Investors Are Fearless!

On CNBC this morning a prominent asset manager boasted he is buying U.S. stocks because investors are so fearful of an inverting yield curve and that the 2nd longest economic expansion is nearing its end. While investors should fear that and more, they don't. Investors are fearless!

Federal Reserve, Crude Oil Prices & Credit Card Debt

Fed's Dovish Posture: A Big Mistake

Every clueless commentator on CNBC is applauding the Fed's dovish posture. They don't understand that this shift was the inevitable result of prior monetary policy mistakes. Rather than acknowledging and leaning from those mistakes, the Federal Reserve is just making even larger ones now! 

FOMC Meeting: Gold and U.S. Dollar Reaction

The fact that the U.S. dollar is not already tanking and gold soaring underscores just how clueless investors remain as to the future trajectory of the U.S. economy and past efficacy of #Fed monetary policy. They are in for a rude awakening. 

Government Bonds: Few Real Buyers For Longer-Dated Maturities

The real reason the Federal Reserve is lengthening its balance sheet is that it knows there are few real buyers for longer-dated maturities. This will only worsen the Federal Reserve losses when it eventually sells those securities to fight inflation, or the public's losses if it choses not to!

Inflation & Crude Oil Prices

The decline in oil prices is the main reason Powell claims he is not worried about rising inflation. Yet oil prices are already up by 33% this year, rising above $60 per barrel today. Oil prices may actually double in 2019. As the U.S. economy slows, the CPI will rise faster.

Americans Owe Over  $1 Trillion In Credit Card Debt

Americans owe over $1 trillion in credit card debt and recent polling data indicates they aren’t paying off those balances anytime soon. (related stocks: Visa (V), Mastercard (MA), American Express (AXP))

A Bear Market Rally

I actually think the US stock market entered a stealth bear market at the beginning of 2018. But we didn't officially enter a bear market with the major averages dropping 20% or more in the fourth quarter of 2018.

 Then the Federal Reserve did exactly what I said they would do the minute the market either entered a bear territory or got close enough to do it to scare the Federal Reserve. I said from before the Fed even raised interest rates for the first time that if they ever attempted to normalize interest rates their attempt would fail that they could never complete the journey because along the way the market would break and the Federal Reserve would have to cut off the interest rate hikes and that's exactly what they did.

I also said that the initial calling off of future interest rate hikes would only create a relief rally in the market and that's what we've had. This rally is the correction. In bear markets the rises are the corrections, the opposite of a bull market. So, I think the Federal Reserve by throwing the markets this lifeline has created this bear market correction, this rally.