Federal Reserve

While the market may still rally to new highs, the late August free fall in stock prices and spike in volatility served as a wake-up call for investors. In the past ten weeks, major equity indices have recovered virtually all those losses, giving investors an unusual second opportunity to position their portfolio for an important inflection point in monetary policy as the Fed likely starts raising interest rates. Simply put, investors who were not properly positioned and frustrated by their performance in the late August swoon are being given a do-over.

Goldman Sachs -> Treasury -> PIMCO -> The Fed

Late last week, a consortium of financial regulators in the United States, including the Federal Reserve and the FDIC, issued an astonishing condemnation of the US banking system, highlighting “continuing gaps between industry practices and the expectations for safe and sound banking.” They identified a huge jump in risky loans due to overexposure to weakening oil and gas industries. Make no mistake; this is not chump change. The total exceeds $3.9 trillion worth of risky loans that US banks made with your money. Given that even the Fed is concerned about this, alarm bells should be ringing.

JS Kim Issues Critical Warning About Newly Introduced Global Banking "Gold Programs". Could Bankers Be Duping Us into Yet Another One of Their Reverse Alchemy Schemes?

The failure of the Fed’s policies of massive money creation, corporate bailouts, and quantitative easing to produce economic growth is a sign that the fiat money system’s day of reckoning is near. The only way to prevent the monetary system’s inevitable crash from causing a major economic crisis is the restoration of a free-market monetary policy.

The world is bankrupt after thirty years of borrowing from the future to throw a party in the present, and the authorities can’t acknowledge that. But they can provide the conditions for disguising it, especially in the statistical hall of mirrors that once-upon-a-time produced meaningful signals for the movement of capital. The Dow, the S&P, and the NASDAQ are the only signaling mechanisms that the legacy media pays attention to, and the politicos take their cues from them, in a feedback loop of false information that begets more delusional positive psychology in those same markets.

"Historically, the statistical or mathematical properties of the financial markets have shifted as the economic recovery nears full employment (i.e., at about the 5% unemployment rate the contemporary recovery has reached). Traditionally, at this point in the recovery, the stock market suffers more frequent declines, bond yields rise more often, average annualized returns from both asset classes are lower, diversification benefits tend to diminish, and recession risk is enhanced."

Having noted the plunge in consumer spending expectations to record lows last month, The Fed faces an even bigger problem this month. Despite the apparent wage growth in Friday's magical BLS data, The New York Fed admits "public expectations of future income took a big hit," as the index suffered its biggest one-month decline on record. But the news gets even worse, as 3-year-ahead inflation expectations plunged to record lows (confirming the record low inflation expectations from UMich's) and entirely discounting Stan Fischer's inflation excuses last week. Fianlly, as stocks have stagnated this year as wealth creator for The Fed, consumer expectations of housing price gains have tumbled to series lows. It appears a desperate-to-hike-rates fed is cornered by, as UMIch previously noted, "a disinflationary mindset is taking hold."

If the US economy were actually in economic recovery, would half of the 25-year-old population be living with parents? The real job situation is so poor that young people are unable to form households.

Based on last week’s developments, which included the launch of an investigation into the world’s largest oil company and the rejection of the most politicized energy project to date, the “above ground” problems for the energy industry are growing much worse. That could complicate the future fortunes of oil and gas companies.

Not all is well on Wall Street, where when one cuts all the noise, just one thing matters: the year-end bonus. It is here that as WSJ reports citing the latest survey from Johnson Associates, bonuses are expected to see a broad drop for the first time in four years.

In almost all cases where coddled, thin-skinned students claim their feelings are hurt, school administrators bend over backwards to appease them, legality notwithstanding. In fact, if anyone is being discriminated against, it’s those rare and courageous professors who publicly stand up to this unconstitutional nonsense. Which brings us to today’s post about an ongoing incident at Yale. With students being coddled in a fantasy world of “safe spaces” and fear of “micro-aggressions,” can we really expect them to grow up to be adults capable of confronting real issues of money, power and imperial aggression?

The most important question (which no one’s asking) that needs to be asked and addressed today is: With the Fed. all but signalling come heck or high-water – they’re raising in December. Do the global markets once again stand at the same ledge they did in early August? And if that is indeed so, the question that is self-evident is this: Are you now better equipped both psychologically, as well as strategically and tactically adroit to handle such gyrations? Or, have you focused on “fees” and “diversification” as expounded via today’s financial books with a tendency to just BTFD because it’s worked so well in the past regardless of forethought or angst?

The potential outcomes are looking increasingly worrisome for financial markets across the board...