The artificial bull market is officially over, with the SPX officially entering bear market today. BTFD is dead. Worst single day drop ahead of Christmas since 1918! As the first bear market in years hits the most artificial stock market in history, President trump tweeted today :
The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch - he can’t putt!— Donald J. Trump (@realDonaldTrump) December 24, 2018
Trump is right, the Fed is the problem, but not for raising rates. Trump and the MSM media are saying the Fed is making a policy mistake by raising rates as the economy slows, and more importantly because the stock market is selling off. The current FF rate is sitting between 2.25 and 2.5%, which historically is still low and accomodative. But Trump should have stuck to his campaign version of the Fed, when he called out the Fed for the bubble in stocks, and for keeping rates to low which led to what he called a "big fat ugly bubble." After his election, he embraced the stock market, and now he owns it.
The Fed is the problem because they cut rates to Zero and held it there for 7 years. The Fed is the problem for helping orchestrate the bailouts. The Fed is the problem because they did multiple rounds of QE which did NOTHING for the middle class and the average Americans, instead it made the rich richer and created the largest wealth inequality. The Fed is the problem because they waited too long to begin raising rates, which helped create the largest asset bubbles the world had ever seen.
And on CNBC, as the market has been selling off nonstop, they have the audacity to ask 'why the relentless selling'?! As the market rallied 342% over the last 10 years, not once did they ever ask why the relentless buying. Not once were they or anyone else worried about the repercussions. The were cheerleading the entire time. Not once did anyone mention that the Fed's reckless policies led to a dangerous rally in stocks and across multiple asset classes. People thought the party would and could never end.
So as the market is only down -20%, today former Hollywood movie director turned Treasury Secretary sent the markets into deeper selling as he made headlines for calling Bank CEO's and consulting with the Plunge Protection Team (PPT) about the market conditions and liquidity. We haven't even seen panic in the markets yet, and we are consulting bank ceo's and the PPT??? But once again, the old conspiracy theory of the existence of the PPT became a fact. Mnuchin confirmed their existence.
Now all of a sudden we are seeing "recession fears" headlines all over the place, but a few months ago when stocks were at records you never heard the "r" word. Yet they love to say the stock market is not the economy. The longest artificial bull market is officially over. Now we will see just how bad it will get. We are only down -20%, and it is a long way down if this is only the start.