Loading ...Possible Stock Market Crash & The FED’s Limited Options
This is the week that I have been looking for the stock market to crash, if there is going to be one. Unlike the October 1987 crash, this isn’t likely to be 23% in one day, for a number of reasons. It also won’t result in the bottom for the stock market, because unlike 1987, the FED has limited options. Having just begun to gain back a small bit of credibility after losing it on waiting too long to tighten and calling inflation “transitory”, they can’t cut interest rates if stocks crash 10-15% more from here. What they can and probably would do, is to stop talking about additional aggressive rate hikes and announce a reduction in or suspension of QT. That would probably allow the stock market to form a temporary bottom with a decent bounce until maybe year end. What it would also do is accelerate the already nascent beginnings of the next leg of the bull market for gold and silver. They are going higher from here anyway, but if the FED needs to back off QT to save the stock market and economy(even if only temporarily) the precious metals will soar from here. If you thought the first three quarters of 2022 were wild, you ain’t seen nothing yet!
I wasn’t aware that the FED has a scheduled meeting today regarding the reserve rate. I don’t know if this was one of the periodic such meetings they schedule throughout the year or if this was an emergency meeting added to the calendar recently? Apparently the past six weeks of stock market decline may be enough for the FED. Instead of waiting for a partial crash this week before taking action they may actually have leaked thru their usual media sources that something is coming in the way of another “twist” or other such actions(possibly including what I suggested in the above post) to head off any such crash. If they do so, any subsequent rally and market stabilization won’t last much past the beginning of the New Year, if that, as I also suggested above. If they don’t announce something meaningful later today, the market should selloff until they do.