ZeroHedge Search

The markets are beginning what could in fact be an epic meltdown.

The technical damage from yesterday’s bloodbath was severe. I’ve been warning readers of Gains Pains & Capital that we were heading for a serious collapse. Yesterday’s action was just the beginning.

This is just the start. I warned my clients subscribers in our most recent issue that higher rates were coming noting a collapse in bonds in Europe and the emerging market space.

The Fed has spent TRILLIONS of Dollars and failed to deliver anything resembling economic growth. The number of people who are of working age who are actually working has barely budged since the 2009 low.

The Fed is known to leak key information to insiders, so for certain “someone” will know before the rest of us.

With that in mind, I suggest keeping a close eye on the bond markets. These will be the “tell” of what the Fed is likely to announce.

So let’s see what happens on Wednesday. The markets will likely rally until then on hopes of more juice from Bernanke. But if he should disappoint at all (read: not announce something more or at least strongly hint at doing so) then buckle up.

Bernanke claims the Fed can successfully exit its current strategy. He’s lying. Or he’s adhering too strongly to economics and ignoring human nature.

The markets in the US have entered a mania in which investors look for any and all excuses to push the markets higher.

$1.4 trillion in QE bought a bear market for Japan. Good luck to the rest of the QE crowd.

Few analysts know or admit it, but the only thing that held Europe (and ultimately the financial system) together since May 2012 was the promise of unlimited bond purchases from the ECB.

Given that the Fed is openly citing the stock market as an indication that QE is working… and given that every other metric shows QE is a total failure…

This is coming our way, whether investors like it or not. The signs are all in place with the economy weakening, corporate profits set to fall, multiple Hindenberg omens and more.

If we take out this trendline, stocks could easily go to 1,450. And if things get really ugly we could even see a Crash (though that would likely come later in the Autumn based on historic patterns).

Given that ALL of the stock market gains since 2008 were based on Fed money printing… what do you think will happen when the Fed tries to taper QE?