A cura di Walter Snyder, Swiss Financial Consulting
The Fed has murdered price discovery in the markets and has enlisted other central banks as henchmen. The SNB (Swiss National Bank) has bought millions of dollars worth of Apple stock, for example, and it remains to be seen what the central banks will do if the slight downturn of the last few days persists. They may all buy the dip.
The Fed will most probably raise interest rates by another 25 bps on Wednesday, 14th June 2017, which would normally bring about a recession if past performance is any indication. The last Fed interest raise seemed to push the stock market even higher, which is against all reason. Higher interest rates should result in lower stock prices. Such anomalies suggest conspiracy theories.
In an interesting article by David Haggith that appeared on 11th June 2017 at http://thegreatrecession.info/blog/, Is the Central Bank’s Rigged Stock Market Ready to Crash on Schedule? the question of central bank interference in the markets was examined. The explanation that markets have been manipulated by central banks is pertinent. The gold market, as is well known, is continually manipulated by the central bankers in their intent to eliminate gold as a currency so that fiat currency can reign supreme globally.
The problem for investors is to know how far the central banks are willing to go to keep markets under control and where the central bankers want the markets to go. The Fed might want to bring about a strong recession to discredit President Trump so that the Republicans suffer a disaster in the mid-term elections in 2018. The Democrats could then easily impeach Trump and have Pence move into the White House. The recession may come about whether the Fed wants it or not.
It is not to be expected that the Fed will remain politically neutral, given the tension around Mr Trump`s administration. If the interest rate rise in June does not suffice, then another rise in September and a lightened Fed balance sheet will almost certainly bring on turbulence that could mean the beginning of the end for the Trump administration. The economy is already sluggish.
The combustible cocktail of politics, the Fed and distorted manipulated markets means that investors will have to be extremely vigilant to protect their capital against losses. The central banks could not prevent higher bond yields despite ZIRP and NIRP. At a certain point raising interest rates and stock market manipulation are not going to balance. Blame the Fed and the banksters when the correction comes.