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The Fed is Out of Ammo… and Options

Phoenix Capital Research's picture




 

The Fed missed its chance.

 

Truth be told, the Fed should have raised rates in 2011 or 2012. Even if the Fed had an excuse not to at those times, it should have hiked them in April 2014, when the US economy hit its unemployment rate target of 6.5% (assuming this number is correct).

 

Instead the Fed opted to keep rates at zero, as it also did in April of 2015, June of 2015, and now September of 2015.

 

Indeed, a whopping 82% of economists thought the Fed would hike rates in September. The whole market believed it too. So why didn’t the Fed do it? Just how much prepping do we need for a measly 0.10%-0.25% increase in rates after six years of ZIRP?

 

So now we’re well into 2015 and the US is moving back into recession at a time when rates are at zero.

 

The Fed’s own GDPNow measure shows that GDP grew at a measly 0.9 in 3Q15.

 

 

As Not Jim Cramer recently noted, all of the September Manufacturing data suggested a collapse in GDP.

 

H/T Not Jim Cramer

Indeed, by some data, it's possible we're already IN a recession. Bill Hester recently noted, all four of the Fed’s September Purchasing Manager Index (PMI) readings (Philadelphia, New York, Richmond, and Kansas City) came in at readings of sub-zero. This ONLY happens when you are already 4-5 months into a recession.

 

H/T Bill Hester

In short, the economic data is a disaster, suggesting the US is entering if not already in a recession. Moreover, stocks have taken out critical support at the 50-week moving average.

 

Historically this has been THE line for bull markets. We sliced through it like a hot knife through butter last month. The market has done this twice in the last six years. Both times it was saved by a new Fed policy: QE 2 and Operation Twist, respectively.

 

 

However, this time around, the Fed's hands are tied by the fact that it is in the political cross hairs: ample research has shown that QE increases wealth inequality... and we're approaching a Presidential election in the US.

 

In short, the only thing holding the market up is hype and hope of more QE. But this is missing the point...

 

The bull market of the last six years is over.

 

Already investors have begun to realize that Central Banks have lost control of the markets. This is why they erased months' worth of gains in four days’ time.

 

Smart investors are preparing for a collapse NOW, BEFORE it hits.

 

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

 

We made 1,000 copies available for FREE the general public.

 

As we write this, there are less than 10 left.

 

To pick up yours, swing by….

 

https://www.phoenixcapitalmarketing.com/roundtwo-ZH.html

 

 

 

Best Regards

 

Phoenix Capital Research

 

Our FREE e-letter: www.gainspainscapital.com

 

 

 

 

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Tue, 10/06/2015 - 16:08 | 6636760 Grandad Grumps
Grandad Grumps's picture

Nah, they can do a lot, but they want someone else to blame it on.

Tue, 10/06/2015 - 16:03 | 6636732 undercover brother
undercover brother's picture

um, no they are not out of ammo at all.  they can continue to print and devalue the dollar.  they can continue to expand their balance sheet.  they can continue to direclty buy stocks, futures and bonds.  and they can continue to expand their "mandates" to include anything including the kitchen sink.  didn't you notice they just created a 3rd out of thin air last week (foreign market instability).  The 1% owns the banks including the federal reserve, they own the stocks, own the corporations, and they own the politicians.  As such, nothing will change because it doesn't benefit the 1% to change the model or end the fed.  No small group of politicians will have the power to stop them, ever, that is at least until the whole place burns in a major revolution.  

Tue, 10/06/2015 - 12:34 | 6635867 LawsofPhysics
LawsofPhysics's picture

LOL!!  Don't overthink this.  There is no "market", bull or otherwise!!!!

Tue, 10/06/2015 - 12:16 | 6635790 Lost in translation
Lost in translation's picture

Breaking, this just in from Phoenix Capital:

"Water is wet!"

 

Tue, 10/06/2015 - 10:24 | 6635293 ToSoft4Truth
ToSoft4Truth's picture

Helicopter money.

HARRP blew out South Carolina which will now be rebuilt…

Tue, 10/06/2015 - 09:08 | 6634915 Baronneke
Baronneke's picture

The Fed knew all along the US was heading for a recession but the reason for not hiking rates is imo that they would like to experiment with negative rates.  So.....recession is underway, time to go Negative !!

 

Bad, Very bad news for savers for example. 

Tue, 10/06/2015 - 08:10 | 6634757 TongueStun
TongueStun's picture

Shut the fuck up. The FED still has a printing press.

Mon, 10/05/2015 - 14:37 | 6632014 HenryHall
HenryHall's picture

> In short, the economic data is a disaster, suggesting the US is entering if not already in a recession.

 

We are not in a recession. We are in a depression.

Tue, 10/06/2015 - 07:35 | 6634683 Arnold
Arnold's picture

Common anti depression drug.

 

 

https://en.wikipedia.org/wiki/Bupropion

Mon, 10/05/2015 - 17:49 | 6632788 Burticus
Burticus's picture

Thank Hank.  Refreshing that someone has the intestical fortitude to use the "D" word instead of the sissified, milktoast "R" word!

Mon, 10/05/2015 - 14:58 | 6632086 Seal
Seal's picture

what does that matter? HYG is UP, JNK is UP, DOW is UP 300. It's ALL good

Mon, 10/05/2015 - 14:43 | 6632011 wisebastard
wisebastard's picture

maybe if they stop fucking america in the ass for a day or two they can build up enough juice to ejaculate once agian............but most likely they wont............they will keep fucking shooting blanks till they cant get it up anymore and then they will start playing with assault riffles and popping caps in mother fuckers asses till they kill all the Christians, Jews, and Atheist..................maybe bomb another hospital, raise another false flag, burry some child rape under the rug in the Oval Office, and gangstalk all the people in the US that dont go along with the herd of cattle rushing to get into the slaughter house channting the latest phrase tossed out by MTV..................i cant wait for ww3.............the US will tottaly not kick Putins ass....................but hey I can watch all the death from my Iphone..............can i get a high five amen hallelujah

Mon, 10/05/2015 - 14:34 | 6632001 we built this city
we built this city's picture

out of ammo or not...

 

S&P is only 7% down from high

 

VIx is under 20

 

and HYG is soaring...

 

pheonix dude are you sure you are not out of ammo??

Mon, 10/05/2015 - 15:21 | 6632171 Mark Mywords
Mark Mywords's picture

Yep. The S&P nearing 2000 again proves that there is so much more ammo in the Fed's arsenal than previously understood.

Mon, 10/05/2015 - 14:33 | 6631995 Osmium
Osmium's picture

First, what does a recession have to do with the stock market?

Second, it looks like they will regain the 50 week moving average this week.

Mon, 10/05/2015 - 14:11 | 6631913 Burticus
Burticus's picture

Fortunately, I'm NOT out of ammo!

Steel and lead, "The other white metals."

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