9/17/2016 – A mixed day with the Dow Jones down 65 points (-0.39%) and the Nasdaq up 5 points (+0.10%)
Well, the FED has blinked. It appears that things are not as wonderful as most economists and politicians would have you believe. Here is the primary question…….if the FED can’t even raise rates 25 bps, how bad is it?
Thus far, the market is not sure how to react. From one vantage point, we should surge higher in anticipation of remaining in an easy monetary environment. From another, the stocks are overpriced and what kind of an economy are we dealing with here if the FED can’t even raise.
None of the above should come as a surprise to the readers of this blog. I am have been saying that the FED is unlikely to raise rates since about the beginning of this year. But don’t take it as a net positive. Here is a very bearish take on the subject matter Markets in store for huge correction if Fed doesn’t raise rates
Zero interest policies, says Stockman, are leading to the global economic turmoil we are currently experiencing. “In the last 15 years China took its debt from $2 trillion to $28 trillion… it’s a house of cards with an enormous overcapacity and enormous speculation and gambling that is beginning to roll over,” he says. “It’s just the leading edge of a global deflation that I think is underway as a consequence of all this excess credit growth that we’ve had.”
If the Fed raises rates and doesn’t mince words there’s going to be a long-running market correction, says Stockman. If the Fed doesn’t raise rates there will be a short-term relief rally but eventually the markets will lose confidence in the central bank bubble and we’ll be in store for a “huge correction.”
I couldn’t agree more. As for me, I will simply repeat what I have said here two months ago.
I am 75% confident that the FED will not raise interest rates at all and 100% confident that they will not raise it in any meaningful way. What is meaningful? Even 8 separate hikes at 25 bps each would be laughable here. And while anything above that will matter, I am extremely confident that we will not even get close to that over the next 2-5 years.
Here is why…….
- China has launched an official currency war by devaluing the Yuan 3 times in a row (thus far). Japan is trying to do the same and the EU is threatening further easing and/or QE. In this ocean of devaluation, the US cannot afford to have a strong currency.
- Plus, the US Economy is rolling over into a recession. Some of today’s official numbers are starting to reflect that.
- We are on the verge of a massive down leg in our equity markets. At least based on my mathematical and timing work.
- Commodities have collapsed.
- Deflationary forces are reappearing throughout the economy.
- Etc….
As I have mentioned before, this is the worst case scenario for the FED. They are already TOO LATE. Now they are stuck in a situation where our economy and capital markets collapse while they are rendered powerless. As soon as other investors realize that……well…….watch out below.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 16th, 2015 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
The FED Blinked. How Will The Market React? Google