Will there be a market collapse in the near future?
At the close of the year and into 2022, folks presume that there are a number of factors that can prick the market bubble (and it is currently in a HUGE bubble), which include:
-- A major war -- as there are a few hostile situations that seem to be building between Russia, Ukraine and US; as well as China, Taiwan, and US; as well as Israel, Iran, US, etc.
-- Covid variants -- whether it's Omicron or some other variant the MSM and technocrats will fearmonger about -- and how the governments around the world will respond (i.e more mandates, lockdowns, etc.)
-- Out of control inflation -- and the potential civil unrest and socioeconomic disruption this will cause worldwide.
-- Political instability -- particularly the sparring over budgets and spending in the US.
These are the things the MSM will blame for the current market convulsions, but don't be fooled.
There's really only ONE thing that matters: what the global central banks, particularly the Federal Reserve (Fed) will do -- whether they continue printing money (which means they're "dovish"), or whether they taper (which means they're "hawkish")-- i.e. stop printing money, stop buying bonds, and raise interest rates.
This is the ONLY thing that matters in the greater scheme of things. IOW, if you invest in the stock market, I'd be watching closely what the Fed does here on out. But you should be wary of this whether you invest or not, as a market collapse can obviously have huge ramifications on the economy in general.
We have seen ample proof that nothing else really matters in how the markets will move. Even in the midst of the lockdowns in 2020, the stock market reached record highs and that's only because of the support of the Fed.
Thus, if it doesn't really matter the situation that determines whether the markets will go up or down, whether they crash or reach record highs, as long as the Fed remains dovish, then we would assume the opposite reaction will happen if the Fed is hawkish.
And that's exactly what we see.
The markets have been a bit rocky lately. Why you ask? It isn't because of Omicron, it's because Jerome Powell is giving off hawkish vibes (claiming they will remove their support and reverse policy).
We saw this play out exactly in 2018 when Powell began to reverse course (slowed down their bond buying from the 2008 rescue and started raising interest rates).
From 2017-2018, the Fed funds rate went from 1.00% to 2.50%. In 2018, the markets lost momentum and began going sideways with crazy peaks and dips.
At the close of 2018, Powell blinked, immediately announced they would stop raising rates, lowered rates once again in the beginning of 2019 and kept lowering them throughout 2019-2020 until the rate went back to 0.25%, the rate it was at as a result of the Fed reaction to the 2008 crash.
As a result, in 2019, the markets were happy about this and once again took off.
Then in the fall of 2019, we were on the cusp of yet another potential crash when the repo market spiked (the specifics aren't really important, just that this was a really bad sign of a potential 2008-style disaster). The Fed quickly intervened and began another QE program (money printing and pumping).
From there (fall of 2019), the Fed only began increasing the amount of money it was printing and pumping into the system (with a dramatic money printing spike in the beginning of 2020) and has never looked back... until now.
So here we are, with Powell (so far) taking a hawkish stance and threatening to reverse their policy. It's just been a bluff so far and even that is causing market disruption, or a "taper tantrum" as they call it.
The Fund rate is still currently at 0.25% and their balance sheet at 8.6 trillion (this is the amount of bonds they currently hold). If they start to taper, that means they'll dump the bonds they hold into the market, and that 8.6 trillion number will start to shrink.
We'll follow this closely, and I'll report the Fed's actions as they happen -- if they hike rates and if that 8.6 trillion bond holding begins to be reduced. I'm guessing that as the market convulsions continue and if there is significant downside, Powell will once again blink and give off dovish vibes just to stop it, but we'll see. If they continue to taper regardless, then LOOK OUT below.
At the close of the year and into 2022, folks presume that there are a number of factors that can prick the market bubble (and it is currently in a HUGE bubble), which include:
-- A major war -- as there are a few hostile situations that seem to be building between Russia, Ukraine and US; as well as China, Taiwan, and US; as well as Israel, Iran, US, etc.
-- Covid variants -- whether it's Omicron or some other variant the MSM and technocrats will fearmonger about -- and how the governments around the world will respond (i.e more mandates, lockdowns, etc.)
-- Out of control inflation -- and the potential civil unrest and socioeconomic disruption this will cause worldwide.
-- Political instability -- particularly the sparring over budgets and spending in the US.
These are the things the MSM will blame for the current market convulsions, but don't be fooled.
There's really only ONE thing that matters: what the global central banks, particularly the Federal Reserve (Fed) will do -- whether they continue printing money (which means they're "dovish"), or whether they taper (which means they're "hawkish")-- i.e. stop printing money, stop buying bonds, and raise interest rates.
This is the ONLY thing that matters in the greater scheme of things. IOW, if you invest in the stock market, I'd be watching closely what the Fed does here on out. But you should be wary of this whether you invest or not, as a market collapse can obviously have huge ramifications on the economy in general.
We have seen ample proof that nothing else really matters in how the markets will move. Even in the midst of the lockdowns in 2020, the stock market reached record highs and that's only because of the support of the Fed.
Thus, if it doesn't really matter the situation that determines whether the markets will go up or down, whether they crash or reach record highs, as long as the Fed remains dovish, then we would assume the opposite reaction will happen if the Fed is hawkish.
And that's exactly what we see.
The markets have been a bit rocky lately. Why you ask? It isn't because of Omicron, it's because Jerome Powell is giving off hawkish vibes (claiming they will remove their support and reverse policy).
We saw this play out exactly in 2018 when Powell began to reverse course (slowed down their bond buying from the 2008 rescue and started raising interest rates).
From 2017-2018, the Fed funds rate went from 1.00% to 2.50%. In 2018, the markets lost momentum and began going sideways with crazy peaks and dips.
At the close of 2018, Powell blinked, immediately announced they would stop raising rates, lowered rates once again in the beginning of 2019 and kept lowering them throughout 2019-2020 until the rate went back to 0.25%, the rate it was at as a result of the Fed reaction to the 2008 crash.
As a result, in 2019, the markets were happy about this and once again took off.
Then in the fall of 2019, we were on the cusp of yet another potential crash when the repo market spiked (the specifics aren't really important, just that this was a really bad sign of a potential 2008-style disaster). The Fed quickly intervened and began another QE program (money printing and pumping).
From there (fall of 2019), the Fed only began increasing the amount of money it was printing and pumping into the system (with a dramatic money printing spike in the beginning of 2020) and has never looked back... until now.
So here we are, with Powell (so far) taking a hawkish stance and threatening to reverse their policy. It's just been a bluff so far and even that is causing market disruption, or a "taper tantrum" as they call it.
The Fund rate is still currently at 0.25% and their balance sheet at 8.6 trillion (this is the amount of bonds they currently hold). If they start to taper, that means they'll dump the bonds they hold into the market, and that 8.6 trillion number will start to shrink.
We'll follow this closely, and I'll report the Fed's actions as they happen -- if they hike rates and if that 8.6 trillion bond holding begins to be reduced. I'm guessing that as the market convulsions continue and if there is significant downside, Powell will once again blink and give off dovish vibes just to stop it, but we'll see. If they continue to taper regardless, then LOOK OUT below.
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