Market Crash watch

[seanD]

In case anyone is wondering why things are so volatile already when the Fed hasn't even begun tightening yet, no it's not potential war in Europe or Omicron. This is probably the reason...

From Biden's recent speech:

So, here’s what we’re going to do:

A critical job in making sure that the elevated prices don’t become entrenched rests with the Federal Reserve, which has a dual mandate: full employment and stable prices.

The Federal Reserve provided extraordinary support during the crisis for the previous year and a half.

Given the strength of our economy and the pace of recent price increases, it’s appropriate, as the Federal Chairman, Chairman Powell — the Fed Chairman, Powell, has indicated — to recalibrate the support that is now necessary.

This was seen as a greenlight directly from the WH for Powell to go full steam ahead with the tapering/tightening, and, in fact, folks may be expecting the Fed to even start tightening (which is expected to start around June) much earlier than expected.

Hence the market reaction.

[seanD]

The Fed is scheduled to deliver their public address tomorrow wrt their actions moving forward.

This is why I believe the market is convulsing. The WH pretty much made it clear to Powell last week that they want the Fed to address inflation (I guess you can look at this as practically a disguised order on what to do).

So, either one of two things (or maybe even both) is happening: the market suspects Powell to be even more hawkish than before, or (and) the market is trying to spook Powell on being less hawkish and more dovish.

Personally, I'd be surprised if Powell was dovish. Best case, IMO, is Powell will be about as hawkish as he was before, though there is a chance he will be even more hawkish and indicate the Fed will actually speed up the tapering and tightening process.

Buckle your seatbelts.

[Sparko]

Well I am just gonna leave my stocks alone in my 401K for now. In my personal Roth, I am using this as a buying opportunity. I need to make my year end roth contribution to max out my contributions for 2021 so I am sticking the cash in now and I will try to see how far down the market goes and then buy, buy, buy. Then maybe when the GOP gets in at the end of the year maybe the market will pick back up. Or if this pandemic is ever over, I am sure the economy is gonna have a real kick in the pants and competition will drive down inflation again. hopefully.

[seanD]

Well I am just gonna leave my stocks alone in my 401K for now. In my personal Roth, I am using this as a buying opportunity. I need to make my year end roth contribution to max out my contributions for 2021 so I am sticking the cash in now and I will try to see how far down the market goes and then buy, buy, buy. Then maybe when the GOP gets in at the end of the year maybe the market will pick back up. Or if this pandemic is ever over, I am sure the economy is gonna have a real kick in the pants and competition will drive down inflation again. hopefully.

If there even is a "red wave," they're going to come into power when there's already a major economic crisis (possibly multiple crises all at once) already happening. By then, our country may even be facing a major civil unrest situation.

And since the two sides don't trust each other and the Dems are already stirring up suspicion about the integrity of the elections, the mid-term itself won't come without some serious sociopolitical turmoil of its own.

[Sparko]

If there even is a "red wave," they're going to come into power when there's already a major economic crisis (possibly multiple crises all at once) already happening. By then, our country may even be facing a major civil unrest situation.

And since the two sides don't trust each other and the Dems are already stirring up suspicion about the integrity of the elections, the mid-term itself won't come without some serious sociopolitical turmoil of its own.

That might be, but even during all the turmoil after Trump's election and during his term the stock market still responded well and shot up. I think business feels safer when the GOP is in charge, or at least with someone in charge who is a confident leader, instead of a wishy-washy demented fool like Biden is. Not only does the market have to worry about the fed and inflation, it worries about what idiotic crisis are Biden and the Democrats going to get us into next?

But I think the big change will be if this pandemic is ever over and people can get back to normal. I can't see this going on forever. Once it breaks I think the relief from that stress will cause the economy to experience a boom.

[seanD]

That might be, but even during all the turmoil after Trump's election and during his term the stock market still responded well and shot up. I think business feels safer when the GOP is in charge, or at least with someone in charge who is a confident leader, instead of a wishy-washy demented fool like Biden is. Not only does the market have to worry about the fed and inflation, it worries about what idiotic crisis are Biden and the Democrats going to get us into next?

But I think the big change will be if this pandemic is ever over and people can get back to normal. I can't see this going on forever. Once it breaks I think the relief from that stress will cause the economy to experience a boom.

The whole point of the OP was that the market isn't based on politics. It's based on what the Fed does, period. If the Fed keeps interest rates at 0-.25% and pumps money into the system, the market is happy and thrives. If the Fed stops, the market falls.

And that's exactly what we saw in 2018 and what we're seeing now. The market has been going through crazy swings since Monday, and the Fed hasn't even started tightening yet. All they've been doing is tapering and talking hawkish. Unfortunately this won't be enough to help inflation unless the Fed really takes drastic action.

[seanD]

And interesting article by ZH...

Are Global Central Banks (Ex-China) Suddenly Panicking?

Don't let all the bond yield jargon rattle you. The gist is that central banks, even the ones that have been the most absurdly dovish in the past (Japan), seem to now be leaning towards a more hawkish stance (the US Fed being the most hawkish), which raises the question -- why?

Do they perhaps see a global inflation (or more specifically stagflation) tsunami coming and they're getting spooked?

Central banks have always catered to wallstreet, which is why they're quick on the QE draw and why they often capitulate when uncertainty sets in and the markets start their scary reverberations. So my takeaway is this coordination is perhaps indication that maybe... maybe... the Fed is serious this time.

[seanD]

Here's a theory I have about the Ukraine situation and its relation to the markets.

There's got to be some reason the Biden admin (and by "Biden admin" I'm not talking about Mr. Braindead himself, but his handlers, whoever they are) is causing such a fearmongering ruckus about an imminent Russian invasion, that even Zelensky and some EU bodies have criticized.

What if the Biden admin is trying to crash the market by spooking it? Bare with me. We know the Biden admin wants the Fed to use its policies to fight inflation...

So, here’s what we’re going to do:

A critical job in making sure that the elevated prices don’t become entrenched rests with the Federal Reserve, which has a dual mandate: full employment and stable prices.

The Federal Reserve provided extraordinary support during the crisis for the previous year and a half.

Given the strength of our economy and the pace of recent price increases, it’s appropriate, as the Federal Chairman, Chairman Powell — the Fed Chairman, Powell, has indicated — to recalibrate the support that is now necessary.

But, as I've explained in the OP, in order for the Fed to fight inflation, they've got to tighten (and tighten a whole LOT more than they're saying they're going to do to have any effect on inflation... but that's another subject).

However, tightening will eventually crash the market bubble. Thus, the Biden admin will get hit with a double whammy -- inflation AND a market crash. Most folks are unaware of the correlation (causation really) of the Fed's actions and market instability, thus the Biden admin will get the blame for both situations.

By spooking the market with Ukraine war hysteria, the intent would be to crash the market prematurely and then use the Ukraine situation as a scapegoat.

Anyway, the Fed apparently has scheduled (an emergency?) closed door meeting on the 14th, which some have speculated has to do with the "unexpected" (lol) inflation number we just got and a possible tightening move even before March.

Stay tuned.

[Ronson]

A tie-in to Ukraine could be simpler than that. They bought a bunch of gold in November, and they want to cash it in now. Nothing like wars and rumors of wars to send gold skyrocketing.

[seanD]

A tie-in to Ukraine could be simpler than that. They bought a bunch of gold in November, and they want to cash it in now. Nothing like wars and rumors of wars to send gold skyrocketing.

If that were the case, I don't think the establishment (particularly the financial MSM) would so dismissive of gold. CNBC, big banks (i.e. Jamie Dimon), and shills like Cramer would be pumping it to no end, like they do bitcoin.

But, in these crazy times, anything's possible.

[Sparko]

Well based on the fed saying they will up the interest rates, and all of the crap going on with Ukraine and what that might mean if we put sanctions on Russia, I moved half of my 401K to money market for the time being.

investing panic.jpg

[seanD]

The Ukraine conflict completely changes the dynamic. Now that the Biden admin and Fed have cover, they have the option of either tightening or continuing QE.

If they tighten, when the market and economy downturns, they have a scapegoat -- the conflict.

If they continue QE, they can use the conflict as an justification to do so in spite of inflation, and the Biden admin can even blame the continued rise of inflation on the price rise of commodities and raw materials... "because of the conflict."

Now it's even more of a toss-up what the Fed will do.

[Sparko]

The Ukraine conflict completely changes the dynamic. Now that the Biden admin and Fed have cover, they have the option of either tightening or continuing QE.

If they tighten, when the market and economy downturns, they have a scapegoat -- the conflict.

If they continue QE, they can use the conflict as an justification to do so in spite of inflation, and the Biden admin can even blame the continued rise of inflation on the price rise of commodities and raw materials... "because of the conflict."

Now it's even more of a toss-up what the Fed will do.

Yeah, Biden has already set the stage for us having to 'tighten our belts' so to speak because of the sanctions. The stock market has been on a downtrend for a while now but it had a pretty good drop yesterday because of Ukraine. I think I moved my money just in time. It's gonna get worse.

Now if Biden had just let the Keystone pipeline move ahead. Maybe he will rethink it now. I doubt it, because that would make too much sense and be a bit late to help now, but who knows?

[seanD]

Yeah, Biden has already set the stage for us having to 'tighten our belts' so to speak because of the sanctions. The stock market has been on a downtrend for a while now but it had a pretty good drop yesterday because of Ukraine. I think I moved my money just in time. It's gonna get worse.

Now if Biden had just let the Keystone pipeline move ahead. Maybe he will rethink it now. I doubt it, because that would make too much sense and be a bit late to help now, but who knows?

The Keystone pipeline might have an effect on the WTI market and gas prices, but I'm not sure what effect you think it has on the equities and bond market.

The only thing that affects the equity and bond market is what the Fed does. The question is will the Fed continue QE or will they tighten in March? If the latter happens, interest on bonds will keep rising and the stock market will continue its bear trajectory, and we'll hit a stagflation recession/depression, which the Biden admin and the MSM will blame on the conflict. If the Fed calls it off, then I would expect bond interest rates to lower and the stock market to reach new record highs.

[Sparko]

The Keystone pipeline might have an effect on the WTI market and gas prices, but I'm not sure what effect you think it has on the equities and bond market.

The only thing that affects the equity and bond market is what the Fed does. The question is will the Fed continue QE or will they tighten in March? If the latter happens, interest on bonds will keep rising and the stock market will continue its bear trajectory, and we'll hit a stagflation recession/depression, which the Biden admin and the MSM will blame on the conflict. If the Fed calls it off, then I would expect bond interest rates to lower and the stock market to reach new record highs.

Sorry, my point was that we would be still be energy independent if Biden hadn't screwed that all up, making our economy in a much better position to wait out the sanctions against Russia.