Finance U: Fed Cuts Rates with Stock and Home Prices at ATHs!

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Originally published at: https://peakprosperity.com/finance-u-fed-cuts-rates-with-stock-and-home-prices-at-aths/

The Fed claims to be “apolitical” in the same spirit as OJ claimed to be innocent. The Fed opted for an emergency level rate of 0.50% despite stocks and house prices being at all time highs and inflation hardly back to safe levels.

In other words, asset prices going up for wealthy people, and incumbents facing better re-election odds were higher priorities for Fed than young people being able to get a decent start in life.

Because that’s the message, loud and clear.

Obviously, when starting out people deserve to be able to buy affordable homes and start investing at reasonable valuation levels and to afford the basics of life such as food, fuel, property taxes, and insurance.

The Fed doesn’t care about any of the concerns of the young. It cares about an out-of-control system of financialized wealth harvesting being able to continue for a bit longer.

In other words, it’s the same old, same old.

Different day, same playbook.

Where does all this lead? Nowhere good, obviously, because there has to be some connection between the real world and the equity markets, but for now they are about as disconnected as they have ever been. One need look no further than Germany’s stock market which stands in stark contrast to its rapidly deteriorating economic conditions and obvious geopolitical risks in Ukraine and with Russia.

Note: the box in yellow in the insert graph matches the timeline of the equity chart: 2023-2024

If the central banks have some sort of a plan, some sort of an exit strategy, I sure wish they’d share it with the rest of us, because this doesn’t add up.

Until they do, or until the Fed changes its generational reward/abuse habits we’re going to predict they keep being exactly who they’ve already shown themselves to be over and over again. So expect more inflation, more “”market”” rescues, and eventually lots more currency creation, a.k.a. “QE.”

The only thing that will stop them is some external force…such as the BRICs or a major oil shortage and price spike.

 

 

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And here I thought September (and the rate cuts) were gonna bring about a correction. Doh! Fortunately I didn’t go short.

Rate cuts and recessions go hand in hand. But Powell is pretending like all is well. “Oh we’re doing a 50 bp cut because inflation is under control! Definitely NOT because we’re in a recession or anything.”

And ZeroHedge is saying the same thing:

  • WAR IS PEACE
  • FREEDOM IS SLAVERY
  • IGNORANCE IS STRENGTH.
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My Gen Z son has JUST started to express interest in what “my people” think of finances. He was specifically interested in the rate cuts, which he feels actually benefits him since he is successful. I am grateful I have something to show him. Thank you, guys!

PS Alan Booker’s talk on the Gen Zers was great at the Summit and I was so happy to get some personal help from him in talking to my son.

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Blackrock and Microsoft partner to put $100 billion into building MORE datacenters and also power stations to power em… cause we don’t have enough yet…even though they are popping up everywhere like starbucks

ahhh nothing to see here… I’m sure Blackrock and Gates have nothing but good intentions at heart…

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By your chart on Fed rates vs the 2-year treasury assumes no manipulation? This is rather odd since the whole purpose of the FED policies are to manipulate the rate. That is exactly what TWIST, QE etc. did. That is exactly what FED jawboning does.
Second the 2-year treasury rate is a combination of FED policy response and individual models being used. So, again, no manipulation?
How does one explain zero as an interest rate other than government thumb on the scale due to regulation, an infinite amount of $$ and near total discretion where to put those infinite $$?
Finally, with inflation per annum being over 3% how does one justify the 2 year rate? Why should I save if I am receiving nothing for putting off my consumption.
What has changed is that money is now credit; a promise to pay in the future. Money used to be capital saved.
I suppose one can resurrect the Greenspan statements to the effect that the world had excess savings.
Another old saw is that everyone in the capital markets is looking at what everyone else is doing so all one needs is capital market psyops.
My view is that the FED has surrendered any pretense of independence. Stable prices was surrendered to a 2% inflation rate that is becoming a ?% inflation rate. A stable economy has been subordinated to government access to easy money. This leaves the third leg, the value of the US Dollar to decline and with that, everything becomes unstable. All of this to facilitate the Legislature’s spending habits.

Post Script: Whatever happened to the predicted “active hurricane season”?

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16min in to the video:
I was among those who raised their hand that the fed would bail out the markets. I am a millennial and have a leveraged-ETF position expecting the S&P 500 to go down. That position is doing very poorly as the S&P 500 is hitting all time highs of late. So when I raised my hand, that was an act of pessimism, rather than optimism. Similarly, when the bayesian experiment was ran and we were asked about our estimates for a 50% stock crash in the next 4 years, I was in the 20% line because I anticipate the fed will bail out the markets and distortions and circuses will continue. Again, a pessimistic view.

As it stands, I’m trying to maintain flexibility and options… resilience, if you will. I’m not terribly bummed out that my positions for a S&P 500 dive and for oil to go up in price aren’t doing well, as it means I get to continue going to work and getting the mon-… currency, to fund my life. I anticipate a bleak and challenging future, and every day that I’m wrong is a day to be enjoyed.

(I’ll post edits as I continue the video)

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For some reason this episode got me thinking again that the smartest investments I can be making right now are into forms of secondary wealth I know I’ll want or need in the future that I can buy now and will keep more or less indefinitely. This is stuff that is available now, which might or might not be in our future world, and more to the point is likely to be more expensive in the future if it is available.

Some specific examples of what I mean as viewed from my personal life would be things like my recent upgrade of my off grid solar system battery bank from AGM type batteries that I know will need to be replaced in 2 to 5 years to LiFePO4 batteries that have a much longer potential life. Since I more than doubled the size of the bank too this also means I’ll be having a lower depth of discharge each cycle which also extends their life. I should be good for 2 to 3 decades based on my use.

Also in the energy category I heat with wood. So I’m getting a stock of extra chainsaw chains to keep on hand for my chainsaws. I’ve already got several extra gallons of bar and chain oil.

Of course things like clothes and shoes are already purchased and stored away. I’m also looking at seemingly small things I use and know I’ll want like dental floss, wash cloths, printer paper, USPS “forever” postage stamps, screws, nails, electrical tape, wire nuts, drill bits, screw driver bits, thread, string, etc. I’m trying to look at things I find I’m already purchasing and ask myself, do I have space to store more of this, will it keep for a long time, is it something that isn’t likely to become obsolete in my personal life?

I’m thinking I might start making a habit too of stopping by the local used metal supplier and purchasing steel and aluminum bars, tubes, and angle iron when I have extra cash as these seem like things that may well hold their value in the future even if I don’t end up using them personally. (I’d need to make sure I have protected storage for the scrap steel though so it doesn’t just rust away!)

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The disconnect between markets and reality is more than I can comprehend. “The Market” is a worldwide blob that moves in unison at the behest of central bankers & globalist oligarchs – untethered to any underlying economic or geopolitical realities, like German industrial disintegration or WWIII. I’m glad I turned over portfolio management to KWM to play by the rules as they exist (rather than as we wish they were or that make rational sense).

To honor Paul’s appreciation of Proverbs, I searched for scriptures on “lying” and got a bonus that also covers Chris’ death cult AND much of the balance of the globalists’ agenda.

Proverbs 6 (NKJV)
16 These six things the Lord hates,
Yes, seven are an abomination to Him,
A proud look,
A lying tongue,
Hands that shed innocent blood,
18 A heart that devises wicked plans,
Feet that are swift in running to evil,
19 A false witness who speaks lies,
And one who sows discord among brethren.

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It takes a lot of computing and store capacity to have a government controlled financial, tax, economic and surveillance society. [Many cubic miles.]
I think on Bloomberg there was talk about three mile island expansion potential.

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Apologize, I did not watch this episode. I am thinking if you did a man on the street interview, asking the 18-30 cohort, how the 50 basis point cut affects their lives; I would say the response would be it doesn’t. Not in a material way. Or…they don’t really have a clue.

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oh look 3 mile island is safe to turn on again… not to heat your homes but to exclusively power more AI data centers for Billy boy…

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Yes. I believe the covert financing Chris alludes to at about 40 minute mark, is next generation surveillance; essentially A.I. pattern recognition of individuals that will make Edward Snowden’s NSA seem like the ‘good old days’.

All but the most sophisticated anonymizing tools with be useless.

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*** WTF? 38 data centers in 1 county alone!..***

so long story. short… I just went to a community meeting in a rural area where my shop " Plan B" is located they were concerned about a unwanted 30 house development coming in on an auctioned off farm… However, they had enlisted help from a statewide protect the farms organization… I chatted up the lady from the organization after the presentation… seems they are also fighting the governor who is trying to rezone 171 acres of farm land legally protected for the next 40 years into Data Center zoning… I asked about all the stop the data center signs and the growth in data centers… I thought there were maybe 1/2 dozen or so data centers in my county… however, according to her it turns out they have ALREADY BUILT 38 data centers!… thats just in one county not counting the ones up the river in eastern oregon… and they want land for more!..

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What the actual F…?

Things are going faster than I thought. This data will cause me to reevaluate timelines…

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