The FED and a Goal-Line Stand Needed

For 3 years, we have been telling you both sarcastically and seriously, THE FED WILL NEVER RAISE RATES UNTIL THE MARKETS FORCE THEM TO. We have been utterly amazed how every month, pundits continue to predict otherwise. The latest nonsense has been September…September…September…the reading has been the Fed is ready…and now we get yesterday’s nonsense. As usual, the Fed teased and then punted again. They now have everyone leaning NO RATE HIKE…thus, there is now zero chance.

The Fed could not give a crap about the economy. They only give a crap about markets. Their only success is in bubbling up asset prices as they think the creation of wealth based on rigged and manipulated markets by the printing of money and 0% forever is a good thing. They know that if markets crumble, everything else goes with it. That’s the problem with the asset bubbles. They always end badly which makes the Fed continue to come up with even more easy money. Does anyone remember the fed-induced housing bubble? That was only a few years back.

Call it blinking. Call it what you want. There will be no rate hike in September and if we are right, the next time down will take us into QE4-land. We remain hostage to the whims of these people that don’t have the foggiest. This remains amazing to watch in real time as Wall Street does not care that one person continues to control the strings. We just had better not ever get to the point where markets actually tank on all this easy money. Then there will really be no answer.

More importantly, the market needs a goal-line stand. We have already reported to you that over 60% of the market is already in bear form. It will not take much to get the rest. In other words, if the market wanted to break, it easily could. Last Wednesday’s big reversal to the upside put an important line in the sand at some long term support levels. It still holds but as we write this, markets will open this morning in the midst of that support day. It had best not break.

Favorite areas continue to be housing-related as rates continue to plunge but now thinking pullbacks are at hand. Areas that must be watched closely here are the financials and biotechs. If they go, trouble! Lastly, you recall this report mentioning this past weekend that Stanley Druckenmiller had taken a huge position in gold. He is one person we watch. Just letting you know gold is now getting a strong bid off of recent lows but need more cards coming out of the deck.