If you don’t believe what I’ve been screaming for years that the Federal Reserve System is the greatest criminal conspiracy in American history and that they, as a private enterprise, run the country, you’re about to see the truth for yourself.
In a Bloomberg op-ed piece on August 27, 2019, William Dudley, the former vice-chairman of the Federal Open Market Committee and former president of the Federal Reserve Bank of New York, who stepped down from the Fed last year and attended last week’s Jackson Hole central bankers confab, threatened the President of the United States by advocating that the Fed not accommodate the President’s trade war with China and essentially raise rates if they have to in order to drive the country into recession so Donald Trump doesn’t get reelected.
My last two articles here have been about attempts to manufacture a recession to undermine Donald Trump’s reelection chances and what those efforts could mean for the stock market.
Sure, some of you thought I had lost it. But, Bill Dudley’s call to arms is proof positive that I am 100% right, about attempts to manufacture a recession and that the Fed is too powerful, too political, and a rogue state within the state that needs to be legislated out of existence.
Yesterday morning, the markets inverted several times, one moment up only to crash down the next. And Shah Gilani says that this yo-yoing isn’t even bad yet; in fact, it could get uglier. While others cry for the Fed to make a quick cut by end of September, Shah knows the real problem will be if anyone actually borrows from the low interest rates. Find out here how markets will be affected, especially as one dying business loses $12 billion in lawsuit settlements… Click here to watch.
Not everyone likes to hear good news about the economy.
Typically, political parties out of power want to see seated opponents get clobbered by economic failure.
In this age a real, or virtual recession, could be manufactured given today’s media reach and technological tools when leading to an election if even just in the minds of voters.
So, you need to ask yourself: Is a recession being manufactured right now? Who benefits from a failing economy or just pushing the recession narrative? Could a manufactured recession or incessant recession fearmongering crash the stock market? And, what would happen to you?
Since you just asked by reading those questions, I’m going to answer them for you.
Only, you’re not going to like what’s really happening and how bad it’s going to get.
Last Monday in the Capital Wave Forecast I said, “This week could be a make or break week for the markets. It could also be a lot of nothing.”
It was both. First there was a lot of nothing, then an ugly breakdown on the last trading day of the week.
Being the second to last week of summer vacation, the likelihood of traders working hard to make anything happen last week was unlikely.
And for the most part, despite a lot of econometric news flow, it was a gentle week as stocks edged higher heading into Friday, precisely because Jerome Powell was speaking then and expected to say something positive about interest rates.
What the Fed Chairman said Friday morning wasn’t that the Fed was going to lower rates, only that they would “act as appropriate.”
What if all the recent attention and talk about a recession isn’t media misinformation?
What if it’s real?
Though it’s hard to believe we’re looking at a recession here in the U.S., given how strong consumer spending has been, how unemployment’s been scraping 50-year lows, how wages have been ticking higher, how accommodative interest rates are, and how strong the stock market’s been having just made all-time highs again in July, a recession is still a possibility.
At least that’s what mainstream news outlets are highlighting, that a recession is just over the horizon.
So many others on Wall Street think that we need rate cuts to match others internationally, but not for stimulating our economy. Well if you read yesterday’s mailing, you’d know what’s really going on. Click here to catch up if you missed out. All the fuss for rate cuts could be much more for our dollar than anything that the rates themselves do. It’s clearly evident how the top retailers are doing it right in getting consumers to stay as the big apple feeding the economy. Click here to watch.
In spite of the Federal Reserve lowering rates, the U.S. dollar has been strong and getting stronger.
There are several reasons why the dollar’s appreciating and lots of implications for stocks and bonds.
It made sense when the U.S. dollar started rising as the Federal Reserve began raising rates in 2015.
When interest rates in the U.S. were higher than in other countries and the Fed announced it was going to start “normalizing” rates (raising them from artificially low levels) as the economy showed better strength, as deflationary fears gave way to talk about inflation prospects, as equity markets climbed higher, it made sense the dollar would strengthen.
That’s because when rate differentials widen, when the U.S. raises rates while other countries’ rates remain the same, money flows into the U.S. so it can be invested in higher yielding instruments.
In order to buy dollar-denominated U.S. Treasuries or U.S. corporate bonds, foreign investors must exchange their currencies into dollars. Those transactions, done in huge volumes, raises the dollar’s value relative to other countries’ currencies.
But the dollar didn’t move up dramatically against other currencies, because most of them were doing better economically too, and their central banks were expected to end their quantitative easing programs and eventually start to raise rates too.
This week could be a make or break week for the markets. It could also be a lot of nothing.
There’s a big difference.
A lot of nothing ultimately means very little net movement by the close this Friday from where we closed last Friday.
And less than noting means a flat week on noticeably diminished volume.
That’s a possibility because we’re coming to the end of summer, the end of traders and big decision-makers being on vacation. So, it wouldn’t be surprising to see a lot of nothing going on over the next two weeks leading up to Labor Day weekend.
On the other hand, there’s already been a lot of big-wig vacationers calling into their offices barking trading instruction to their minions from their Hamptons homes and the resorts of Southern Europe, on account of not being able to relax as news flow moves markets more than usual in the usually quiet half summer.
Back in the 1992 presidential race, James Carville, Bill Clinton’s campaign strategist wanted his candidate to blame incumbent George H.W. Bush for the recession the country was facing and pressed the Clinton team into focusing on that key talking point by telling them, “It’s the economy, stupid.”
That phrase is still used today.
But it shouldn’t be when it comes to the stock market.
In fact, anyone who thinks the market’s wobbling because the economy is wobbling might be stupid.
The market is having an ugly bout of hiccups, not because there are any problems with the economy, it’s hiccupping because the Federal Reserve is stupid.
Last week President Trump had his Treasury Department brand China as a currency manipulator.
Is the President right to call out China as a currency manipulator?
Most currency analysts and financial news pundits say the President is wrong, that China didn’t manipulate its currency and the President, by implication threatening to knock the U.S. dollar down in retaliation for alleged Chinese manipulation, will sink world trade and equity markets.