Friday, September 25, 2015

Losing Confidence ...........

Its becoming evident that even the gamblers in the casino are losing confidence in the Fed.

Because there are obvious signs of division at the Fed, evidence of confusion and indecision as well, and once that process begins to fully unfold, which it will for meeting after meeting as we go forward………because the Fed has
painted itself into a dark corner and has no clue how to get out…..once that process of division and confusion runs to it's logical conclusion the markets are going to lose confidence in the whole central bank bubble and were going to have a huge correction.

Alas, confidence was apparently so shaken by the Fed's recent action that it's as if they did ring a bell at the top. The relief rally got monkey-hammered on the spot.

Ironically the gong was Janet Yellen's incoherent babbling at the post-meeting press conference. Over and over she said how everything is swell in the US after 80 months of ZIRP, and that the consumer and labor markets are nearing the pink of health. Nevertheless, she and her posse had elected to keep banging the Emergency Button, anyway, just in case something falters in Shanghai, Timbuktu or some other unspecified precinct of planet Earth.

Whether the inevitable thundering collapse of the latest and greatest of all central bank bubbles has now commenced will be known soon enough. But what is clear the markets reaction is that the buy-the-dips algos have lost a lot of mojo. Perhaps they are even being reprogramed to trawl for signs of confusion, conflict and cacophony among our central banks rulers.

So while the Federal Reserve has chosen to keep the Federal Funds rate near zero, it is merely delaying the inescapable and inevitable result of its own monetary policy – another much 
needed economic correction that its actions will have generated but which it will, no doubt, blame on the supposed "failures" of the market economy.

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