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So here we are again. The entire financial world is awaiting the ramblings of an old man who is going to declare which policies are best guaranteed to preserve his nine-figure family fortune. While at the same time hearing him utter his lies about how what he’s doing is for the common folk of the country. It’s sickening.
In any case, that’s where we are, all at the mercy of Jerome Powell and his minions. To my eyes, when I look at the path of interest rates, this chart doesn’t exactly scream to me “bull run“; instead, it screams to me “heading for negative values since that’s all our enfeebled economy is going to be able to support for years to come.“
Mr. Steven Ricchiuto, he of a Masters in Economics from Columbia, has
laid out the proper plan for the Federal Reserve in this oh so noisy
environment in which an unassuming and fairly quiet man is trying to
tune out a personal bully on Twitter, tune out the stock market’s daily
whipsaw and do what he perceives to be the right thing.
Today, the academic named above throws in with Trump and politely
harangues Chairman Powell thusly in an open letter. You can read it by
hitting the graphic…
Dutch was kind enough to send me a chart he put together which is fascinating. It tells the story, but I’ll say it anyway: these big Fed meetings that everyone anticipates so much have recently been the harbingers of big downturns (and what we’ve seen recently is clearly no exception). Click on the graphic for something more readable.
With the market at all-time highs, we are now approaching another Fed meeting. But, this one will likely provide us with a change in direction for rates, if you believe what most pundits are saying. In fact, there seems to be 100% certainty that the Fed will lower rates. Imagine that . . . the Fed is going to lower rates when the market is at its all-time highs. When was the last time this happened?
While many view a rate cut as being akin to the Fed “blessing” this market rally, history tells us a different story. What is most interesting is that the last time the Fed changed direction in rates near all-time highs was in 2007. And, when the Fed began to lower rates in 2007, it was just before the major stock market melt-down.