Don't expect the Fed to hike rates next week during the March FOMC meeting.
But while low interest rates are great for stocks, the Fed's dovish turn means it thinks the economy is too weak.
This chart tells the whole story…
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Market noise is never-ending – as are worries over and questions about the market.
What to buy? What to sell? What to hold? What will the Fed do? Where are markets headed? When will the next recession hit? Why? Why?
What should I do?
In this increasingly volatile market, nervous investors still look to prompt-reading advisors and pundits who work within the safe and stupefied confines of mainstream consensus.
Market timers and market predictors, too, are everywhere; they always have been and always will be. Some are bulls; some are bears.
Investors are seeking answers – and instant, calming solutions. These "experts" and "systems" are offering just that – most of which is the same.
"Markets rise and fall," the experts say as a chorus, "just be diversified – hold stocks and bonds – and carry on. The economy is strong, employment is high, inflation is low, and the markets will stay the steady course over time."
This all may feel and sound comforting, but so does dope. Their advice might seem to "make good sense," but the data (i.e. objective facts) as to the economy, employment, inflation, and the strength of stocks and bonds suggest otherwise.
So we need simple, blunt guidance. And we need to know how to protect ourselves.
Fortunately, the answer is right in front of us, which is to say, right behind us...
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Looking for yield? Be careful what you ask for…
Every slick Wall Street operator is hawking junk bonds and leveraged loans as the ultimate drug for yield-starved investors – those seeking "juicy returns" in an otherwise risk-saturated bond market.
What they'll find is suicide by credit overdose.
I'm not surprised we've come to this point.
Now, those who know me know I'm not a big fan of the U.S. Federal Reserve. Acting as Wall Street's un-official "drug pusher" for decades, it went hog wild post-2008, dispensing low-rate, cheap, and always freshly printed money at grotesque levels.
As a result, today's "stimulus-addicted/Fed-supported" securities markets – thoroughly embroiled in bubbles – have crossed the Rubicon of debt and are now limping toward their own suicide, as you'll see.
But it doesn't have to get you.
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Gold has been a store of value and wealth for more than 5,000 years, dating back to ancient Egypt.
But the benefits of owning gold are made crystal clear by the crisis in Venezuela.
Here’s why and how you can avoid making the same mistakes the Venezuelans did…
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Fear not, the Federal Reserve knows all. When it comes to interest rates and the state of the economy, there is no better source of information.
And the Fed has indicated that on top of the four rate hikes we saw in 2018, two more hikes are coming in 2019.
That's a major catalyst for bank stocks, and the three we have for you today are the best of the bunch.
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I'm hoping to heck that the recent bone-jarring losses in the stock market aren't hurting you! If you have followed my advice, you're sitting pretty. While all about you are losing their heads amid the noise and strife, you took your money home and let it hug you.
If you haven't taken my advice, but you've been in the market for the better part of the past nine years, there's still time to harvest the massive gains that you've accrued. Then you can rest easy through the difficult times that lie ahead.
In light of the Fed's actions Wednesday and Fed Chair Jerome Powell's words at his press conference, the overwhelming weight of the evidence continues to show that capital preservation is the name of the game.
As we've been over many times, it's not about rates. The arguments about the Fed's pace of rate increases are pointless. This is about the shrinking supply of money in the system versus the increasing demand for it. When money is in short supply, investors liquidate assets to raise cash. The Fed has made sure that money is in short supply, and has made clear that it is not about to deviate from its course.
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Monday was a terrible day in the stock market. The S&P 500 had a new closing low for the year. It briefly touched a new intraday low. In my book, this is a bear market, despite the media nonsense that it's only a bear market if it's down 20%. By the time the market averages are down that much, many mutual funds and individual stocks will be down more. Would you want to sit through that?
I hope that you followed my advice earlier in the year and took your money home and let it hug you while everyone else was feeling the pain. If you have, great!
I'd accept these gifts gratefully and take advantage to lighten up big time. Bear markets typically last 18 to 30 months, and this one is just starting. I see no reason why it might be more benign than is typical.
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Sure, it's maddening that we're on the hook to bail out the Mortgage Bankers Association mob syndicate. But we're on the hook not just because the Fed owns a ton of the bonds the mob originated. We're also on the hook because we, the taxpayers, bailed out that mob when the federal government took Fannie and Freddie into conservatorship. We now own or guarantee the entire portfolio of once under water mortgage paper that's about to go under water again.
It's especially maddening that the mortgage mobs brought down the financial system in the first place with their massive bubble financing fraud in the 2000s. It's maddening that not one single mortgage mafia don was ever brought to justice. And it's maddening that because of that, we're about to see Act II.
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You may have seen this news too.
If you, like me, are a member of the Antife (Anti Fed), you may be cursing the day. "Curses!" you shout. "There goes the Fed again! Losing taxpayer money! Our money!"
My friend, Professor Anthony Sanders, finance professor at George Mason University, pointed out to us on Dec. 12 that the Fed just reported it has $66 billion of mark-to-market losses on its balance sheet. Horror of horrors!
My reaction?
Well woop de doo. The Fed doesn't mark to market for a reason. It never sells anything. It will never be forced to sell anything.
The Fed does not need capital to operate. It can – and does – conjure money in and out of existence at will. And eventually, as its bond holdings mature, it always gets paid. Or at least so far, it has always gotten paid. So, marking to market is a nice philosophical exercise, but in practical terms, it's meaningless. It has no impact on the market. It never will have an impact on the market. It should play no role in your thinking about investing or trading.
But boy, are there plenty of reasons to pay attention to the Fed's balance sheet, which is what I do a large part of my work time. I do it so that you don't have to, and mostly because I have come to believe, over 55 years of following markets, that while it might not be the only thing that matters, it sure as hell beats whatever comes second.
First, let's look at this mark-to-market business.
Here's what is critical for you to know...
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The Wall Street–captured financial "news" media blasted us with the usual misinformation in the wake of last Friday's nonfarm payrolls report. The big guns of financial infomercialism touted the notion that the reported gain of 155,000 jobs in November "missed" economists' expectations. The consensus guesstimate was for a gain of 198,000.
Here's how a CNBC headline put it: "Job growth falls short of expectations in November: 155,000 payrolls created vs 198,000 estimate."
"Markets have high expectations for a December rate hike, but a slowdown in hiring in November appears to give Fed officials some room to slow down their hiking path next year," the outlet reported.
In the meantime, we can look at the actual data right now, make a few comparisons with years past, draw a few lines, and see reality as it currently exists without waiting five years for the seasonal adjustment process to be completed. Of course, that was the seasonally "adjusted" number, which as often as not bears no resemblance to what actually happened. The seasonally fudged number is subject to two monthly revisions, and five annual revisions thereafter as the statisticians fit the abstraction to reality over the next five years.
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