Warning: The Fed is "Letting Stocks Go."

The Fed is “letting the stock market go.”

As I’ve outlined multiple times, if the Fed has to choose between supporting the bond bubble or supporting stocks, it will choose bonds Every. Single. Time.

The fact is that in a debt-saturated world such as the one we live in today, if stocks collapse, investors and Wall Street get angry. If bonds collapse, entire countries go bust.

Cue NY Fed President Bill Dudley last week:

Judging by remarks this week from policy makers, who were unmoved by rising yields and the losses in stocks, the Powell Fed isn’t rushing to signal that tendency. New York Fed President William Dudley on Thursday called the stock selloff “small potatoes” and said it has no economic implications.

Source: Bloomberg

This is Bill Dudley talking… the guy who was pushing for more QE non-stop and who routinely appeared to verbally “prop up” the markets anytime they took a nose-dive from 2008-2016.

And now he’s calling last week’s sell-off “small potatoes." And he's ALSO saying that the Fed believes the markets could dive without impacting the economy in any significant way.

This means the bounce in stocks is on "borrowed time." The time to prepare for the next drop is NOW before it hits.

S&P 500 chart with key trend lines.

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming collapse will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

As I write this, there are only 33 copies left.

To pick up one of the last remaining copies…


Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


Beam Me Up Scotty Tue, 02/13/2018 - 10:49 Permalink

Isn't that how the Fed has propped up stocks to date?  By propping up the bond market?  Dudley never came out and said they were going to prop up the stock market.  Every time stocks swooned, he came out and said they either weren't going to raise rates, or put the raise off farther into the future.  All he ever did was jawbone about interest rates, not the stock market.  So they have propped up the bond market, and that in effect has propped up the stock market.  How is that different from today?  If they let the 10 year go over 3%, then I would agree with you.  And they very well might do that.  But if so, they aren't supporting the bond market either.

The Most Inter… venturen Tue, 02/13/2018 - 12:22 Permalink

The Fed should have be very encouraged last week.  Bond yields did not spiked through 3 %, or even 2.9%, and declined in the face of an equity sell off.  I believe the Fed is confident, we will see if their confidence is misplaced, that rates will not go higher.  Interest rates on the short end of the curve will indeed continue to rise, the long end, it is their hope, will hold steady, and even decline, in the face of a decline in equities.

In reply to by venturen

The Most Inter… Beam Me Up Scotty Tue, 02/13/2018 - 12:18 Permalink

Where this new Fed policy differs is that they will continue to raise the Fed Funds rate on the shortest end while tapering on the long end, quantitative tightening.  The Fed will, basically, support the bond market indirectly through risk off moves by investors from stocks to bonds.  In other words, on the way up, the Fed supported the bond market directly.  On the way down, investors will support the bond market.  People have been talking a lot about how risky bonds are, especially longer-dated maturities, but stocks are nothing more than a perpetual, or the longest dated maturity, bonds in the market.

In reply to by Beam Me Up Scotty

The Real Tony Tue, 02/13/2018 - 11:49 Permalink

Does this mean stocks are supposed to fall 89 percent from the January 26th high like the '29 crash? The stock market today was more overvalued than at the peak back in '29.

Crawdaddy Tue, 02/13/2018 - 19:03 Permalink

Who gives a shit about the Fed's next move? They've been telegraphing it since the day we let those fuckers get a foothold.

Does anyone think they are doing anything other than implementing a plan that fucks over everyone who still has any assets?

Rinse, cheat & steal, repeat. That is their game plan.