December 12th Markets Update – The Fed to buy “Coupons”; Those who say the markets are rigged, fixed, or cyclical cannot be trusted

To download the podcast – Right mouse click here 

-These markets are not rigged nor fixed. The price performances of the major asset classes are a direct manifestation and result of the significant changes to the monetary and fiscal policies over the past decade.
-Those who correctly interpreted these dynamics have profited with confidence. Those who couldn’t comprehend the economics behind these changes made the worst investment decisions and dispensed the poorest advice.
-Jerome Powell’s press conference yesterday offered a very revealing clue as to the future direction of the asset markets. One comment overshadowed all others. I took note.
-Powell stated that the Fed will probably begin purchasing coupon-bearing Treasuries soon; these are longer-dated notes, over a year in duration at issuance. We have been discussing for a while that this needs to be as QE can never end and that the assets on the Fed’s balance sheet must climb, so that rates can move lower and that the Federal government can stay in business.
-Those who keep saying the markets are fixed or rigged do not understand intermediate economic theory and should not be dispensing their garbage advice.
-Gold couldn’t stay higher today and fell sharply. The COT is still extremely overbought; more than last week’s COT.
-Real estate in the U.S. is still attractive. The areas that I have been recommending to my readers (former industrial and Rust Belt cities are on tap for the best returns in 2020.)
-One reader asked me about Spokane, WA real estate last month, which I recommended, and it was listed as a hot spot for 2020. The hottest housing markets of 2020 are far from the coasts
-The Dow and S&P 500 put in new all-time highs. Most of the bullishness came from Powell’s comment yesterday that the Fed will start buying coupon securities again.
-Building the first million is the toughest. After that, it gets easier; as long you do not listen to the people pushing the ideas of fixed and rigged markets, or peddling the cycle trash.

Related Posts