The Market Ticker
Commentary on The Capital Markets- Category [Federal Reserve]
2017-06-14 14:15 by Karl Denninger
in Federal Reserve , 271 references
[Comments enabled]  

So the Fed is going to shed $600 billion a year in bonds, beginning this year and going to that level in 2018 yet both long-term interest rates and the stock market ignored that?

May I remind you that this is awfully close to the rate of accreation.

Here's reality: The market doesn't believe The Fed.

There's utterly no way you have the curve this flat, with the long end this far suppressed, if the Fed is actually going to do this and the economy remains "ok".

If the economy is not ok then the bond market is right but the stock market is at double its legitimate price -- or more.

If you want to take a bet on who's right you bet on the bond market and short the hell out of stocks.  Why?  Because this looks like 1999's Greenspan games with the Fed and we know how that ended.

Of course you must remember in 1999 the Naz doubled before it all blew up, which makes being short something that might very well wind up with you being dead right (in other words, you're right but you're both broke and forced out of your position first!)

Yeah.

View this entry with comments (opens new window)
 

Main Navigation
MUST-READ Selection:
A One-Sentence Bill To Force The Health-Care Issue

Full-Text Search & Archives
Archive Access

Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.