Is The Fed About To Drop The MOAB On Wall Street?

Tyler Durden's picture

Authored by Michael Pento via PentoPort.com,

Wall Street and our central bank are in for a rude awakening very soon! The idea that the US economy is on stable footing and about to experience a surge in growth is ridiculous. Hence, the consensus that the Fed can normalize interest rates and its balance sheet is nothing short of a bad joke…and it’s on them.

For starters, the government’s fiscal deficit for the month of March came in at $176.2 billion, which means the deficit 6 months into fiscal 2017 is $526.9 billion and running 15% over last year. If not for the calendar timing of receipts and payments, our government's deficit would be a year-to-date $564.0 billion or 23% above last year. In addition, there was an 18% decline in corporate income tax collection. We all know there was no corporate tax reform passed. So the credible conclusion must be reached that corporations are not growing there profits…they are actually shrinking.

The nation will now bump up against the $20 trillion debt ceiling on April 28th and is facing a possible government shutdown. This will happen to coincide with day 100 of Trump’s Presidency.

Unfortunately, Trump resembles more like a swamp creature as the days go on. Sadly, he becoming a flip-flopping carnival barker that duped the American public into believing he was actually going to cause an earthquake in Washington that shook the government back down to its constitutional foundation.

He no longer wants a strong dollar and an end to endless interest rate manipulations that has been robbing the middle class of its purchasing power for decades. Instead he's become a Yellen supporting, bubble blowing, XM bank funding, NATO backing, China loving, card carrying member of the neocons in D.C.

But even though Trump now loves low interest rates, the Fed has probably already tightened monetary policy enough to send stocks into a bear market and the already anemic US economy into recession. More proof of recession and deflation came from the economic data released on Good Friday: CPI down 0.3% in March and even the core rate fell 0.1%, Retail sales fell 0.2% in March and February sales were revised sharply lower to minus 0.3%, from previously reported up 0.1%.

Housing starts, Empire State Manufacturing and Industrial Production have all recently disappointed estimates. Housing starts fell a very steep 6.8 percent to a 1.215 million annualized rate. Empire State Manufacturing dropped from 16.4 in March, to just 5.2 in April and within Industrial Production, the manufacturing component shrank to minus 0.4 percent.

The sad truth is Trump isn't draining the swamp... he's flooding it with more of the same swamp creature from Goldman Sachs that have mucked up D.C. and the Fed for decades.

The Fed is About to Drop the MOAB on Wall Street

The mystery here is why the Fed is raising rates when Q1 GDP growth is just 0.5%, there was under 100K net Non-Farm Payroll job growth and a negative reading on both the headline and core rate of consumer price inflation? Could it really be that Yellen realizes that savers must finally be rewarded for putting money in the bank? Perhaps she has come to the conclusion that asset bubbles must correct down to a level that can be supported by the free market. If only that were true. What is much more likely is that the clueless Fed has duped itself into believing it fixed the economy by its massive distortion of interest rates (100 months of less than 1% Fed Funds Rate), which has forced stock and home prices to record highs--and debt levels soaring to levels never before seen.

Wall Street and the Fed (which is a charter member of the swamp club) have been quick to explain this economic malaise away. The floundering GDP growth is being explained by a perennially weak first quarter. March NFP growth of just 98k is excused by the bad weather that occurred during the survey weak. And negative CPI is being brushed aside by what the Fed hopes are just temporary factors. But unless the data turns around quickly, the Fed’s days of tightening monetary policy may have passed.

The economy won’t accelerate unless Trump is able to push through a massive tax cut very soon. But that doesn’t look likely in the least. Most importantly, keep in mind, the Fed has been tightening monetary policy since December 2013 when it began tapering QE. Now, after three rate hikes, the economy is teetering on outright contraction and deflation.

What all this warrants is extreme caution in Bubbleville. With geopolitical risk flashing bright red, half percent GDP growth, record high equity valuations and a delusional Fed that continues threatening interest rate normalization; the market’s reality check is surely imminent.

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ali-ali-al-qomfri's picture

the call goes out for Ben,

Ben "the courage to act" Bernanke

where are you?

we need you crapped crusader!

quick flash the giant dollar sign into the sky........

101 years and counting's picture

hey look!  its the 4,979th top call since 2009 by ZH.

Bay of Pigs's picture

I haven't seen a top call here in years.

BTFD? Yes.

Xatos's picture

This anti-Trump crap about he's an insider who fooled everyone is getting old. The only people flip-flopping are the people who supported him in droves 6 weeks ago and talk shit about him today. 

 

What's Trump done? People seem to have forgotten:

 

  • Supreme court pick already swaying key fights
  • The end of TPP (despite the BS article on here days ago suggesting he would back track. The NEXT DAY he doubled down)
  • The 500 billion in waste discovered by his pick, Ben Carson in HUD. 
  • The 80 billion in deregulation
  • The Keystone/Dakota Pipelines
  • Allowing states to mandate drug tests for welfare
  • Allowing vets to get care from any hospital they choose and eliminating all the red tep keeping them from care
  • Got China to turn on North Korea, and start buying American coal instead. Are you paying the fuck attention people? 
  • He IS building the wall and if you don't believe it, you're an idiot. 
  • For every regulation, 2 other regulations must go. 
  • Exposed the Deep State so much that the term is actually being said in the MSM.
  • Exposed the FBI, the CIA, and Obama Admin for open and blatant corruption
  • Woke up MILLIONS of people into the MSM bias.

 

We could go on and on and on about the great things he's done already. Everyone suddenly got butt hurt over Syria and guess what, you got scared. You didn't pay attention to what the result was, you just instantly screamed "WAR HAWK" like a sheep. He won over Xi, put the world on notice and most importantly did something you people don't seem to fucking think about. 

Trump has been in control/power his entire life. He knows what control and authority look like. As soon as he become president he knew he didn't really run the country. But there's one thing he does run, the mother fucking bombs, and he let everyone know, inlcluding the deep state, and he called their bluff. 

He's been there 3 fucking months people. This shit is going to take years. We are talking about centuries of gradually increasing corruption. This isn't some overnight fix. He's gotta pick his battles one at a time. 

Stop being little bitches. 

Chipped ham's picture

It's a shame actually. 

Manthong's picture

Crud..

You could detonate a thermo-nuclear core inside of a Hindenburg class Zeppelin filled with race-car gas just over Broad and Wall and still not take the hot air out of the the Wall Street scam.

 

The_Juggernaut's picture

The only MOAB the Fed will drop on Wall Street is the Mother Of All Bailouts.

 

...after the Mother Of All Bubbles, of course.

yogibear's picture

The Fed can print hundreds of trillions of dollars.  More and more trillions of dollars to keep the Ponzi going.

Chipped ham's picture

He's turning out like I thought he would.  

Trump: :I believe today what I believe today. Tomorrow isn't here yet.  

I agree he was saying what we all wanted to hear but that was then, this is now. Meet the new Trump. Same as the old Trump.  

It won't be long now. 

zzzz88's picture

when more and more middle class become desperate, war is coming. 

Uranium Mountain's picture

This next downturn is going to claim a lot of lives. 

Valuator's picture

Doesn't matter what happens.  Production will only accelerate with higher population growth and increased economic freedom.  Trump will cause neither.

The collapse in soft data will produce at least a 2011 strength crash.  And that's all due to China which is already decelerating.

If Yellen inverts the yield curve or even shrinks it too much, recession.

new game's picture

ummm, that is happening. note the ten...

the debt is becoming bigly concern, psychologically at least.

and all that interest crowding the rest of the pie. slices not shrinking(yet), but that military budget, yeah, gotta go up.

rolling debt with the fed raising is, ummm

kinda nucking futs.

maybe yeller counting on uuge rotation to save the day.

but wtf do i know...

Vlad the Inhaler's picture

In For A Rude Awakening - Since 2011 tm

starmathers's picture

This country is in for a rude awakening. Insiders and elites have sucked our economy dry and they continue to ignore the terrible position average citizens are now in. Without us to use for their ongoing schemes and frauds, it will be over.

BandGap's picture

Oh we're going to be bumping on betterthan 20 trillion. Just watch and be entertained.

Sky flyer's picture

My plan is stack physical and ammo. It won't save me for sure but at least I'll have a fighting chance.

Catahoula's picture

How much negative news opinion can your noodle handle? It's all fake news

Chipped ham's picture

Except for the real stuff.

francis scott falseflag's picture

 

That would be very strange as Wall Street is the MOAB on

 

                      BUNKER BUCKS

stant's picture

Future zh spam " I am making $17.51 a week wipeing the dust off a robots ass ,and you can too!"

new game's picture

dust rags supplied? any bennies to speak of? do any of these robos do side jobs, wink wink...

illuminatus's picture

I keep hearing that it's gonna hit the fan any day now, but it's just not happening. Dow 25 thousand is more likely. Meanwhile I've missed out on making some easy fiat because I've believed that the central banks just can't possibly keep all those plates spinning.

Remember Brexit? Oh it's all coming down then for sure and gold will go to the moon, and now France was supposed to bust up the EU and crash the whole world economy. Meanwhile the Dow is up a couple of hundred and gold got hammered. It's getting boring.

Osmium's picture

Not to worry.  Trump just slashed the corporate tax rate.  Stocks to double from here.

back to basics's picture

The author is confused.

Why would the FED drop the MOABs on essentially itself?

Get a grip ffs, only a true black swan can take this illusion of a market down (and even then I have my doubts) and I assure you, the black swan won't be the FED who created the illusion in the first place.

Chipped ham's picture

In other words, you believe that only a swift, massive event can bring down this otherwise smoothly sailing along ship?  

I submit it might be taking on too much water. So does Pento. 

Blub blub.

TeraByte's picture

There is no magic central banks can produce anymore. They have run out of both rabbits and hats. Now reality starts taking over.

back to basics's picture

Rabbits and hats didn't lift this market to the dizzying heights that it is, creating money out of thin air did. And last I heard, central banks still have the printing press and more than willing to use it.

Anyone shorting this central bank owned beast have has their scalp handed to them on a platter. It's okay to have a bias, but it's not okay to hang on it while going broke.

They own the fucking place and they'll do their outmost to keep the ponzi going. They haven't even begun to print. Which part of that people on here still don't get?

idontcare's picture

Harry Dent just issued a "buy, buy, buy" recommendation.  If Gartmann chimes in too in the next 2 days with a "buy" then it's time to "duck and cover".

Magooo's picture

'Unfortunately, Trump resembles more like a swamp creature as the days go on. Sadly, he becoming a flip-flopping carnival barker that duped the American public into believing he was actually going to cause an earthquake in Washington that shook the government back down to its constitutional foundation.'

 

How does it feel to have been played?

virgilcaine's picture

Orange as a new ethnicity category also.

Fake Trump's picture

The Collapse of The America Empire is near.