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Today was the day for the Federal Reserve and Chairman Janet Yellen to sound off in a big way. But rather than give much guidance on what they’re going to do with interest rates, they largely kept mum.
There was no press conference this time. But in the limited post-meeting statement we did get, policymakers sounded fairly sanguine on the economy and job market.
They said, “Economic activity has been expanding moderately,” led by household spending and the housing sector. They also pointed to the fact the “labor market continued to improve, with solid job gains and declining unemployment.”
On the other hand, they devoted a substantial amount of statement real estate to lackluster inflation. Blaming everything from “Earlier declines in energy prices and decreasing prices of non-energy imports,” they said inflation is missing their targets.
Plus, they implied it won’t get up there unless the “transitory” drop in energy abates and the dollar stops going up. You don’t need to be a genius to see that those conditions haven’t been met. If anything, the dollar has been rallying further against a whole host of emerging-market and commodity-sensitive currencies … and energy prices are back near the low end of their recent range.
But the thing is, the markets aren’t sitting around and waiting for the ditherers on the Fed to do something. Indeed, the latest Fed meeting comes amid a market swept up by increasing turmoil – not just here, but abroad as well.
| “The markets aren’t sitting around and waiting for the ditherers on the Fed to do something.” |
Chinese stocks are tanking. Key U.S. sectors are slipping. Even strong, highly rated stocks are occasionally getting dragged through the mud.
At the same time, long-term bond prices have been declining throughout 2015. Emerging market debt has gotten whacked, while even supposedly ultra-safe municipals have taken hits – thanks to the dual combination of rising rates and increased credit risk.
This turmoil is all part of the Bloody Wednesday process – one I’ve been forecasting for some time now. We’ve seen an extraordinary, unprecedented bout of monetary stimulus thrown at the markets, a shot of financial morphine the likes of which no economy and no market has ever been dosed with.
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| Federal Reserve Chair Janet Yellen kept mainly mum about interest rates. |
It stands to reason, then, that the withdrawal symptoms could be worse than anything we’ve ever seen. Increased volatility. Huge winner and huge losers. Wild swings in stocks, bonds, currencies, and commodities. You name it – it’s coming your way as the market’s autopilot system starts to fail!
It is no time to go it alone. So I urge you to keep your eye on Money and Markets and my Safe Money Report. That’s where you will get the absolute freshest, unbiased, hard-hitting advice on what to do to protect and grow your wealth.
In the meantime, let me know what you think of the Yellen Fed’s latest remarks. Are they obtuse? On target? Totally nuts? If so, why and how?
What are you doing, if anything, in response to the Bloody Wednesday market actions we’re witnessing with increasing frequency? Here’s the Money and Markets website to get you pointed in the right direction if you’d like to share – and I hope you do.
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Two topics dominated the online conversation overnight: The precarious state of the markets and the nuclear deal with Iran.
Starting with the first, Reader Mike said: “The more the central banks support low interest rates and the stock market, the more it means a bigger bust is coming. I will bet the Federal Reserve is very worried about this but is boxed into a corner.”
Reader Duane added: “They say ‘a rising tide lifts all boats.’ Well, I think that the steadily rising tide is ending and there isn’t much that central banks can do about it even if they decide to go ‘all guns a-blazin’.
“So if certain trends which have been working begin to stutter, it’s best not to play them anymore and shift around to newly emerging trends. That may mean playing the short side maybe with inverse ETFs. If there are no clear trends or too much confusion, there is always cash.”
Finally, Reader Billy all but proclaimed the six-year bull market dead and buried. He said: “We are seeing technical, cyclical, demographic, macroeconomic and geopolitical signals and canaries in the coal mine that suggest it is absolutely time to buckle up the seat belts. In fact, it is quite likely a major bear market has already begun!”
As for the Iran negotiations, Reader Robert A. said what Obama is seeking is the best option on the table. His view:
“I think that this deal will work. The other option is war. We can’t win another war. Work with the people of Iran to build a more open, friendly relationship. Talk is better than coffins.”
But Reader Jerry N. countered: “Iran is not trustworthy. Iran refers to America as the Great Satan and threatens all the time to destroy us. Iran is the direct sponsor of terrorism all over the world.
“How can you expect them to honor the agreement, especially if the inspections are not enforceable? Are our politicians too blind to see that this agreement is only for the benefit of Iran, and it does not protect the U.S. and the rest of the ‘Satans’ from their terrorist ambitions?”
Thanks for weighing in. I’ve shared my view of the Iran deal, and suffice it to say I am highly skeptical of its terms and the argument it will have a long-term positive impact in the region.
With regard to the markets, the Bloody Wednesday warnings I’ve been amping up over the past several months are coming to fruition. That’s why I’ve been recommending more ways for you to help you protect your capital. Riding the rising tide and avoiding most inverse ETFs has paid off for several years – but that could be changing now. So look for more guidance on ways to adapt right here in Money and Markets!
And as always, if you haven’t shared your thoughts yet, here’s the link where you can do so right now.
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Shareholders of Twitter (TWTR) and Yelp (YELP) were tweeting and yelping about their pain today in the wake of disappointing results from both former social media darlings. Concerns about user growth, ad rates, and more helped tank their shares.
Microsoft (MSFT) launched its newest operating system, Windows 10. But the release came with very little company hype, not to mention a collective yawn from investors. It’s a huge difference from years past, reflecting how the mobile and tablet ecosystems have supplanted PCs in popularity.
The head of the Taliban movement in Afghanistan, Mullah Mohammad Omar, is dead, according to reports. The Taliban’s spiritual leader may have been dead for as long as two years, though there was no explanation of how he met his end or who will take his place.
Is the Deflategate scandal finally over? One can only hope! NFL Commissioner Roger Goodell upheld New England Patriots quarterback Tom Brady’s four-game suspension, citing non-cooperation with the investigation and other factors. Brady fired back that the NFL was full of beans. Whether he will serve it without fighting the NFL further in federal court remains to be seen.
Are you eager to buy a PC with Windows 10? Or could you care less? Are you sick of hearing about Deflategate, and just ready to draft your fantasy football team at this point? What about the “deflation” of former social media darlings … is it signaling broader problems for the tech-heavy Nasdaq? Let me know over at the website.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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The Fed does not tell the truth. Larry EDELSON IS “RIGHT ON THE MONEY AND SO ARE YOU MIKE LARSON! The DOLLAR will continue rising and when it does GOLD wll be falling. The governments can not and will not be able to STOP THE MARKETS FROM FALLING…AND BIG TIME TOO!
Yellen is supporting current administration basically saying all is well. Wait till things start rolling and Yellen will be ‘yell-in’.
This agreement with Iran only serves to show what feckless politicians always do; kick the can down the road. It allows Iran to be a nuclear power and to build a bomb but let our children and grandchildren worry about that. However, we will now finance Iran’s true ambition, to build a Shia caliphate with the $150 billion we will give them. It sounds really stupid but our and Israel’s ally will be Isis. Iran will not allow a radical Sunni force on its Western border and if we were smart (of course we’re talking about politicians which is a non-sequitor) we would pull all resources and aid out of Iraq and Syria and let Isis fight it out with Iran and Turkey and let them expend all their resources on this instead of funding Hamas, Hezbollah and the Houthis.
Deflate gate…any quarterback would know it was deflated and in reality it was good for both sides that day…we only complain after the fact. When we lose..hmm. Same happens to many traders when the Hunt brothers tried to manipulate the markets…they probably would have lost it anyway…flexibility to adjust is the game. In markets, too.
Let Iran do its thing..what ever that is…tired of bullying the sand box. Wait and just kick butt when needed.
Windows 10 (yawning). Show me some change!!
Deflation is here, it just needs a few more logs on the locomotive boiler to gain steam.
Re: footballs – only the balls that the Patriots were using were deflated, so it was NOT good for both sides. A bit of useless trivia I learned because of this kerfluffle.
I share your feelings re: Iran, but simple fatigue isn’t a good reason to let fanatics get nuclear weapons. I do think it’s inevitable Iran will get the bomb, but if it happens 50 years from now conditions may be very, very different.
I suppose it’s possible that our government’s expert opinion is that, without a total war, they’ll get the bomb in only a few years. In that case, trying to transition to a “tolerated neighbor” instead of “Satan” might be good strategy. Iran may be less fanatical at the higher levels of government, especially if they are benefitting from their relationship with the USA.
all this SHOCKING news? is only put out to move the public attention away from our own sorry bought and paid for political leaders. How do our congress people on <200000 salaries become multimillionaires in just a few years?
I absolutely COULD care less about Windows 10, and be eager to “buy a PC with Windows 10”, both at the same time! Everyone excited about the release cares a good deal, so they have lots of room to care less. If I couldn’t care less, then I don’t care at all by definition.
I should have created a username of “GrammarNazi” just for this post.
I expect the Fed will work feverishly with other US financial agencies to prop up the economy (on paper) until the end of the current Presidential term. The ugly mess will blow up on the next President.
Tom Brady….why beat him up? Do you think professional sports are chaste and wresting is real? I think he may be just following the herd mentality. Check the news (political, corporate, financial…..etc), lawsuits, corruption, investigations, and unmentionable things done to the public.
Honesty is just like Elvis, it has left the building.
Cheating has become part of the American infrastructure. For those who do not believe me check your last tax return.
Do you promote giving up on the concepts of fairness, lawfulness, honesty, and ethical behavior? That way lies anarchy and chaos.
Failure to “beat up” on the perp in a high-profile case of cheating is admission that the rules are meaningless. Besides the social implications, the NFL would lose audience and revenue if people thought cheating was the path to victory.
Wrestling is weird – it’s a live action soap opera, with extreme athleticism and action-hero-movie violence thrown in. I can’t explain why it’s entertaining, except that some people like to watch blood sports and that’s mostly outlawed.
Even so, wrestling has it’s rules that must be obeyed, all spelled out in their contracts. Cheat on those rules and see what happens.
How about going after the Tax Cheats? I’m not affected by a Football being a Pound under the Range the NFL finds acceptable.
Answer this, after Every play, whether Running or Passing, the Ref places the ball on the turf.
Every Play the officials are handling the ball. None of them noticed anything abnormal about the Football until whatever transpired at Halftime.
Brady stated in the past that he prefers the Football to be on the Soft side. Some staff members probably took it upon themselves to give Tom what he prefers.
Then, after this so-called cheating, Brady came out on fire and blew the Colts away.
Then, I’m sure the SB balls were watched very carefully and the Pats pulled out a 4th Ring….
This whole incident is a Facade…
wrestling is so phoney you would have to be near brain dead to watch this crap. and 100 % brain dead to believe that it is not phoney. some of the moves they do would cripple or even kill someone if it were done rite , but again we are talking about wrestling
not to mention the mentality of the people who can sit around and watch this for hours
You have interesting thoughts and predictions. Always remember Mike who the player in the room is. The players who control the market determine its rise and fall. The proof was in the last crash of 2008 when gold and silver dropped in price. I. Believe that was the first time in an economic crisis since Christ was a child. The elephant in the room is the baby boomers and there redemption plans. They will eventually draw down a system with no money and the players must stops this. This will seem like a financial crisis but just a preventive transfer of weAlth.
I can’t agree with you more. That’s why there are no “safe harbors” for money now.
Inflation must go up to prevent Boomer wealth from being in cash. Stocks, bonds, gold, and real estate have to go crazy enough to shake the Boomers out. If that doesn’t work, we’ll see taxes and / or confiscation.
The Boomers have wealth on paper that cannot be paid out.
Why are war and accepting this “bad deal” with Iran the only two options on the table? They say accepting this deal just postpones the inevitable… Iran obtaining a nuclear bomb. Well, pulling out of this deal and keeping their money and sanctions in place also postpone the “inevitable”… perhaps even longer. I too am ready to get out of the sand box for a while and see if someone else wants to jump in and play “peace keeper”!
It’s tempting to let the world descend into chaos and violence. That will show people the money and blood spent to maintain order wasn’t simply bullying.
But that isn’t very mature thinking. I’m tired of it all too. But I require those that are paid to lead continue to do their best.
We have been stealing money from the future to pay for the “world policeman” role, and that must stop. So I understand the effort to orderly transition some of the burden onto other civilized nations. The key words are “orderly” and “transition”. No dump and run for the responsibilities we’ve assumed.
larry, have you been smoking something you shouldn’t have again. no matter what deal we have in the middle east, nothing, and i mean nothing is going to have a long term positive impact there. they hate us but they hate israel just as much, and isarel is much closer then we are. we have done our part in the middle east. we have killed over 175k men, women and children there. isn’t that enough to satisfy the defense budget and the war mongers for a while????
Our interest on debt is 450 billion + and every basis point rise is more costly. Yellen is not going to raise interest rates until the market speculators and buyers of Treasuries force her hand. When the banking interests and monopolies gain control of a nation’s currency and production, there is hell to pay. There is no good end. Mike and Larry are on target in their assessment, in my opinion.
Iran used to USA’s friend. Now not so much? We ‘pick’ our friends, and often create our enemies through our idiot policies. Think about we have done over my lifetime of awareness (50 years I’m 63). Vietnam – a created government fiasco. Iran, Iraq, Afghanistan, Syria to name but, a few. A state department with insular graduates with the same ideas, quite similar to those on Wall St. who certainly didn’t have control a few years ago. What would make me think this hopelessly indebted nation of indebted unhappy people have a dam clue what’s next?
TTP, TTIP, and TiSA who knows what they even contain? A corporate welfare goodie list drafted in secret that hapless, clueless lawmakers will either vote in, or out? Where is our leadership gone?
Ah, that was refreshing J P. Truly Wonderful.
It is only natural that the Federal Reserve would be negative if there are positive signs, since the Fed is owned by the Rothschilds and makes its money on our debt. Positive economic news would mean we could pay off our illicit “debt”, but the Fed actually benefits by a stronger dollar. It seems to be a matter of whatever is better, paying off our debt with cheaper dollars, or having stronger dollars in a stronger economy to pay off our debts. At any rate, if there is positive news, maybe we will not be increasing our debt so much as the Fed desires.
I agree with everything everyone says about why the “you know what” is about to hit the fan, and yet the S&P continues to bounce hard off its rising 200 day moving average and is headed towards its 4th shot at the overhead resistance. Hard to bet against new highs, though I’d certainly like to.
Do you think the “Money Interests” give a hoot if this country ever pays off its debt? They make their money on the interest. If the debt goes bad, that is a tax write-off.
Windows what? Our commercial clients could care less about a new OS as long as their business aps still work on Windows 8. Most home users have moved on to tablets and smart phones.
The FED has rigor mortis… They are stiff from fear. How’s this sound Janet, raise rates in Sept. by 10 basis points. Every 2 months raise rates by another 10 basis points.
Before You know it, we will be up 1% and SAVERS might Slowly start shifting out of the Riskier Assets and feel good enough to start returning to a Comfort Zone in which they actually start Spending again, since they will start realizing returns on a Safer Level.
Jeez, is this really so difficult? Put Me in as Chair of the FED, I have the mettle to do what they obviously don’t have the sack to do!!!!
I don’t follow Mamma Yellen or her chit -lens, the latest good/bad EFT or bonds. I much prefer the bigger picture. One of the largest key players is the IMF. It has the power to control reserve currency. I quote the following comment…”In October, a new currency could be granted a reserve currency status.” What could this do to the dollar? I say down the toilet. The IMF will select from a basket of approved reserve currencies.
The one currency that has not been declared officially is the Chinese Yuan and if you follow the scuttlebutt the Yuan could be backed by gold. Then the race to leave the dollar could be over whelming. Those poor souls ( that’s you and me ) holding U.S. assets will loose their shirts. I feel that inflation will sky rocket and it will be a slow and painful ride down.
You ask ‘Why China?’ as her market is dropping. She has become the largest exporter.
More countries are now trading in Yuan opposed to the dollar. Both China and Russia have been working together on making the Yuan useable and an accepted global form of payment currency, and it is working.
What am I planning for down the road? I am dusting off my pup tent and making reservations for a space under the Brooklyn Bridge.
In good health,
Elissa
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I agree with all comments above; You are all so spot on,everyone of You.So I give You all the credit rating here;it’s the only way in this format.
mon amie yallen .je travailles très trop .pour je sauvé l économies en 2008 .est je résumé les catastrophe financière .est j ai cadrés les marketings .est je repose le System des globale économique pour soudé toute les service des monde dans un seule mouvement.
maintenant autre chose .la période de c est donnent pour accepté la confiance des monde .maintenant je sais le montage de monde en économies est le finance .c est pour ce la j ai gardé mes innovation est mes invention est aussi mon science .qui es défirent de ce régime
.pour quant vous changé la mentalités . est ne biles pas mon amie yallen que la crise confectionné une 3 émme gère mondiale .merci
She looks,acts and answer all questions like a parrot;they are very clever,but she is even less wise than them.May Something help us all.
Obama blew it, he had the opportunity to help the Iranian people by backing the Green movement back in 2009. Now by backing the current regime he legitimized a despicable regime intent on destabilizing the region. He’s also ingrained an oppressive government that is counter to every belief we the US stand for: human rights, freedom of expression separation of church and state. These are part of the reasons the embargo were originally set up and nothing will have changed, if anything he’s assured the people of Iran an oppressive future. Now Obama has twice legitimized oppressive governments- Cuba and Iran. I feel most sorry for the general populace of these countries, Obama screwed them both!
Hello Mike,
What are your tea leaves telling you now on energy stocks?
I recall you being quite optimistic as to they are so undervalued etc
For example SDRL was trading around $14 plus when you mentioned that one and now as of August 5,2015 7.90 or so!