The Fed Is Bluffing
Interest Rates Won’t Rise in 2015
The Janet Yellen Fed will not raise interest rates in any meaningful way anytime soon. Instead, she will announce new QE programs. On Wednesday, red was showing up just about everywhere – U.S. stocks, European stocks, Asian stocks, emerging markets stocks, crude oil… but it could have been worse…
U.S. stocks recovered some of their losses for the day, after the minutes of the most recent Fed meeting showed Yellen and team still won’t pull the trigger on a rate hike until certain unspecified conditions are met.
According to the Fed, the conditions for a rate increase are “approaching” but haven’t been met yet. Well, guess what… Conditions will never be met.
They’ll just drop in to see what condition our condition is in …
Image credit: Ethan Coen
Market Morphine
It doesn’t work that way. This economy will never recover – not as long as it is under the current Keynesian management. It is like a patient attended by quack doctors – doomed to get sicker from their quack “cures.” Today’s economy depends on large doses of cheap credit…
And like morphine, you have to up the dosage just to stay in the same place. Take away the drugs, and the pain rises. The pain caused by falling stock prices, for example. Take away the cheap credit… and the buybacks on Wall Street dry up.
What shall it be today, gentlemen? A coup de whiskey or a shot of morphine? We’ve got it all! – click to enlarge.
That means earnings per share – the ultimate driver of stock prices – fall, too. With falling corporate earnings and stagnant household incomes, the inevitable direction for stock prices is also down.
…click on the above link to read the rest of the article…
