Those figuring that the Fed still might hike rates in September are getting one more bite at the apple. As the week drew to a close and the Fed’s “quiet period” before meetings was about to settle in, investors recoiled over news that the central bank’s most dovish official, Governor Lael Brainard, will be delivering a previously unannounced speech Monday at The Chicago Council on Global Affairs. -CNBC
The Federal Reserve’s ongoing policy failures once again wrecked markets on Friday.
Just a hint that the Fed might raise at its next formal meeting caused reverberations around the world and dropped averages in numerous markets.
The S&P 500 was down more than 1 percent Friday afternoon, on track to close with its biggest percentage move since July 8.
Indeed, the guessing game over whether the Fed might enact its first rate rise since December and only its second tightening in more than a decade has set off a fever pitch of horse trading. At one point Friday morning, markets put the chance of a hike later this month as high as 30 percent before backing off.
Bad enough that speculation over the moves of a tiny group of pampered economic bureaucrats can cause such havoc. Even worse is that the Federal Reserve cannot justify any sort hike.
Rate hikes are supposed to be appropriate when economies are “overheating” but the US economy is actually collapsing. A terrible services reading, a manufacturing contraction and a weak nonfarm payrolls report all add up to an implosion of economic activity, not an explosion.
But nonetheless, Yellen’s Fed persists in creating expectations of a hike. Supposedly, this will provide the Fed to move rates back down as necessary.
In fact, what the Fed intends to do only makes sense if one remembers that central banks are at this point nothing more than a tool of global governance.
Elites are determined to consolidate government at a global level and it will likely take various forms of catastrophe – war and economic ruin especially – to generate the necessary impetus to create and impose what’s necessary.
Over time, central banks must invariably destroy the economies that they purport to guide and shape. Price fixing simply doesn’t work … ever. And while a patina of success can be presented by mainstream media regarding the current system, the reality of failure will inevitably surge to the fore.
Many markets around the world are far higher than they should be by any rational measure. And precious metals are likely far lower against the dollar. Additionally, the current stock cycle is extraordinarily elongated and doesn’t make any sense, anyway, given sputtering and diminishing economies worldwide.
We understand that in the best of times, central banking is merely setting up further, destabilizing economic failures. And it would seem for reasons mentioned above, that volatility and further equity crashes are certain to take place, probably sooner rather than later.
We predicted months ago that markets would continue to rise but now as we approach fall, end-of-year investment adjustment will take their toll. Marry this to continued central bank struggles to supposedly improve economies and you have a recipe for continued markets events such as the one we saw on Friday.
Of course, many brokers and other investment professionals are advising investors to “stay the course” much as they did in 2000 and 2o0o8. Yet given the age of the bull market and the inevitability of its inevitable collapse, one wonders at continued equity participation generally. Yellen’s apparent determination to raise rates is just one more reason why the near-term market outlet must be seen as perilous.
Meanwhile, as we’ve pointed out before, precious metals remain in a bull market despite manipulations. Anyone observing market movements over the past 50 years or so would likely conclude that the upside for metals is distinctly better than for mainstream fiat/paper products including equity.
The only exception to this may be in the area of metals mining stocks. In fact, it’s recently been revealed that central banks in both Switzerland and Norway have begun purchasing miners – and this should be a significant warning to those who remain heavily invested in mainstream stocks and bonds.
Conclusion: The cycle is turning and physical precious metals as well as precious metals miners are likely to generate profits that will outstrip mainstream equity and fixed-income positions. Certainly, as always, the timing is in doubt but surely not the eventual occurrence.
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