Last week was a green week for the markets thanks to the Powell put on Wednesday & tariff propaganda being gamed over the weekend & into Monday.
Let’s think about Powell first, the fed chairman’s public perception turned dovish after his statement last week. He basically said we are closer to a neutral rate than previously thought & that policy decisions would be data dependent. The market interpreted this as bullish news, perhaps thinking the Goldilocks market can continue forever with the perfect rate manipulation strategy.
The reality is, there has never been perfect interest rate manipulation in history & crash history suggests the Fed raising interest rates starts the end of a growth cycle & when something finally breaks (rising rates = unmanageable debt) they stop raising rates & lower them again to try & lessen the blow of the crash. By that time everyone from the upper middle class down has lost a huge chunk of equity in there home & any stocks or bonds they had the misfortune of holding.
The market knows these cycles well, yet Powell’s statement was interpreted as bullish because of the backwards thinking bad news is good news feedback loop the Fed has created via stimulus & cheap debt. Eventually that cycle breaks & leaves many greedy or perhaps just ignorant bag holders.
When I hear the Fed say we may have to slow the hikes combined with interest rate trajectory over the past cycles I see a giant contraction ahead. Deflationary crash style at first (debt cancellation is deflationary) & then hyper hyper inflative stimulus if we even get there before some type of reset. Guess that is why I’m not a short term trader.
The Trump & Xi meeting was also pretty meaningless news to me. They just agreed to kick the can slightly down the road & the media tried to make it out to be a really great success for the market. That rally faded pretty quickly yesterday & I was not the least bit surprised. Wouldn’t have been too surprised to see it shoot higher either, though, “buy the fucking dip” has trained many buyers over the past few years. I’m still waiting patiently on reality in the markets
Today looks more real, almost giving back all the Powell & tariff gains in an instant.
The dollar is pretty flat
Commodities doing pretty well today. Gold has crawled above 1230 resistance for the first time in awhile. If gold ever gets the momentum to truly break 1350 in usd, there will be a historic gold rush. Silver is historically cheap right now.
Crypto’s have been bouncing around this morning & prett volatile lately since the renewed sell off. I expect them to get beat up with the big markets for awhile if there is pain. Perception management is most important to the big banks.
The bond markets are screaming right now: YIELD CURVE INVERSION!!!!!!! 😱
Straight off the treasury’s site👇 The 3year is officially yielding more than the 5year.....
Look at the difference in movements today among the US 2, 10 & 30, not normal, not healthy.
Or how about that German 10y, one of the strongest economies in the world yielding .25% over 10 years 😂😂😂😂😂😂😂😂😂😂😂😂 Who in their right mind would buy that & why? Oh right, central banks do to manipulate currency & our lives. I almost forgot ....
The system is broken & needs redesign. There will be a lot of tough times ahead, but if people come together & put their resources in decentralized places we may have some hope of ending the artificially induced economic terrorism & tax slavery that is our economic system.
Do you care more about getting rich quick or changing things for the better long term?