromised by monetary policy designed to bail out borrowers and reward speculators at the expense of people just trying to live by the old rules.

How the Fed is hurting seniors

Let’s be honest and call ZIRP what it is; an immoral manifestation of modern finance that rewards banks, inside players and speculators that jump on board for the ride.  This is why I have to laugh (or cry) every time some bull wise guy tries to legitimize the bullish atmosphere as being something normal or moral.

It is not.  It was created by decree of man to the enrichment of some and the detriment of many.  Other than that I have no strong opinions on the matter.

Post Crimea, FOMC Meeting Next

The HUI Gold Bugs index got Ukrained to the extent that global crisis hype seeped into this market leading into the weekend.  The S&P 500 got Ukrained the other way as people actually acted as if the Crimea question is a macro fundamental.

hui.spx

I think after today the books are square on Ukraine but not yet the FOMC meeting, which will provide another hype opportunity.  Will they or won’t they ruminate about an eventual hike to the anti-Grandma Fed Funds rate, AKA ZIRP?

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Bundesbankification

Guest Post by Doug Noland

Developments in China and the Ukraine weren’t enough to restrain the exuberant bulls.

For someone deeply engaged in monetary theory and policy, Thursday was special. While CNBC was carrying Janet Yellen’s testimony before the Senate Banking Committee, there was also a live feed available for a panel discussion on monetary policy at the Bundesbank Symposium on Financial Stability. The two discussions were separated by much more than the Atlantic.

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Yield Curve’s Message for GDP

Guest Post by Tom McClellan

10-year and 3-month yield spread versus relative strength
February 21, 2014

One of the really fun leading indication relationships involves the yield curve, the spread between interest rates on similar securities across different maturities.  The real yield curve has too many data points each day for visual modeling, and so a simplistic model of the yield curve can suffice to make for easier modeling.  In this week’s chart, the role of the entire yield curve is portrayed by the spread between the 10-year T-Note yield and the 3-month T-Bill yield.

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US Fed: Proudly Promoting Old Bad Habits

Leaving aside for a moment the compulsion for market participants to remain ‘risk ON’ that is an underlying effect of Fed policy of the last 2 years, what other effects may have been promoted by the latest inflationary operations?

Well, personal consumption is trending up.  Yey, it’s 1999 (or 2007) again!

personal.consumption

Courtesy yCharts

Unfortunately, personal savings is trending the other way as ZIRP has put a bull’s eye on the dreaded domestic enemy known as the saver.  Why, saving seems to have been deemed un-American and in the face of ZIRP, it’s a losing bet too… as long as the asset bubble is maintained that is.

personal.savings

Courtesy yCharts

Hey, despite a re-shoring of manufacturing that is in progress (and a good thing), we remain a heavily consumer based economy.  They are consuming and they will continue to consume until they puke, which in less crude terms means until the next asset market liquidation.

Officials have spent the last couple of years looking like heroes (boom).  We are likely in the process of pivoting toward the other end of the spectrum.  That would be the inevitable bust stage.  We will not consume our way to prosperity especially by manipulating debt.