A River of Denial Floods Markets Everywhere

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Dangerous Stock Markets

By Adam Hamilton – Re-Blogged From Gold Eagle

These record US stock-market levels are very dangerous, riddled with extreme levels of euphoria and complacency.  Largely thanks to the Fed, traders are convinced stocks can rally indefinitely.  But stock prices are very expensive relative to underlying corporate earnings, with valuations back up near bubble levels.  These are classic topping signs, with profits growth stalling and the Fed out of easy dovish ammunition.

Stock markets are forever cyclical, meandering in an endless series of bulls and bears.  The latter phase of these cycles is inevitable, like winter following summer.  Traders grow too excited in bull markets, and bid up stock prices far higher than their fundamentals support.  Subsequent bear markets are necessary to eradicate unsustainable valuation excesses, forcing stock prices sideways to lower until profits catch up.

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Fed Statement Commentary

By Peter Schiff – Re-Blogged From Gold Eagle

The Fed’s tightening campaign, which was supposed to restore a semblance of monetary normalcy, after a decade of extraordinary stimulus, is officially over. The curtain came down far earlier than just about anyone in the mainstream had predicted. Given that the Fed’s sounded the retreat before any real blood was shed, should put into question whether they will ever be able to stand tough again.

According to most analysts, the economy is still strong and the financial markets are healthy. Yet despite this, yesterday the Fed announced no rate hikes for 2019 (and perhaps just one in 2020) and a premature September ending of its $50 billion per month balance sheet reduction program. When announced just last year, that program was supposed to cut the Fed’s $4.5 trillion bond portfolio by at least half. Instead we will be lucky to get below $4 trillion. Barely a dent.

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Powell’s Testimony & The ECB Meeting?

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Powell’s testimony before the Congress is behind us. The ECB meeting is ahead of us. Will Draghi support the gold prices after recent declines?

Gold Falls Below $1,300

Gold bulls might be disappointed. The upward trend apparently ended. As one can see in the chart below, gold fell below $1,300 on Friday.

Chart 1: Gold prices from March 1 to March 4, 2019

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Stacking The Next QE On Top Of A $4 Trillion Fed Floor

By Daniel Amerman – Re-Blogged From Gold Eagle

The Federal Reserve is currently communicating to the markets that it will likely pivot, and pause two strategies. The first pivot is to stop increasing interest rates. The second pivot is to stop unwinding the Fed balance sheet.

While the interest rate pause is getting the most attention – the balance sheet pause could be the most important one for investors over the coming years.

As explored herein, the impact of pausing the unwinding the balance sheet is to create a new floor at about $4 trillion in Federal Reserve assets. And if the business cycle has not been repealed and there is another recession – the Fed fully intends to go back to quantitative easing, potentially creating more trillions of dollars to be used for market interventions, and to stack another round of balance sheet expansion right on top of the previous round.

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The Fed’s Failure is a Fait Accompli

By David Haggith – Re-Blogged From The Great Recession Blog

Here is a single chart that proves how completely the Fed’s end-game for its recovery failed, which means the fake recovery, itself, is failing. It’s not hard to figure out what happened here.

Talk about a euphoric rise at the end of the Trump Rally heading into 2018, followed immediately by a massive blow-off top. When you compare the size of the blow-off to the total size of the S&P 500, it looks almost like Mount Saint Helens blew its top off.

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Fed Statement Commentary

By Peter Schiff – Re-Blogged From Gold Eagle

While some may have been confused by Fed Chairman Powell’s circular statements in yesterday’s press conference, the takeaway should be abundantly clear: the period of Fed tightening, is over. The Fed will now hold steady on interest rates, and when they move again, they are more likely to lower rates than to raise them. And while the Fed’s program of balance sheet reductions is technically still underway, Powell made it clear that the program is no longer on “automatic pilot” and that the $50 billion per month of bond sales will likely diminish, and ultimately, conclude much earlier than anyone had predicted just a few weeks ago.

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