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Fed brain power level


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#1 LMF

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Posted 03 March 2019 - 10:50 AM

Two months after the December FOMC debacle we can now look back and see how ridiculous these guys really are.  No matter what it says on their resumes.  They haven't spent any time studying the markets, and they know nothing about what the markets really run on which is confidence.  Confidence at the 1987 bottom......confidence at the 2009 bottom when Ford was selling at 90 cents a share.  And just recently in December.  When confidence gets vaporized, there are no answers.  Not a good place to visit just for the fun of it.

 

Nobody with a brain does a rate hike when the RUT is showing a death cross like in December.  The RUT is leveraged to the job creation side of the economy.  The big mega cap companies are net job vaporizers.  We have a whole room of FOMC members that have never heard about this.  

 

Rate hikes combined with the balance sheet reduction.....the Yellen creation.  If you want to normalize rates, don't even think about ramping up the balance sheet reduction at the same time.....you've never done that before, remember.  All you have to do is set the balance sheet reduction at a relatively low level and keep it there forever.  The market won't care one way or the other.  It's like the boiling the frog trick.....don't ramp up the water temperature.  The frog is sure to figure it out and jump out of the pot.  The FOMC guys like Yellen and Powell just don't think right.....you can't depend on them to have the right reasoning process 99 percent of the time. 

 

Powell thinks the the December thing was just a market tantrum that interrupted their normalization plans.....that couldn't be further from the truth.

 



#2 CLK

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Posted 03 March 2019 - 12:29 PM

Maybe you weren't trading in 1994, but Greenspan raised rates 5 times, 3 after the death cross, surprising the markets after holding rates steady for some time.

This is nothing new or irresponsible, market sold off 20% and then went parabolic from 95 -2000.

 

 

https://www.thebalan...hs-lows-3306135



#3 tradesurfer

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Posted 03 March 2019 - 01:11 PM

Yes they are always too slow in their decisions and too late or too fast. I wonder if they see a no bid bond market collapse coming ?

#4 LMF

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Posted 03 March 2019 - 01:28 PM

My line in the sand with the Fed has always been 1998 LTCM.....it changed forever at that point.  Its rare when anything Fed induced before that event could matter with any significance  now.  And for sure by the 2000 super dot.com bubble top.  Just my personal opinion.



#5 opinionated

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Posted 03 March 2019 - 02:17 PM

They are actually saying 80% no hike this year!!  And actually an 7.5 % of a decline in Jan 2020



#6 Data

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Posted 03 March 2019 - 02:40 PM

Actually, Greenspan was pumping liquidity into the system in 1994-1995 as measured by the M3.   That is usually what the Fed does in the last 25 years.  They raise the benchmark rate on one hand and either they or the proxies in Japan flood the system with liquidity.  1998 was another example where QE was stopped and the emerging markets bond market started to collapse within six months.

 

Frankly, they've screwed up the economy and the stock markets to such an extent that they're more tightly coupled than ever.   The top 10 percenters are completely dependent on realized gains from the stock market for their spending.  Nearly 40 percent of their income is due to realized capital gains.


Edited by Data, 03 March 2019 - 02:42 PM.


#7 CLK

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Posted 03 March 2019 - 03:25 PM

Actually, Greenspan was pumping liquidity into the system in 1994-1995 as measured by the M3.   That is usually what the Fed does in the last 25 years.  They raise the benchmark rate on one hand and either they or the proxies in Japan flood the system with liquidity.  1998 was another example where QE was stopped and the emerging markets bond market started to collapse within six months.

 

Frankly, they've screwed up the economy and the stock markets to such an extent that they're more tightly coupled than ever.   The top 10 percenters are completely dependent on realized gains from the stock market for their spending.  Nearly 40 percent of their income is due to realized capital gains.

 

 

So I guess the QT at the same time as rate hikes was too much, maybe they did it as a stress test to see what they could get away with.



#8 Data

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Posted 03 March 2019 - 03:43 PM

The market was rising most of last year.  It didn't really start to roll over until there was a substantial debt issued by the government.  There was very little debt issued from April till September.  Then there was around 400-450 billion dollars borrowed in three months.



#9 robo

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Posted 04 March 2019 - 08:51 AM

By my estimation, the Fed took the funds rate 75 bps above neutral, caused several parts of the yield curve to invert and real M1 growth to completely vanish. Recession odds this year are at 80% (Ned Davis is at 96%!!).

 

 

 

A global recession without the USA? That's what I'm hearing. Reminds me of the clowns who were talking about decoupling back in 2008. No such thing. Sorry to be the one to tell you.

 

https://twitter.com/...uyRosie?lang=en

 

(From Today's Forecasts) "it was pointed out this weekend to me that funds experienced outflow during this last 45 days... if that's the case, who was buying it? How about brokers and bankers for $100 Alex? So it was a "stimulus" from the Central Banks driving it"

 

https://twitter.com/VolumeDynamics

 

It's almost showtime, and my eye is on the VIX!

 

Jeff Clark's Market Minute Another Day… Another Caution Sign

Well… here we go again…

The Volatility Index (VIX) is flashing another warning sign. It closed Friday right on its lower Bollinger Band. That’s a sign of extreme complacency in the stock market. And, that’s a BIG caution signal.

Here’s an updated chart…

https://www.jeffclarktrader.com/

 

The American Association of Individual Investors (AAII) publishes a weekly survey in which it asks respondents if their stock market outlook is bullish, bearish, or neutral over the next six months. It’s an excellent gauge of investor sentiment, and it’s a useful contrary indicator – meaning when the bullish numbers are high, then it’s time to be cautious. And when the bearish numbers are high, then it’s time to start buying stocks. On January 31, the date of the AAII survey, and just prior to the VIX closing on its lower Bollinger Band on February 4, bullish respondents to the survey were 32%. Bearish respondents were also at 32%. So, investor sentiment was evenly matched. As of last week’s survey, though, the bulls have jumped to 42% – the highest number of bulls since October 4, 2018. Meanwhile, the bears have fallen to just 20% – the lowest number in several years. So… like I said… it sure seems like a lot of people are napping right now. I suspect the VIX warning we got on Friday is going to be a bit more significant than the one last month.

Best regards and good trading,

 

 

 

Good trading to the Bulls and Bears - because there be money to made in both direction if one knows how....  The trend remains up so watch the sky and be glad Bulls can't fly....  Still NO SELL signal for VXF and that's all I trade for 401k money.

 

Above the 9 EMA, the 20 DMA, and the trend remains up until it's not...

https://stockcharts....11c&a=649489856


Edited by robo, 04 March 2019 - 09:01 AM.


#10 robo

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Posted 04 March 2019 - 09:32 AM

There are those who are persuaded that some new price-enhancing circumstance is in control, and they expect the market to stay up and go up, perhaps indefinitely. Then there are those, superficially more astute and generally fewer in number, who perceive or believe themselves to perceive the speculative mood of the moment. They are in to ride the upward wave; their particular genius, they are convinced, will allow them to get out before the speculation runs its course. They will get the maximum reward from the increase as it continues; they will be out before the eventual fall. For built into this situation is the eventual and inevitable fall. Built in also is the circumstance that it cannot come gently or gradually. When it comes, it bears the grim face of disaster. That is because both of the groups of participants in the speculative situation are programmed for sudden efforts at escape.

– John Kenneth Galbraith
A Short History of Financial Euphoria, 1990