Earlier this week, I shared compelling evidence that the Fed’s unprecedented money-printing ($278 billion being just the latest round) has distorted stock market forces to such a degree that this current, explosive rally doesn’t really have a foreseeable end. The... Read more »
Turn on any television, click on any hyperlink, and you'll be bombarded with... "versus." It's tiring: Bulls versus bears, expansion versus recession, and, of course, red versus blue.
Well, we can put that polarizing debate to bed, once and for all... The old rules of economics and approaches to investing - the tired old sacred cows of the pundit class - are rapidly receding in the rearview mirror. And investors who align themselves with that kind of thinking are, to be blunt, doomed.
Even now, we're way past talk of "bulls and bears." I'll show you in a minute how the Fed and its renewed money-printing - $278 billion and counting fast - are pushing us toward what old sailors and cartographers used to call "terra incognita."
The edge of the map. The Twilight Zone. Think "Australia in 1603." Unknown land. "Here be dragons." Strange territory, indeed.
And just like those early modern explorers found, there are almost unimaginable riches to be had. Peril, too, but I'll show you why you don't have to worry about that.
The Fed's unprecedented - let's call it what it is, folks - stimulus has created a gravity-defying, absolutely gangbusters market melt-up; a colossal opportunity for making money. One that we may not see again in our lifetimes.
If that sounds strange to you, I agree. The fundamentals don't support a market like this, but the Fed is the market now, and this market is having a melt-up for the history books.
In the last two weeks, market winds have been changing dramatically in both direction and speed – which is typical in a Fed-driven Twilight Zone. In such muted, back-and-forth markets, the signals get confused and it’s easy to feel frustrated.... Read more »
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.
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...
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.
Welcome back to our Monday “look ahead.” Decelerating growth and job gains, along with a developing manufacturing recession, will be the headlines this week, as the FOMC (Federal Open Market Committee) announces further interest rate cuts (or not) at 2:00... Read more »
Earnings season is back, and so is the distortion. In the backdrop of what are now undeniably central bank-driven markets riding a decade+ wave of pure (and historically unprecedented) “intervention,” I’m often asked if fundamentals even matter anymore. Below, I’ll... Read more »