From Birch Gold Group
Do you remember the 2-year / 10-year yield curve? You know, the one the Fed swept under the rug in 2018? The one that officially inverted last year?
Well, that same yield curve inversion preceded every major recession for the last 50 years. Last year’s inversion appears to be right on target for preceding another recession, barring a near-term turnaround.
For the last 3 weeks, the Dow has been whipsawing severely. On March 15, Federal Reserve Chair Jerome Powell decided to intervene. Reporting on the Fed intervention, CNBC explained:
The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.
So it appears that Powell has changed his tune, moving the Fed’s language from “organic balance sheet growth” back to what a number of people said it really was, Quantitative Easing.
You can see the sharp uptick in the Fed’s balance sheet growth on the official chart below:
Bottom line, the Fed has started up the “money printing press” again, and in an attempt to curb market panic, has essentially cut rates to zero.
But that hasn’t worked out well so far, because the market is still in panic mode. Which leaves the obvious question…
What Else Can the Fed Do?
The Fed has already made most of the “rate moves” it can make, short of taking unprecedented action.
You can see this reflected in the chart from CNBC below:
The Fed has also stated, “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
We have yet to see if this will instill any investor confidence, or if things will keep sliding. Of course, the Fed can also keep its “QE printer” alive, but who knows how much longer that can keep the markets afloat.
So that begs the question: If the Fed is running out of bullets, can it do anything to save the U.S. markets?
Buckle Up: Uncertainty is Likely for the Near-Term
You don’t have to let the extremely volatile market hit your retirement the way it did to so many people in our last recession. You can start taking action now to protect your savings.
During uncertain times, having a diverse range of assets known for their protection, such as physical gold and silver, is a strategic way to protect what you’ve worked so hard to earn.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
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The US Fed is now printing the same amount of money daily as it did per month at the height of their last panic. Central banks have lost control and do not believe otherwise. This is why the current situation is so dangerous, they will not acknowledge the real problems because to do so would in itself cause collapse. Meanwhile banks globally are being stuffed full of government money in an attempt to avoid the debt house of cards falling. The media continues to do their job telling us it is to help small businesses and create jobs, always jobs, when the only purpose is to keep the banks afloat. What else is buying bonds likely to achieve apart from providing nearly free money to large corporations who then buy back their own shares with it?
Sh*t, if the Chinese virus does not get me the high blood pressure surely will.
How about shut down, go home, and let the country try to recover from their constant theft. It’s like having Dr. Mengele for your GP.
Dan, that would be to simple and it most likely would work. Government doesn’t like things that work.
I actually do think it might work. The dollar is stronger than ever (go figure) and most P/Es are way above historical levels (equities can fall much further and just get more rational). The only hitch, of course, is that the cronies would go bankrupt, at long last and deservedly. Interest rates and investments would finally be priced by the market. Good for the country but not for the crooks, which is why they’ll continue with their money printing and $2 Trillion deficits (just more money printing, actually).
I would like to see a day of judgement for the crooks as well. However, it has been my experience Dan that these turds nearly always rise to the top. Good folks are to busy working at figuring out how to make a living while the crook is busy figuring out how to steal the other persons work.
Yup, me suspects the PTB’s – Powers that Bugger – current decades-long CB FIAT DEBT MOAP – Mother of All Ponzis – is about to “run out of ammo/start shooting blanks”.
Believe it or not, the recent liquidation in the metals and fiat markets could, in part, be indicative of a flight to cash… because…. why? Because some believe a vaccine will be announced soon. Others believe the Kung Flu will soon be proven to be as deadly as the common cold. Call it the flattened curve deals of the century.
Either scenario, or any number of other white swans, could result in once-in-a-lifetime buys – some stocks and indexes blasting upwards like rockets, and others taking slow and steady flight like golf balls smacked by drivers of good news.
So don’t be surprised if this ain’t the end. Just sayin’