If history is our guide, we are on track for a severe market meltdown in 2019. While the U.S. broader indexes remained in record territory for most of 2018, December turned out to be a complete disaster for stocks. So, even though the markets have reversed higher from their Christmas Eve lows, this is nothing more than a bear market rally.
It’s really that simple. Thus, all the hype about “Fed Market Rigging” to push the markets up a record 1,000 points following the Christmas Eve massacre, becomes white noise as markets always correct higher after a massive selloff, with or without the Plunge Protection Team (PPT). Furthermore, the notion put forth by members of the Alt-Media suggesting that the Fed rate hikes will cause another market crash, and wealth transfer makes no sense in an EROI Collapse (Energy Returned On Investment).
As the EROI of the oil industry falls even lower with the addition of oil sands and shale oil, there will come a time when the economy and market will disintegrate due to a lack of profitable net energy. In this future net-energy-starved economy, most ASSETS will become LIABILITIES. So, the lousy conspiracy that the Fed is using their “rate hike policy” for the “grand elite wealth transfer,” needs to be thrown in the waste-bin for good.
Folks, it’s time to stop focusing on lousy conspiracies and figure out what you are going to do when energy becomes a real problem.
Unfortunately, hype and conspiracies sell a lot of books and subscriptions because they are more exciting than facts, data, and information. It seems to me that a large number of the Alt-Media followers are being misled just as much as their Mainstream media counterparts. However, they don’t realize it… LOL.
Okay, let’s get back to the 2019 Market Meltdown.
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Perhaps the reason equities tanked when Powell suggested that the Fed’s plan to normalize its balance sheet was on “auto-pilot” can be seen in the chart below. Red line is the Wilshire 5000 (representing all publicly traded US equities) and yellow columns are the weekly change in the Federal Reserve’s holdings of Treasury’s. On the five occasions (highlighted again) since 2007 that the Fed has ceased buying or outright sold Treasury’s, the Wilshire has gone into convulsions or outright cracked lower.
