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Fed Sez: No Changes

Given the fact that CNBC are unable to be proper journalists anymore I thought I would translate the FOMC statement into realspeak. Hopefully I won’t get into trouble for thought crime…..

“Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. ” – We have injected trillions of dollars into the market, equivalent to putting a dying person onto life support. The patient has not died yet and is still breathing.

“Conditions in financial markets have generally improved in recent months.” – See above.

“Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. ” - Consumers are spending significantly less and are scared about losing their job, negative equity and cannot borrow any more money. Scared people spend less.

“Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales.” - Inventories are going to be lower than in previous years, because people have stopped buying things.

“Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. ” – We have no idea what is going to happen.

“The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.” – We are still shit scared of deflation.

“In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. ” – The tool cupboard is looking a bit empty as we have now tried everything and it didnt really work that well.

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. ” – We will continue to keep our head in the sand.

“As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.” – We might have to be even more irresponsible if people realize that a major deflationary depression is really on the cards.

Is it Time to Jump Back into the Market?

Question: Is it time to jump back in the market?
Answer: No
Question2: Awww, but I want to - i would hate to miss out on the bounce
Answer2: Stay in Cash. A bottom is not real until it is a double bottom or a reverse head and shoulders. wait for the retest - if it fails then stay in cash - if it holds then buy in - Simple.

Fed Intervention, Market Response Confirm: We're on the Path to Hyperinflation

The Fed is acting to try to make you think that inflation is on the way. unfortunately the Deflation train is to big to stop. They will continue to act irresponsibly and make things much worse than they would have been otherwise.

Its over. Buy a gun and some rosary beads.

Bernanke Desperate, Fed Out of Ammo

The FED is really, really scared about Deflation. The only way to defeat deflation is to make people believe that inflation is coming. Doing this is really hard, when you have a 54 trillion debt contraction happening. They need to act really irresponsible in order to make you think that Inflation is on the way. This is one of the many steps of irresponsibility.

Unfortunately they don't get it. This is not a simple recession, where there manipulation tends to work. This is big all-singing-all-dancing depression, probably larger than 1929-1933. Thier actions will inevitable fail - deflation will win - however when we do start to come out of it (2011) then it will be into hyperinflation. Think empty shelves and oil to expensive to use.

The manipulation of the Fed has gone on for so long that they have forgotten what their purpose was. Time for it to go and be replaced with gold standard and a free market.

Inflation, Demand and OPEC Should Drive DIG Higher

Every attempt by bernanke to kill deflation, in the last year, has failed miserably. This last attempt of throwing trillions out is very japanesque. The money supply contains about 54 trillion in debt - this debt is contracting really fast, either through default or payment, and is not being renewed. I would not count deflation dead yet.

If, however, Helicopter Ben does manage to kill deflation this time then we are heading into Wiemar republic inflation. Forget Oil - get Gold Bullion stored in a foreign vault and get out of this country as it will be a mess.

Sucker's Rally: Stop Calling the Bottom

I like buying low and selling high. I equallly like selling high and buying low. Both are ethical, profitable and essentailly the same.

When you think stocks are going down - go short, when you think they are going up - go long, when you are in doubt - get out.

No Rational Explanation for the Post-EIA Reaction

Maybe the price of oil has nothing to do with fundementals of supply and Demand, or news. Of course the Dollar collapse, based on the FED continuing to act inappropriately, may have helped drive up all commodities.

Maybe its all to do with a group of people buying and selling based on the charts.

Fundamentals May Halt Stock Rally: Should I Stay or Should I Go?

On Equities I am staying all cash for a bit until the technicals get a little less murky. I expect to go short again, however I'd like to see the nasdaq confirm the Dow and SPX moves.

I am considering shorting 30 yr treasuries - they should have gone higher after the Q.E. announcment. The fact that the 30yrs did not make new highs, and kept within trading limits, means that there are a lot of sellers out there.

Stop Bottom Hunting and Start Investing

I would avoid equities for a while. When the cascade of bankrupcies begins (The government cannot bailout everyone) all stocks, good and bad, will be impacted by the psychology of fear.

Why not simply sit in 30 day treasuries. Unlike equities they have not gone down. Go back into equities when it is clear that the economy is turning. Okay you might miss out on the start of the rally, however you avoid the risk of losing money if there is still further downside.

10 Reasons Why We Still Haven't Hit Bottom

Additionally:

(1) Commercial Real Estate is about to collapse. Watch out for GGP and Simon Property next week.

(2) House prices are still going down and will continue

(3) GM and Chrysler are teetering on Bankruptcy and very few people are buying a new car.

(4) FDIC are about to run out of cash. Most of the big banks ARE insolvent (off balance sheets exposure in the trillions) and one of them will eventually go down.

(5) Quantitative Easing is a final act of the desperate. If the Fed has to resort to QE then we are really in trouble.

(6) Tax Hikes are in the future

(7) etc, etc

It is not different this time - its just that we are in a 1929 - 1938 like depression, rather than a recession.

What's Another $1.15 Trillion?

Asset Allocation for 2009:

40% Canned Food
15% Bottled Water
40% Guns and Munition
5% Pitchforks and Torches

The Fed Must Be Crazy

Does anyone know of a legal way to refuse to pay taxes, on grounds of government incompetence.

Ashamed of AIG

Does anyone know of a legal way to refuse to pay taxes, on grounds of goverment incompetence.

Roubini Puts Likely S&P Bottom at 600, Says 500 'Possible'

By the time we get to a market bottom our use of P/E may have died. Dividend Yield is way better and tends to be at around 6% at the major market bottoms.

Let AIG Go Bankrupt, Not America

A moment of clarity.

If only the Fed and treasury had 10% of the intellectual capital of Rogers.