Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed in Denial on Existence of Asset Bubbles

Stock-Markets / Liquidity Bubble Nov 27, 2009 - 07:07 AM GMT

By: Mike_Larson

Stock-Markets

Best Financial Markets Analysis ArticleEver see one of those “See no evil, hear no evil, speak no evil” statues or pictures? The ones with the three monkeys, one covering his eyes, one covering his ears, and one covering his mouth?

That’s pretty much what the Federal Reserve appears to be doing now when it comes to the asset markets …


redcheck Stocks up 67 percent from their lows? No worries.

redcheck Junk bonds up 52 percent this year — the biggest increase in the history of the high-yield debt market, even as default rates are hitting their highest levels since the Great Depression? That’s cool, too.

The Fed seems to be ignoring what’s going on in the asset markets.
The Fed seems to be ignoring what’s going on in the asset markets.

redcheck Gold at all-time highs of over $1,170 an ounce? Fine with us.

redcheck Crude at $80 and climbing? Agriculture commodities ramping? Surging prices for sugar … cotton … wheat … platinum … silver … copper … aluminum … lead … ZINC? Pu-shaw! Nothing to worry about.

Is it just me or are we apparently ready for round THREE of idiotic asset speculation fueled by too much easy money? Sure looks like it …

Deny, Deny, Deny

You think I’m exaggerating the Fed’s blissful state of ignorance here? Don’t take my word for it. Take THEIRS!

In just the past several days, Fed speakers have practically been tripping all over themselves to deny the existence of any asset bubbles.

First up was Fed Chairman Ben Bernanke in New York. He said:

“It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value,” … but “It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.”

Next in line was Fed Vice-Chairman Donald Kohn in Illinois. He said:

“The prices of assets in U.S. financial markets do not appear to be clearly out of line with the outlook for the economy and business prospects as well as the level of risk-free interest rates.”

Then there was San Francisco Fed President Janet Yellen. She basically waved off the idea of raising rates to combat surging asset prices, saying in Hong Kong that:

“Further research into the connections among monetary policy, the banking and financial sectors, and systemic risk is needed to help answer this question.”

That’s bureaucrat-speak for “We’re going to kick the can down the road.”

Fed President Bullard said we could expect two more years of easy money.
Fed President Bullard said we could expect two more years of easy money.

But St. Louis Fed President James Bullard trumped them all. In a speech in his hometown, he essentially pledged that the Fed would keep rates unchanged through 2012. His comments:

“If you look at the last two recessions, in each case the FOMC waited two and a half to three years before we started our tightening campaign … If we took that as a benchmark, that would put us in the first half of 2012.”

Yes Virginia, there is a Santa Claus. And he lives in Washington, DC! He’s going to give you more than two years of abundant liquidity and cheap money. Go ahead and party and speculate like mad because the cops aren’t going to shut things down anytime soon.

What Does this Mean For Investors Like You?

Well, in my trading services, I have been aggressively long various ETFs and options despite technical indicators that don’t look incredibly bullish. My subscribers are sitting on a couple rounds of triple-digit gains, and in my view, more are coming down the pike.

Why the success?

Investors who stick around too long will get creamed.
Investors who stick around too long will get creamed.

Because I’m keeping it simple. This is an environment where any and all assets are levitating on a sea of easy Fed money. We had the tech stock bubble. We had the housing bubble. Now we have an “everything” bubble — courtesy of the “See nothing, hear nothing, speak nothing” crowd at the Fed.

I say ride it while it lasts. Make as much money as you can. But keep an eye on the exit door, take profits along the way, and use trading tools like trailing stop losses.

Because I will guarantee you right here and now that this Fed-fueled insanity will end in yet another epic blow up. And investors who overstay their welcome are going to get creamed … again.

Until next time,

Mike

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .


© 2005-2019 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