So, from up here in the cheap seats, it seems to me that Amazon and other major companies have the scale and scope to work out insanely cheap rates with UPS, so they can offer “free shipping,” while the “retail” guy gets to make up for all the money they’re losing on Amazon.
Most of you probably know what this past week was like in market land. Enormous swings up and down. The NASDAQ losing 2K points from its high just 14 sessions ago. Entire indexes giving up all their 2021 gains.
Shortly after the open on Friday, things went south again. The NASDAQ peeled off another 350 points, the DOW plunged red by another 200+ the S&P was blood red by 40. It was another slaughter day. Until….
As we know, sentiment — of investors, traders and plain ole households — can drive the day-to-day direction of markets as the players react to the headlines and other events.
According to Charles Schwab’s latest Active Trader Pulse survey, the pandemic is once again the leading risk factor among traders.
Fed Chair Jerome Powell told Congress on Wednesday that he supports a quarter-percent increase in the Fed’s benchmark short-term interest rate when the Fed meets in less than two weeks.
Powell did open the door to a bigger hike, like the half-percent increase called for by most of his colleagues, but only if inflation doesn’t noticeably decline this year—as the Fed expects it to.
Most other Fed officials have vocally supported a 25-basis point rise.
And oh what a week it’s been. Let’s go back to last week for a minute. Last Tuesday the market capped off a blistering to week run, by having the S&P run “smack dab” into its 200 day moving average. Now a lot of people will tell you that the 50 and 200 day moving averages don’t carry as much weight as they used to, but they still carry some clout.
When the S&P hit that 200 day, that whole two week climb came to a screeching halt and we started heading down a bit, but nothing major. Until Friday. Friday the wheels fell off and we plunged. That carried into Monday of this week as the market puked for another big drop. Tuesday and Wednesday the market sort of “ran in place” trying to figure out if they had over reacted on the big sell down.
Meanwhile over in Wyoming at the Jackson Hole economic meeting, all the movers and shakers were talking about the economy, inflation, and interest rates. Despite several fed heads telling folks that they think rates must go higher, most of the talking heads began to tell folks that it seemed the Fed might only do a 50 basis point hike at its next meeting. (Hogwash, you’ll see why)
Hi all, this letter might be a bit shorter than usual. Our office girl came down sick Sunday night, and now my wife’s a bit under the weather. I’m playing nursemaid. Anyway…
Last week, the day ahead of Thanksgiving, the minutes from the last fed meeting were released. Now let me set the stage for you all. On Wall Street, when a big holiday is on deck, the senior management usually gets a one or two day jump on things.
They get their Hamptons beach house all ready for guests and frolicking with much food and drink. And yeah, some coke might be found too. The point being that on the day before the true holiday, if the market is open, it’s not being manned by all the heavy hitters. No, they’re in their cozy beach homes, and keeping in touch via internet and phone with the juniors they’ve left to man the stations.
But usually the word given is “don’t rock the boat.” In other words, the major players don’t want the second string guys to do anything stupid and lose them money. So what usually happens is this…say the market has been trending slightly higher into that holiday. Well, those junior players will figure “hey, the market was inching higher when the bosses were here, we’ll just keep the motion going.”
This became pretty evident to me when those minutes hit. Yes there was talk in them about possibly slowing the “size” of the upcoming rate hikes. Wall Street apparently loves that idea. Why? Well they figure that if they’re no longer needing to stomp on the brake pedal with 75 basis point hikes, then surely that means they’re getting much closer to their target rate and soon they’ll do their pause and stop hiking.
So the report hit and the market which had slumped a bit perked up and ended the day nice and green. Even on Friday with the shortened market session, they eeked out some more gains.
But I didn’t read those minutes like they did. What came blaringly important to me was that most of them agreed that while they might chop down on the size of the hikes, the ultimate rate they think they want is HIGHER than they had previously considered. That to me was a major warning sign.
Let’s face it, there’s a decades old adage that says don’t fight the fed. I get it. When they’re cutting rates, you go with the flow and buy equities. When they’re hiking, you tend to sell down some. But here’s where I think they’ve misread the fed. What difference does it make how big each rate hike is, if your end goal is higher than you originally stated? For instance 2 75 basis point hikes is 1.5%, right? Well isn’t 3 50 basis point hikes the same? It is.
We live in a world where nothing is as it seems. The things we are told on a daily basis, are either lies, distortions, distractions, or misdirection. Of course it’s always for an agenda. Our job so to speak, is to figure out what that agenda is, and often times, it’s not nearly as easy as you’d think.
I think this has been true for decades, but in the past they did their best to at least make it plausible. Don’t forget that 40 - 50 years ago, people really only had TV, Radio and the local newspaper to try and push what ever the agenda was. People were also “smarter” in a sense, and not as easily conned.
That last sentence was not hyperbole its simply fact. If you went back 50 years and asked a first year college student who the first President of the US was, they’d instantly know the answer. Or maybe ask, which President is on the 20 dollar bill? They’d know. They might be able to tell you about his life.
But today, there’s hundreds of videos, where people will go around with a microphone and ask these very basic questions to people on the street, and it’s absolutely stunning to hear some of the answers given. They have no clue, and I find it disturbing frankly.
Well maybe a few more than two. But first off, did you all see Biden promising 31 more tanks to Ukraine? I watched his 20 minute word salad speech and I was speechless. They want this war to go on and on and on. They want all the spending they can squeeze out of this, and boy the money is flowing.
It took me a long time…over two hours. But I wanted to look up the first time I said that when the economy is in the toilet, they will spark a war, open the debt gates and spend their way out of the hole. Well it was all the way back during the NASDAQ meltdown, and sure enough, we went into Iraq over the BS of weapons of mass destruction. 20 years ago. I probably said it sometime in the 90’s also, but got tired of searching.
Once the war time spending hits, they can spend their way out of most recessions. Well, they’ve done it again. They set up the Ukraine since 2013 to be the area ( patsy) for the next multi billion dollar war spending spree. So it worked. They pushed and pushed Russia to the point where Putin did what any world leader would do…he snapped and pushed back.
That was and is the plan and the reason all these politicians are saying things like “what ever it takes” concerning helping Ukraine win. Listen folks, these people don’t give a rats ass about the Ukrainian people. They do like the Ukrainian chemicals, rare earths, and oil and gas…but the people? To the politicians they’re just as expendable as the people in Libya, Iraq, Sudan, Yemen, Palestine, and a hundred other places. Cannon fodder, nothing more. Oh and a good place to launder their millions of dollars…they do like that too.
But they’re playing a very dangerous game this time around. Russia isn’t Iraq or Libya. Russia isn’t Vietnam or Afghanistan. Russia is a very formidable opponent. So, while they’re all in on this war because of the debt that the Central banks can create and the money that gets spent on more armaments…if it gets out of control, we are in WWIII, with the death and destruction that brings. War is a racket, as quoted by Gen. Smedly Butler so long ago. Well this is one of their biggest rackets ever.
Okay, so lets me get back to market land. This coming week is yet another two day FOMC meeting, where they will determine what they’re going to do with interest rates. Then, on the second day of the meeting, Powell himself will give a Q&A press conference, where he’ll get asked 25 times “when are you going to pause and when are you going to cut rates.” Both of which he will dance around in Fed speak. He’s not as good as Mumbles Greenspan, but he’s pretty deft at it.