There's one constant underpinning this market: The Fed. It has literally lost its collective mind (not that I feel sorry for them), like headless chickens running aimlessly around the otherwise impressive façade of the Eccles Building.
My daughter says I write about the Fed too much, but there's no way around it: The Fed is the market now.
We've presented plenty of evidence that this cadre of PhDs is simply making up policy as they go; forever scurrying to keep their Wall Street master smiling.
This experiment, of course, ends badly, but in the near-term we also know that when the Fed is pumping steroids (which is to say slashing rates and printing money at the same time), the markets will go up.
In October, the money printers returned, and I mean big time-which prompted me, the jaded macro bear, to pause my fishing trip out West and scream "Party on! The money printer is back!"
Since then, and right on cue, the markets have been melting up, as my admittedly "exuberant" articles made fairly clear last week - and which we immodestly predicted even earlier in the year.
Why so immodest? Because it's so simple: We knew the Fed, which is nothing more today than Wall Street's harlot, would print money as soon as the market needed it.
Since my autumn fishing trip, we've watched stocks fly higher than my fly rod, posting new gains week after week after week. That's precisely why I told you to buy the S&P and ride the most hated bull market we've ever seen...
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Risky IPOs, overvalued tech unicorns, and a world without recessions are all in vogue these days as investors make the classic bull assumption that tomorrow will always mirror yesterday.
With the Fed sending more steroids into the longest (and most hated) business cycle on record, one can't blame investors for forgetting about bears and dreaming about unicorns.
But more informed investors may want to have a look under the hood of the mutual funds they hold, for there might be a number of unsavory unicorns wreaking havoc on their money.
So shorten your stirrups, it's a nasty ride... Read more »
I almost feel sorry for the Fed. Almost.
Even after last week's much-anticipated rate cut, Powell has been getting hammered by White House tweets for not cranking rates "competitively" faster and lower at levels equal to those of Europe and Asia - which is to say, zero or below.
Such pressure is the logical equivalent to: "If our neighbors are jumping off a bridge, we should, too."
Sending interest rates to the bottom of history (and then below that) has done nothing for the countries who have pursued this suicidal policy except buy more time, kick more cans, and fatten the size of the debt land mines buried beneath their teetering economies.
This is not an opinion; it's a mathematical and historical fact.
Let's explore... Read more »
This week, the Wall Street Journal came out with an article regarding the massive growth, as well as competition and consolidation, within the now $4 trillion ETF market, one that has grown by over 90% in the last five years.
That's all very interesting, but the WSJ article conveniently left out the key risks hidden beneath this industry's otherwise massive growth story...
So today, let's dig deeper and look at the opportunities as well as dangers lurking beneath the ETF market growth... Read more »
Here we go again - another near-miss Fed Red Day on Wednesday.
If you are new to Critical Signals Report, we describe Fed Red Days here.
In short, Fed Red Days occur on days that the Fed lowers interest rates (that's supposed to be good news in a Fed-manipulated Twilight Zone), but markets nevertheless close lower (that's bad news).
Good news is supposed to take the markets up... not down. Down is red - it means your stock investments probably lost money on a day that the Fed lowered rates - hence "Fed Red Day."
This is equally "bad news" because it's signaling that the Fed's magical powers are losing their "magic," and given the sad fact that today the Fed is the market, such red days are particularly disturbing signs.
Today, the Fed lowered interest rates by the expected 25 basis points (0.25%), taking interest rates down by a total of 0.75% since the first rate cut back on July 31 of this year. That's a 30% rate cut since July, but just 0.75% in basis points, raising the question as to whether cutting rates that are this low really matters anymore.
Here's what happened...
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