‘Something’s Wrong’: The Fed’s Creating Risks – But The Markets Ignoring It
The other day I published an article calling out the markets denial of rising risks.
Even with everything that’s happening in Italy and with the Emerging Markets blowing up – expected volatility has actually decreased. . .
Basically, the stock markets pricing everything in for perfection – that the economy and markets will have low-volatility, steady growth, and calming inflation.
At least the bond market isn’t as gullible as the yield curve stays relatively flat – and heading towards inversion.
So, is it just us handful of skeptics and contrarians that don’t believe the mainstreams ‘everything’s great’ story?
Here are a couple other big names that are now doubting the ‘goldilocks’ scenario. . .
Ray Dalio and his firm, Bridgewater Associates – the world’s largest hedge fund, has been in the public eye lately thanks to his new, bestselling book – Principles.
In Bridgewater’s recent Daily Observations, the fund warns that, “2019 is setting up to be a dangerous year, as the fiscal stimulus rolls off while the Fed’s tightening will be peaking…”
Bridgwater concluded with. . .
“We are bearish on financial assets as the US economy progresses toward the late cycle, liquidity has been removed, and the markets are pricing in a continuation of recent conditions despite the changing backdrop…”
Another added to the list of skeptics – a Morgan Stanley Top Analysts made statements on Bloomberg that markets are “heading into a summer that’s going to stay volatile...”
The question now we must ask is: what seems to be the common denominator behind all this volatility, instability in emerging markets, and liquidity problems?
The answer: The Federal Reserve’s tightening.
The Fed has to realize what they’re doing – I refuse to believe that the supposedly ‘greatest financial minds’ don’t do their research about the correlation between ‘easy money booms’ and ‘tight money busts’.
…click on the above link to read the rest of the article…
