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#21 dTraderB

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Posted 24 March 2019 - 12:16 PM

Trader for me.....  I just take the signals. It doesn't matter what the reasons were that caused the trend change. And yes,  sometimes I get whipsawed! 

 

The system below works well for those that want to learn how to trend trade using a very simple system. And yes you will get whipsawed sometimes.  Friday's one day move does not change the MT trend, but I trade using my own system so I'm back to cash in my 401k.

 

Investor or Trader... Which Are You?

Most market participants consider themselves to be "investors." But if you look at a list of the really big winners on Wall Street, you will see that most of those who make big profits, list themselves as "traders."

By "big profits" we mean doing better than the S&P 500 Index or Nasdaq 100 Index by a substantial margin over any three-year period.

Investors

 

"Investors" put their money into stocks, real estate, etc., under the assumption that over time, the underlying investment will increase in value, and the investment will be profitable.

Typically, investors do not have a plan for what to do if the investment decreases in value. They hold onto the investment in hopes it will bounce back and again become a winner.

 

Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them. When faced with a declining (bear) market, they hold their positions and continue to lose.

We all know investors. In many cases it was us before we realized how dangerous buy-and-hold investing could be to our savings.

 

Investors often have some knowledge of trading. But that knowledge is tainted by how it is all too often described in the financial press. Trading is risky, dangerous, foolish, bad, involves a great deal of work, etc. On the other hand "investing" is good, reliable and safe.

"Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them."

Investors had a taste of what buy-and-hold can do to their capital in the 2000-2002 bear market. They lost again in the 2008-2009 bear market.

 

Traders

On the other hand "traders" take a proactive approach to their investing. Traders have a defined plan and invest with one goal, to put their capital into the markets and "profit."

They "trade" with a plan that tells them what to do in any situation. When to enter and when to exit. They never allow large losses.

Being a trader does not mean you must move in and out of the markets frequently. This is a common misconception. A trader simply is one who has a plan for entering and exiting. They know what to do if their trade goes against them, and they know what to do when their trade is profitable.

 

Some traders go short (take bearish positions) as well as long (bullish) positions. Some are unable to go short, or they find short positions to be uncomfortable. Probably the majority of traders do not ever take short positions.

But traders "do" have a plan. This is where they differ from investors.

 

Every Trader Needs A Trend

If you think about it, you will quickly realize every trader needs a trend to be successful.

No matter what trading method is used, whether it is pattern trading, swing trading, long term buy-and-hold investing, fundamental analysis, technical analysis, buying or selling on news events, IPOs, splits, you name it. If the stock or mutual fund does not trend in the required direction after the trade is made, you cannot be profitable.

 

This also applies to all asset classes. Stocks, bonds, currencies, commodities. You must have a trend to profit.

 

 

Trend traders wait patiently for prices to tell them a trend has begun. Then they jump on board. If the trend fails, they exit quickly to control losses. Price tells them when to enter "and" when to exit. If the trend continues, trend traders have no predetermined profit goal. They stay with the trend until it reverses.

 

Cutting losses quickly and staying with a trend until it ends is how trend traders realize huge profits in the financial markets. The financial markets are trending "about" 80% of the time. That means trend traders are profitable 80% of the time. During the other 20% trend traders keep losses very small so that they are ready when the next trend starts.

 

This does not mean 80% of their trades are winners, just that they are in the plus column for that 80%. If you have three losing trades of 2% and one winning trade of 18% in a year, you finish with a 12% gain, even though most trades were losers. This fits the old saying, "cut your losses short and let your winners run."

 

 

https://www.fibtimer..._commentary.asp

 

Interesting analysis, will check this page regularly. 

 

Is this FIB who posts here? 



#22 dTraderB

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Posted 24 March 2019 - 12:19 PM

This guy is one of the most highly regarded "FED watcher"

 

I think lately he has been too "pro_FED" is there is such a thing but I pay attention to what he says since it is a good conduit to 

what the FED is thinking;  yeah, you got to try to know what they are thinking, their strategy...etc so you would not be blind-sided...

 

 

Fed Needs to Get With The Program
Share6
 

Where to begin?

Probably best to first step back to last week’s FOMC meeting. That event concluded with the scene of Powell & Co. running backwards as fast as is possible for central bankers to try to correct the error of the December rate hike. As expected, the Fed downgraded their assessment of the economy and held rates steady. Less expected was the sharp downward revision to the dot plot with now eleven of the seventeen participants anticipating no rate hikes in 2019. The median expectation is for another hike in 2020 and then that’s it for this cycle. Note the median rate path doesn’t even get rates up to neutral. In other words, the Fed no longer thinks containing inflation requires restrictive policy.

That last point resonates as a substantial change to the outlook. The Fed’s models typically don’t work that way. That call for restrictive policy comes from the need to push unemployment to its natural rate to contain inflationary pressures. Those inflationary pressures have apparently disappeared now that the rate forecast has flattened out despite unemployment remaining below its natural rate.

What’s going on here? The persistence of low inflation has finally become too much for the Fed to dismiss, especially now with the economy decelerating. They can’t justify it anymore as a transitory phenomenon so it must be attributable to excessively high estimates of the natural rate of unemployment (which came down again to a now 4.3%) or, more worrisomely, eroding inflation expectations. Powell emphasized inflation concerns in the press conference and acknowledged that the Fed had not met the symmetric inflation target in any convincing way. That’s something of an understatement; if anything, Fed policy has very clearly treated 2% as a ceiling in the actual application of policy.

This from Powell’s press conference is particularly telling:

It’s a major challenge. It’s one of the major challenges of our time, really, to have inflation, you know, downward pressure on inflation let’s say. It gives central banks less room to, you know, to respond to downturns, right. So, if inflation expectations are below two percent, they’re always going to be pulling inflation down, and we’re going to be paddling upstream and trying to, you know, keep inflation at two percent, which gives us some room to cut, you know, when it’s time to cut rates when the economy weakens. And, you know, that’s something that central banks face all over the world, and we certainly face that problem too. It’s one of the, one of the things we’re looking into is part of our strategic monetary policy review this year. The proximity to the zero lower bound calls for more creative thinking about ways we can, you know, uphold the credibility of our inflation target, and you know, we’re openminded about ways we can do that.

I see two big points here. The first is that the Fed suddenly remembered that policy rates remain mired near the zero lower bound. They seemed to forget this point over the last year, too excited by the prospect of raising rates to remember that even at the projected end of rate hikes they would lack the room to mount a traditional response to a full-blown recession. The second point is that fading inflation expectations mean a.) they are “paddling upstream” to hold inflation higher and b.) they have “room to cut” when the economy weakens. My interpretation of this new inflation realization is that the Fed has a fairly low bar for a rate cut; see my latest for Bloomberg Opinion.

Since that meeting, the yield curve continues to flatten and invert with the 10s3mo spread going negative last Friday. An inverted yield curve is a well-known recession indicator. As a market participant, you have a choice. Either embrace that relationship in your analysis or reject it on the basis that any signals from the term structure are hopelessly hidden by the massive injections of global quantitative easing over the last decade.

I am going to error on the side of caution and choose the former. Everyone has their pet recession indicator; many are probability models based on some combination of yield spreads and other leading indicators. Most will be raising red flags like this estimate of the probability of recession in six months based on the 10s2s and 10s3mo spreads and initial unemployment claims:

prob6mo-2j5oc8g-1024x569.jpg

To be sure, the longer into the future, the fuzzier the forecast. If I add in temporary employment claims and narrow the forecast horizon to three months, I get:

prob3mo-258o9s5-1024x562.jpg

In either case I get the same takeaway: The risk of recession has risen to levels that demand attention from the Federal Reserve. In the two cases of similar spikes in the 1990s, a recession was avoided by the rapid response of the Fed in the form of rate cuts. The times that response was lacking, a recession followed.

So now I switch from analyst to commentator: The above leads me to the conclusion that the Fed needs to get with the program and cut rates sooner than later if they want to extend this expansion. Given inflation weakness and proximity to the lower bound, the Fed should error on the side of caution and cut rates now. Take out the insurance policy. It’s cheap. There will be plenty of opportunity to tighten the economy into recession should inflation emerge down the road.

What would delay that rate cut? Data. A yield curve inversion is a long leading indicator. Sure, the data is softer. But soft enough to cut rates? Not necessarily from the Fed’s perspective. Moreover, cutting rates now means admitting the December rate hike was an obvious error. The Fed hates admitting error.

Speaking of errors, the December rate hike is turning into one for the books. Not just on the economic side, but also the political side. I can already hear the howls of the monetary policy community shouting me down with claims of Federal Reserve independence and how nothing has changed in the past two years and that of course the Fed will walk away from the Trump years unscathed. I think that hypothesis is a.) completely wrong and b.) already proven to be completely wrong.

Monetary policy independence is not a law of nature. There is no special 11thcommandment “Thou shalt not interfere with the central bank.” Independence only exists so long as a.) it is an established and followed norm and b.) the central bank continues to deliver results.

The second part is straightforward. The Fed hasn’t delivered on inflation as Powell admitted last week, which by itself is a problem. That problem would be compounded by delivering a recession in an effort to fight a nonexistent inflation problem. You want to stay independent, you have to do your job. After years of watching the Bank of Japan, you would think the Fed had picked up a thing or two on this topic.

 

More at link below

 

https://blogs.uorego...th-the-program/

Fed Needs to Get With The Program
Share6
 

Where to begin?

Probably best to first step back to last week’s FOMC meeting. That event concluded with the scene of Powell & Co. running backwards as fast as is possible for central bankers to try to correct the error of the December rate hike. As expected, the Fed downgraded their assessment of the economy and held rates steady. Less expected was the sharp downward revision to the dot plot with now eleven of the seventeen participants anticipating no rate hikes in 2019. The median expectation is for another hike in 2020 and then that’s it for this cycle. Note the median rate path doesn’t even get rates up to neutral. In other words, the Fed no longer thinks containing inflation requires restrictive policy.

That last point resonates as a substantial change to the outlook. The Fed’s models typically don’t work that way. That call for restrictive policy comes from the need to push unemployment to its natural rate to contain inflationary pressures. Those inflationary pressures have apparently disappeared now that the rate forecast has flattened out despite unemployment remaining below its natural rate.

What’s going on here? The persistence of low inflation has finally become too much for the Fed to dismiss, especially now with the economy decelerating. They can’t justify it anymore as a transitory phenomenon so it must be attributable to excessively high estimates of the natural rate of unemployment (which came down again to a now 4.3%) or, more worrisomely, eroding inflation expectations. Powell emphasized inflation concerns in the press conference and acknowledged that the Fed had not met the symmetric inflation target in any convincing way. That’s something of an understatement; if anything, Fed policy has very clearly treated 2% as a ceiling in the actual application of policy.

This from Powell’s press conference is particularly telling:

It’s a major challenge. It’s one of the major challenges of our time, really, to have inflation, you know, downward pressure on inflation let’s say. It gives central banks less room to, you know, to respond to downturns, right. So, if inflation expectations are below two percent, they’re always going to be pulling inflation down, and we’re going to be paddling upstream and trying to, you know, keep inflation at two percent, which gives us some room to cut, you know, when it’s time to cut rates when the economy weakens. And, you know, that’s something that central banks face all over the world, and we certainly face that problem too. It’s one of the, one of the things we’re looking into is part of our strategic monetary policy review this year. The proximity to the zero lower bound calls for more creative thinking about ways we can, you know, uphold the credibility of our inflation target, and you know, we’re openminded about ways we can do that.

I see two big points here. The first is that the Fed suddenly remembered that policy rates remain mired near the zero lower bound. They seemed to forget this point over the last year, too excited by the prospect of raising rates to remember that even at the projected end of rate hikes they would lack the room to mount a traditional response to a full-blown recession. The second point is that fading inflation expectations mean a.) they are “paddling upstream” to hold inflation higher and b.) they have “room to cut” when the economy weakens. My interpretation of this new inflation realization is that the Fed has a fairly low bar for a rate cut; see my latest for Bloomberg Opinion.

Since that meeting, the yield curve continues to flatten and invert with the 10s3mo spread going negative last Friday. An inverted yield curve is a well-known recession indicator. As a market participant, you have a choice. Either embrace that relationship in your analysis or reject it on the basis that any signals from the term structure are hopelessly hidden by the massive injections of global quantitative easing over the last decade.

I am going to error on the side of caution and choose the former. Everyone has their pet recession indicator; many are probability models based on some combination of yield spreads and other leading indicators. Most will be raising red flags like this estimate of the probability of recession in six months based on the 10s2s and 10s3mo spreads and initial unemployment claims:

prob6mo-2j5oc8g-1024x569.jpg

To be sure, the longer into the future, the fuzzier the forecast. If I add in temporary employment claims and narrow the forecast horizon to three months, I get:

prob3mo-258o9s5-1024x562.jpg

In either case I get the same takeaway: The risk of recession has risen to levels that demand attention from the Federal Reserve. In the two cases of similar spikes in the 1990s, a recession was avoided by the rapid response of the Fed in the form of rate cuts. The times that response was lacking, a recession followed.

So now I switch from analyst to commentator: The above leads me to the conclusion that the Fed needs to get with the program and cut rates sooner than later if they want to extend this expansion. Given inflation weakness and proximity to the lower bound, the Fed should error on the side of caution and cut rates now. Take out the insurance policy. It’s cheap. There will be plenty of opportunity to tighten the economy into recession should inflation emerge down the road.

What would delay that rate cut? Data. A yield curve inversion is a long leading indicator. Sure, the data is softer. But soft enough to cut rates? Not necessarily from the Fed’s perspective. Moreover, cutting rates now means admitting the December rate hike was an obvious error. The Fed hates admitting error.

Speaking of errors, the December rate hike is turning into one for the books. Not just on the economic side, but also the political side. I can already hear the howls of the monetary policy community shouting me down with claims of Federal Reserve independence and how nothing has changed in the past two years and that of course the Fed will walk away from the Trump years unscathed. I think that hypothesis is a.) completely wrong and b.) already proven to be completely wrong.

Monetary policy independence is not a law of nature. There is no special 11thcommandment “Thou shalt not interfere with the central bank.” Independence only exists so long as a.) it is an established and followed norm and b.) the central bank continues to deliver results.

The second part is straightforward. The Fed hasn’t delivered on inflation as Powell admitted last week, which by itself is a problem. That problem would be compounded by delivering a recession in an effort to fight a nonexistent inflation problem. You want to stay independent, you have to do your job. After years of watching the Bank of Japan, you would think the Fed had picked up a thing or two on this topic.



#23 dTraderB

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Posted 24 March 2019 - 12:22 PM

NORTHMAN does not get it right all the time but he is a shrewd analyst:

 

The Reckoning by Sven Henrich

The big macro wheels are turning and everybody better pay very close attention. The Reckoning is coming. Best hope for a substantive China trade deal and a last minute save on Brexit to perhaps delay the inevitable: The Coming Recession. This week's full frontal capitulation by the Fed has not only removed a key buying […]

https://northmantrad.../the-reckoning/

 



#24 dTraderB

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Posted 24 March 2019 - 12:24 PM

The BOND KING is acting up, somewhat riled up! 

Jeez, just TRADE THE MARKET! 

 

 

 

Jeffrey Gundlach: "This U-Turn - on nothing fundamentally changing - is unprecedented. Three months ago, we were on 'autopilot' with the balance sheet - and now the bond market is priced for a rate cut this year. The reversal in their stance is stunning." @Reuters @TruthGundlach

 

While they say the king in the WHITE HOUSE offered free TEE TIME to the FED king:

 

 

I'm hearing that Trump just gave Jay Powell free tee times for life anytime he wants at any of his golf clubs.


Edited by dTraderB, 24 March 2019 - 12:25 PM.


#25 dTraderB

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Posted 24 March 2019 - 01:48 PM

WTF! 

 

Holger Zschaepitz @Schuldensuehner
FollowFollow @Schuldensuehner
More
D2ac4WGX0AAiqwj.jpg
2:20 AM - 24 Mar 2019

 



#26 robo

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Posted 24 March 2019 - 04:37 PM

 

Trader for me.....  I just take the signals. It doesn't matter what the reasons were that caused the trend change. And yes,  sometimes I get whipsawed! 

 

The system below works well for those that want to learn how to trend trade using a very simple system. And yes you will get whipsawed sometimes.  Friday's one day move does not change the MT trend, but I trade using my own system so I'm back to cash in my 401k.

 

Investor or Trader... Which Are You?

Most market participants consider themselves to be "investors." But if you look at a list of the really big winners on Wall Street, you will see that most of those who make big profits, list themselves as "traders."

By "big profits" we mean doing better than the S&P 500 Index or Nasdaq 100 Index by a substantial margin over any three-year period.

Investors

 

"Investors" put their money into stocks, real estate, etc., under the assumption that over time, the underlying investment will increase in value, and the investment will be profitable.

Typically, investors do not have a plan for what to do if the investment decreases in value. They hold onto the investment in hopes it will bounce back and again become a winner.

 

Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them. When faced with a declining (bear) market, they hold their positions and continue to lose.

We all know investors. In many cases it was us before we realized how dangerous buy-and-hold investing could be to our savings.

 

Investors often have some knowledge of trading. But that knowledge is tainted by how it is all too often described in the financial press. Trading is risky, dangerous, foolish, bad, involves a great deal of work, etc. On the other hand "investing" is good, reliable and safe.

"Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them."

Investors had a taste of what buy-and-hold can do to their capital in the 2000-2002 bear market. They lost again in the 2008-2009 bear market.

 

Traders

On the other hand "traders" take a proactive approach to their investing. Traders have a defined plan and invest with one goal, to put their capital into the markets and "profit."

They "trade" with a plan that tells them what to do in any situation. When to enter and when to exit. They never allow large losses.

Being a trader does not mean you must move in and out of the markets frequently. This is a common misconception. A trader simply is one who has a plan for entering and exiting. They know what to do if their trade goes against them, and they know what to do when their trade is profitable.

 

Some traders go short (take bearish positions) as well as long (bullish) positions. Some are unable to go short, or they find short positions to be uncomfortable. Probably the majority of traders do not ever take short positions.

But traders "do" have a plan. This is where they differ from investors.

 

Every Trader Needs A Trend

If you think about it, you will quickly realize every trader needs a trend to be successful.

No matter what trading method is used, whether it is pattern trading, swing trading, long term buy-and-hold investing, fundamental analysis, technical analysis, buying or selling on news events, IPOs, splits, you name it. If the stock or mutual fund does not trend in the required direction after the trade is made, you cannot be profitable.

 

This also applies to all asset classes. Stocks, bonds, currencies, commodities. You must have a trend to profit.

 

 

Trend traders wait patiently for prices to tell them a trend has begun. Then they jump on board. If the trend fails, they exit quickly to control losses. Price tells them when to enter "and" when to exit. If the trend continues, trend traders have no predetermined profit goal. They stay with the trend until it reverses.

 

Cutting losses quickly and staying with a trend until it ends is how trend traders realize huge profits in the financial markets. The financial markets are trending "about" 80% of the time. That means trend traders are profitable 80% of the time. During the other 20% trend traders keep losses very small so that they are ready when the next trend starts.

 

This does not mean 80% of their trades are winners, just that they are in the plus column for that 80%. If you have three losing trades of 2% and one winning trade of 18% in a year, you finish with a 12% gain, even though most trades were losers. This fits the old saying, "cut your losses short and let your winners run."

 

 

https://www.fibtimer..._commentary.asp

 

Interesting analysis, will check this page regularly. 

 

Is this FIB who posts here? 

 

"Is this FIB who posts here? " 

 

No it's not.     Most traders here have some kind of trading system already, but for those that don't this is a very simple trend system.   I use some of the same data/tools he does....

 

https://www.fibtimer...ail_website.asp

 

I use some of this type data too....

 

3 PM, March 24, 2019 Fuel Tank On Empty – LOLR Produces Key Signal http://sevensentinels.com/march-24-2019/ 

 

His current video.....

 


Edited by robo, 24 March 2019 - 04:39 PM.

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”   Jesse L. Livermore


#27 robo

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Posted 24 March 2019 - 05:05 PM

I'm just waiting on my next signal....  Nothing I can do about any of this except try and make some money off the market swings....

 

Good Trading!

 

A comment from the Konger!

  The Fed Has Given Up: Get Ready For More QE

 

So The Fed has essentially abondonded it’s previous plan for both “raising interest rates” AND “dramatically reducing it’s current balance sheet”. Both ideas now well off the table.

Authored by Ryan McMaken via The Mises Institute,

The Federal Reserve’s Federal Open Market Committee on Wednesday voted unanimously to keep the federal funds rate unchanged. Overall, the FOMC signaled it has made a dovish turn away from the promised normalization of monetary policy which the Fed has promised will be implemented “some day” for a decade.

Although the Fed began to slowly raise rates in late 2016 — after nearly a decade of near-zero rates — the target rate never returned to even three percent, and thus remains well below what would have been a more normal rate of the sort seen prior to the 2008 financial crisis.

Much of the Fed’s continued reluctance to upset the easy-money apple cart comes from growing concerns over the strength of the economy. Although job growth numbers have been high in recent years — and this has been assumed to be proof of a robust economy — other indicators point toward less strength. Workforce participation numbers, wage growth, net worth numbers, auto-loan delinquencies and other indicators suggest many Americans are in a more precarious position than headlines might suggest.

The Fed’s refusal to follow through on raising rates, however, has highlighted this economic weakness, and today’s front-page headline in the Wall Street Journal reads: “Growth Fears to Keep Fed on Hold”

Abandoning Plans to Reduce the Balance Sheet

For similar reasons, the Fed has also signaled it won’t be doing much about its enormous balance sheet which ballooned to over four trillion dollars in the wake of the financial crisis. Faced with enormous amounts of unwanted assets such as mortgage-backed securities, the Fed began buying up these assets both to prop up — and bail out — banks and to produce an artificially high price for debt of all sort.

This kept market interest rates low while increasing asset inflation — all of which is great for both Wall Street and for the US government which pays hundreds of billions in interest on federal debt.

At best, “total balance sheet will be around $3.8 trillion, down from $4.5 trillion at its peak.” Moreover, “the Fed will soon be a net buyer of Treasurys once again,” analysts said, and some estimate “the Fed is on course to be buying $200 billion of net new Treasurys by the second half of 2020.”

Put simply: the days of quantitative easing are back, and we’re not even in a recession yet.

Some observers might simply respond with “big deal, the economy’s growing, and better yet, the Fed has given us both growth and little inflation.”

But things are not all as pleasant as they seem.

Problems with Easy-Money Policy

First of all, even by the Fed’s own measures, inflation isn’t as subdued as the headline “core inflation” or CPI measure suggests. According to the Fed’s “Underlying Inflation Gauge” which takes a broader view beyond the small basket of consumer goods used for the CPI, inflation growth over the past year has returned to the elevated levels found back in 2005 and 2006.

This hasn’t been great for consumers, and it’s been especially problematic when coupled with ultra-low interest rates. The low interest rates are a problem because people of ordinary means — i.e., the non-wealthy — don’t have the ability to access the high yield investments that wealthier investors do.

Rising Inequality

Earlier this week, finance researcher Karen Petrou explained the problem that comes from ultra-low rates which lead to yield-chasing for the wealthy:

“”When interest rates are ultra-low, wealthy households with asset managers acting on their behalf can play the stock market to beat zero or even negative returns. We’ve shown in several recent blog posts how wide the wealth inequality gap is and how disparate wealth sources help to make it so. However, even where low-and-moderate income households can get into the market, their investment advisers should not and often cannot chase yields. As a result, ultra-low rates mean negligible or even negative return.””

Thus, ordinary people are faced with rising asset prices — driven in part by the Fed’s balance sheet purchases — while also finding themselves unable to save in way that keeps up with inflation.

Meanwhile, the wealthy reap the most benefits from Fed policy as they’re able to more effectively engage in yield-chasing.

Ordinary people get the short end of the stick from Fed policy in other ways. Petrou continues:

“”Historically, pension funds and insurance companies have invested only in the safest assets. These are now in scarce supply due in large part to QE andcomparable programs by central banks around the world . Pension plans and life-insurance companies increasingly have two terrible choices: to play it safe and become increasingly unable to honor benefit obligations or to make big bets and hope for the best. Under-funded pension plans are so great a concern in the U.S. that the agency established to protect pensioners from this risk, the Pension Benefit Guaranty Corporation, faces its own financial challenges . Yield-chasing life insurers are also a prime source of potential systemic risk.””

Middle class people who have been told for decades to rely on pensions are now imperiled by Fed policy as well.

Not surprisingly, this has led to rising income inequality. While some free-market advocates tend to dismiss inequality as an unimportant metric, this is not a good approach when we’re talking about public policy. Fed policy — and resulting inequality — does not reflect natural trends arising from market transactions. Monetary policy is something imposed on markets by policymakers. And that’s what’s going on when we witness rising inequality due to the Fed’s monetary policy.

This has been going on since the late 1980s when Alan Greenspan relentlessly opened the easy-money spigot to spur economic growth throughout the 1990s. But, there were problems that resulted, as noted by Daniell DiMartino-Booth:

“”[A]t the National Association for Business Economics recent annual conference, University of California-Berkeley economics professor Gabriel Zucman presented his findings on the widening divide between the “haves” and “have nots” in the U.S. His conclusion: “Both surveys and tax data show that wealth inequality has increased dramatically since the 1980s, with a top 1 percent wealth share around 40 percent in 2016 vs. 25 – 30 percent in the 1980s.” Zucman also noted that increased wealth concentration has become a global phenomenon, albeit one that is trickier to monitor given the globalization and increased opacity of the financial system.””

Defenders of ultra-low policy tend to claim low rates aren’t the real culprit here because even middle-class buyers can take advantage of easy money.

But experience suggests this hasn’t been the case. Part of the problem is that banking regulations handed down by the Fed and other federal regulators make loaning to smaller enterprises and lower-income households less attractive. Writes Petrou:

“”But, wasn’t there a burst of lower-rate mortgage refinancings that allowed households to reduce their debt burden and thus accumulate wealth? Did low rates allow higher-risk households at least to reduce their mortgage debt through refinancings? Again, low-and-moderate income households were left behind. They continued to seek refis after the financial crisis ebbed, but subprime borrowers current on their loans regardless of loan-to-value (LTV) ratios were less likely than prime or super-prime borrowers to receive refi loans even though higher-scored borrowers may or may not have been current and lower rates enhance repayment potential.””

The overall effect suggests the accelerating reliance on quantitative easing and near-zero interest rates has been great for some Wall Street hedge fund managers — but for those at the low end of the lending and saving apparatus, things are even more constraining than ever. It’s hard to get a loan, and it’s also hard to save.

But at least the aggregate numbers are great, right?

Well, the Fed can’t brag about even that. A policy that favors billionaires might work on paper, of course, so long as the aggregate numbers point toward sizable growth. But even those numbers are so iffy as to prompt growth fears at the FOMC, and to ensure that the Fed puts an end to its promises to return policy to something that might be called normal.

As it is, it looks like we should expect a continuation of the policies which have coincided with both an unimpressive economy and rising inequality.

If that’s not evidence of the Fed’s failure, it’s hard to imagine what is.

 

https://forexkong.co...dy-for-more-qe/


Edited by robo, 24 March 2019 - 05:06 PM.

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”   Jesse L. Livermore


#28 dTraderB

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Posted 25 March 2019 - 10:25 AM

Could get a VIX hourly SELL later today



#29 dTraderB

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Posted 25 March 2019 - 10:26 AM

wrong thread, just trying to post quickly



#30 robo

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Posted 25 March 2019 - 05:03 PM

LOL...  I really don't care if we have a recession, but the data keeps building up.... Keep the news coming because it's great for VST trading...  Bull Market - the trend is up...  Bear Market - the trend is down....  Either way there is always a trend to trade.... However, Die Hard Bulls or Die Hard Bears will continue to get whipsawed.  So how many guesses did I have to read over today in the forums... NONE!

 

Why the Fed keep rates so low for so long will be a question asked for many years to come.

 

https://seekingalpha...jerome-jeremiad

 

https://stockcharts....367&a=653981180

 

 

  The Reckoning

reckoning.png?resize=151%2C90&ssl=1The big macro wheels are turning and everybody better pay very close attention. The Reckoning is coming. Best hope for a substantive China trade deal and a last minute save on Brexit to perhaps delay the inevitable: The Coming Recession.

 

https://northmantrad.../the-reckoning/


Edited by robo, 25 March 2019 - 05:08 PM.

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”   Jesse L. Livermore