Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed Stuck Between Hard Place and a Grenade

Interest-Rates / US Interest Rates Mar 03, 2016 - 05:14 PM GMT

By: Sol_Palha

Interest-Rates He who trims himself to suit everyone will soon whittle himself away. Raymond Hull

The Fed is stuck in between a hard place and a grenade, given this option, they will choose the hard place as unless you are looking for a one-way to ticket to nowhere you won’t choose the grenade. The Fed has nowhere to go; there is only one option available inflate the money supply or die trying to.


Central bankers worldwide have already started to work on the next level of QE. It’s called negative interest rates, and it’s just a matter of time before it comes to the U.S.  The U.S will hold out for a bit longer as they want to maintain the illusion of a somewhat stronger currency. Remember this is a race to the bottom, and so the idea is to finish last instead of first.  The Fed is already stalling; this is clear signal as any that they are already planning the next line of attack. And please do not fall for that mumbo jumbo that the Fed is panicking; having no choice and panicking is not the same thing.  The Fed and its friends always win. Those that fight the Fed have a short life span. They have had decades to fine tune this nefarious art of fleecing the masses, and they are experts at it now.  Those at the top have already used a vast portion of their paper wealth to secure valuable hard assets, so if the entire market were to collapse tomorrow, they would not lose anything. In fact, they will stand to make even more as they will come in and purchase everything in sight, for pennies on the dollar. However, the markets are not going to collapse tomorrow, one day in the future they might, but that day is not tomorrow.

The war on Interest rates is on, and you cannot fight a trend in motion, so the U.S will have no option but to join the battle.  The chart below clearly illustrates how the world has embraced the concept of negative rates

We have provided many factors over the past few months indicating that this recovery is a hoax, but instead of fighting the trend, we have taken the unconventional view, that despite the economic recovery being a hoax, the markets are destined to trend higher.  The weapon of choice now is to throw increasingly large sums of money at the problem, and this works because the masses are not ready to fight.  The can will be kicked down the road until the road ends or the can becomes so heavy that it’s impossible to kick it any further.  We are still a long way from that point. The debt is going to increase to a level that will one day be labelled “as insanely unimaginable”.   Sounds crazy; well then tell us what you make of the fact that it took over 100 years to get to $1 trillion, and now it surges by that amount every year.

Conclusion

The war on interest rates means that deflation will be here for longer than most expect, so it will be interesting to see how commodities in general, especially the precious metal’s sector hold up.  Gold is off to a pretty good start, but it remains to be seen if a breakout past the strong zone of resistance at $1350.  It needs to put in a pattern of higher lows which it has not managed to do since 2012.  The next pullback will be interesting, for it leads to a higher low, and then this recent breakout might have some muscle behind it.

Low rates are positive for stocks, and since we are in the midst of a negative rate battle, the odds are in favour of this market trending higher.

Do not trust to the cheering, for those persons would shout as much if you and I were going to be hanged. Oliver Cromwell

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in