Fed Casts Extras In Its Rate Hike Show

Released Tuesday, 1st September 2015
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The Dow just finished its worst month in over 4 years
A lot has happened in the market since I recorded my last podcast
When I recorded that podcast, I had anticipated a "Turnaround Tuesday" where the market would gap up, but then sell off by the close
That is exactly what happened
Then the Dow had its biggest 3-day rally in history
Still that record-setting rise was not enough to repair the damage done that was done earlier
The Dow had its biggest down month in over 4 years
Still in official correction territory
Adding woes to the stock market are Fed comments that September rate hikes are not off the table
This will continue to add pressure on the markets
If this week's Non-Farm Payroll number is positive, it could be very dangerous for the Dow Jones
Technically, the market is very vulnerable, and without the Fed's support there is little to stop the correction from progressing into a bear market
All of the big money is starting to sell stocks because they believe the Fed may raise rates
The market will keep falling until the Fed cries, "Uncle!"
Once the Fed comes to the rescue, big money will start buying again
The Fed is still ignoring negative economic data, such as today's August Dallas Fed Manufacturing Survey which came in at -15.8
There is probably not going to be much change in the unemployment number, no matter how weak the economy is
Walmart is now cutting back on hours because they increased wages earlier
As long as the Fed is continuing to bluff that rate hikes are on the table for September or October, this market will be under a lot of pressure
If we close below the lows of last Monday, it is going to get ugly really fast
The Fed doesn't want the market to connect the dots directly from monetary policy to market performance
That would illustrate how unsustainable its policies really are
I compared the Fed's tactics to trying to yank the table out from under the tablecloth, rather than the tablecloth out from under the dishes
The Fed was basing the whole recovery on lifting the asset markets
As soon as the Fed stops lifting, the recovery goes away
One of the interesting things today was the reversal in oil prices
One of the few times oil prices rose, and the stock market didn't
Over the last 3 three days, we've had better than a $10 increase in the price of oil
Oil needs to go up quite a bit more before we can say a bottom is in
An end to rate hike rhetoric will knock the support out from under the dollar and that the strong dollar is undermining global demand for crude oil
I was in Jackson Hole during The Federal Reserve's Annual Economic Policy Symposium to participate in the American Principles Project Economic Summit, which was a protest against Fed policy
Concurrent to our conference another organization called, "Fed Up", sponsored by the AFLCIO and Black Lives Matter
Working class protesters carried signs encouraging the Fed to keep interest rates down and target higher inflation
How is that going to help these working-class "protestors"?
These participants probably had very little knowledge of the Fed or monetary policy
The American Principles Project Economic Summit was denied access to the resort where the Fed Summit met because for security reasons, citing that other group was allowed to meet in that venue
"Fed Up", however, was allowed to meet in the same venue as the Federal Reserve
I think "Fed Up" conference was staged. They conveniently provided a backdrop of signs encouraging more of the Fed's existing monetary policy
The protest I participated in was sharply critical of the Fed's monetary policy, calling for an end to the the false support that has created asset market bubbles
My thesis is that the Fed's talk of raising rates is just a show and the "Fed Up" protesters' signs are just part of that show
The irony that is lost on everybody is that the protesters understand that the economy is bad,

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33m 21s

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