THE FOOLS RUSHED WHERE ANGELS FEARED TO TREAD!!
Well, well - 'everybody' (except me), is rushing madly bullish on the DJI, as there is now a 99% expectation that the Federal Reserve is gonna make not one but three interest rate cuts over the next 18 months. This post is relevant to risk management and trading psychology.
The hard evidence is that rate cuts in the similar economic circumstances are followed by recessions. Don't believe me. See it for yourself at the Federal Reserve! For an annotated version see here.
I can find no hard data that leads me to believe that the US Economy with its $22 Trillion exponentially rising debt, is healthy. There is nothing in the fundamental data that would account for the sort of charge north we saw in the last week. The leap north is simply about greed and hope, that the FED will save the markets - which is not their business.
Central Banks in India and Australia have already cut interest rates. For India the markets went south in response, for complex reasons that may not relate to the DJI. The Aussies are indecisive at this point. Now we have Draghi in Europe contemplating rate cuts.
A fresh round of money printing (aka quantitative easing) is likely to happen. Look, all this stuff is like paddling hard in a canoe against a tsunami. The IMF warned us about the approaching financial tsunami. Instead our leaders worsened the situation by protectionist trade measures. This is what people do: when your life is under threat, you panic and protect your own - instead of cooperating. So - nothing surprising. All the protectionism is a signal to me that something big is coming.
Looking ahead, if a collapse happens (and I'm not predicting), I expect Gold, Platinum, and Cryptos to rocket north. For forex, I expect all /JPY pairs to head south. AUD and NZD pairs tend to move south but the correlation is far from perfect.
DISCLAIMER: This educational post is speculative. Opinions expressed here are not intended as 'advice' even if so construed. DYOR! Your decisions in the markets are your own. If you make decisions based on this post and you lose money, you are totally responsible for your losses.
The hard evidence is that rate cuts in the similar economic circumstances are followed by recessions. Don't believe me. See it for yourself at the Federal Reserve! For an annotated version see here.
I can find no hard data that leads me to believe that the US Economy with its $22 Trillion exponentially rising debt, is healthy. There is nothing in the fundamental data that would account for the sort of charge north we saw in the last week. The leap north is simply about greed and hope, that the FED will save the markets - which is not their business.
Central Banks in India and Australia have already cut interest rates. For India the markets went south in response, for complex reasons that may not relate to the DJI. The Aussies are indecisive at this point. Now we have Draghi in Europe contemplating rate cuts.
A fresh round of money printing (aka quantitative easing) is likely to happen. Look, all this stuff is like paddling hard in a canoe against a tsunami. The IMF warned us about the approaching financial tsunami. Instead our leaders worsened the situation by protectionist trade measures. This is what people do: when your life is under threat, you panic and protect your own - instead of cooperating. So - nothing surprising. All the protectionism is a signal to me that something big is coming.
Looking ahead, if a collapse happens (and I'm not predicting), I expect Gold, Platinum, and Cryptos to rocket north. For forex, I expect all /JPY pairs to head south. AUD and NZD pairs tend to move south but the correlation is far from perfect.
DISCLAIMER: This educational post is speculative. Opinions expressed here are not intended as 'advice' even if so construed. DYOR! Your decisions in the markets are your own. If you make decisions based on this post and you lose money, you are totally responsible for your losses.
FED balance sheet 42% of GDP @ 2020-01-26. Does money have value anymore? [Different perspective on the virus youtu.be/NjTdvALChwk ]
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