FED to Market… “Drop Dead !”
Its Sir Plunger’s turn to author the Rambus Chartology Weekend Report.
“This weekend I would like to take a look at the big picture and offer some unique insights on the market and how today’s market fits into the greater scheme of things. I will unveil a ground breaking market call which will rule the investment world over the next 10-25 years. I assure you, this will not be heard from any other media source, yet is based on sound historical principles.”
A follow up to the Post Bubble Contraction Series which is public https://goldtadise.com/?p=435204
but this one is for members
https://rambus1.com/2018/12/30/weekend-report-fed-to-market-drop-dead/
Plunger : Always poignant provocative and prescient 🙂
“The most important thing an investor must grasp in order to understand this market is the analogy of the drug addict. Yes, the market has become an addict. It is addicted to free or easy money, therefore it behaves just like a drug addict without his drugs. For 30 years now the FED has increasingly administered drugs to the market until now the market has become a hard core abuser of easy money. After the crash of 1987 the FED soothed the market with some high potency marijuana and by the time it got to QE3 in Sept 2012, it was injecting pure heroine straight into the markets veins. When an addict is starved for his hit he rolls around on the floor and screams until he gets his drugs. The market is no different, it needs it’s easy money. Over three decades it has accumulated debt levels and trading strategies which require, in fact DEMAND easy money. If it can’t get its drugs, trust me, the market will let it be known.”
and practical ( if you are shorting the Dow et al)
“Market Compression- The current bounce.
I would like to present a model to view the current rally we are witnessing in this bear market. There are two types of rallies in a bear market: BMR’s and clearing rallies.”
““The most important thing an investor must grasp in order to understand this market is the analogy of the drug addict. Yes, the market has become an addict. It is addicted to free or easy money, therefore it behaves just like a drug addict without his drugs. For 30 years now the FED has increasingly administered drugs to the market until now the market has become a hard core abuser of easy money.”
Correct, and Kass agrees:
Kass: “Don’t Blame Powell For The Mess He’s Left To Clean Up” https://t.co/JduhBO6AdU
However, the blame doesn’t begin with Greenspan. It begins with Johnson for overspending, Nixon for not ending the war quickly and for delinking the dollar, and the 70’s era Fed for overly loose money policy after the twin oil shocks (rates rose but too slowly).