08/22/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/082218.mp3
JUST LETTING YOU KNOW
There’s a great hedge fund manager by the name of Louis Bacon that decided to return billions of dollars to clients because, as he said – I can’t compete with politicians and central banks constantly interfering with the markets.
Meaning, when markets want to go down, they just open up their mouth and markets stop going down.
And, of course vice versa.
And he basically went onto echo everything that I’ve been telling you.
Today we got the minutes from the Fed meeting.
There’s hardly a day that goes by where they don’t leave markets alone. And let me be clear about something. They know what the heck they’re doing. They’re idiots, but they’re not big idiots. Well…I take that back.
So in the past couple of weeks, the bond market has been getting hit. What happens when bond prices come down? Yields go up. So we watch the 10-year yield go from about 1.4 and change to about 1.8 in change, which is still ridiculously low!
Conveniently, out of the Fed, in those minutes, were the Fed Heads discussing that maybe, just maybe, it would be a good idea to have more printing of money to buy bonds, which would take down long-term interest rates. Here’s what the said:
“Many participants expected that such a program could provide additional support for the economic recovery both by putting downward pressure on long-term interest rates by contributing to easier financial conditions more broadly.”
Well here is my answer to that.
You’re insane. Yes, you’re taking interest rates down, but there are repercussions longer-term just like everything you have ever done. In the short-term, you’re screwing the savers.
On top of that, we have never ever experienced such monetary easing. We’re not in a depression. We’re not in a recession. We still have GDP growth, yet they’re acting like it’s back to 2008 again when everything was following off the cliff. And we already know a couple of outcomes of massive, ridiculous over-the-top easing by the Fed:
- Led to the Nasdaq Bubble
- Completely and directly led to the Housing Bubble. There is no way, shape or form that Housing could get to the prices it got to without the Fed.
So the question is: What is this one going to lead to?
Today though, they got interests rates down a little bit. They interfered with the market again. And I’m starting to question whether the Fed is long Bond Futures. I wonder.
Of course it hit the dollar. And, of course, it rallied Gold again. But as far as the market goes…well it was much worse during the day and came back some – but still finished in the red at least in one of the areas.
The good news? Some good action in some leading names today. Some good action in Housing stocks today. Some good earnings out of Toll Brothers.
And, of course, they refuse to let the market correct.
Markets need to be able to go on their own. They need to have ebb and flow, based on the fear and greed of the people that are investing in it. And the dollars they are investing in it. The Federal Reserve refuses to let that dynamic happen. And there’s an old line that “If you throw sand into the wind, it’s going to come back eventually in to your face. The problem is that they’re not playing with their own money. They’re playing with invented money. They wouldn’t be doing this if it was their own money ladies and gentlemen.
I’m so sick and tired of watching this Fed continuing to interfere with the real market. The one that moves up and down based on the fear and greed of investors…not them. It’s a never ending yap-fest into order to manipulate and move things.
I just wonder at what point in time does the market take out its sword and starting cutting them back. Because eventually that will happen.
As I have told you, Lehman Brothers, Merrill Lynch, Wachovia, Countrywide, Bear Stearns – they didn’t go out of business. The markets put them out of business because ultimately the market is bigger and there’s only so many trillions you can invent to move those markets…at least I thought.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.