It's possible that the Fed will be short sighted enough to further devalue the USD to prop up the market more, but I hope that doesn't happen for the good of America's long term viability.
There can be no doubt that The Treasury Department has been tasked to accomplish market inflation (not stabilization) at ALL costs.
I see one of two scenarios playing out.
1) Fed gets on board w/ Executive desire to see a V(ish) shaped recovery.
2) Fed refuses to ignore reasonable monetary policy and allows the market to beautifully deleverage.
Scenario 1: They continue to inflate the markets and we see higher highs. Every step in this wrong direction makes it even harder to deleverage beautifully and is exactly what caused the massive economic destruction in The Great Depression. I'm terrified that this is likely the case.
Scenario 2: The Fed decides to allow markets to fall in a controlled manor through reasonable monetary policy. No negative interest rates, continued reduction to bond buying, and a move towards higher interest rates sooner than later. I hope this is the case for the sake of the country.
In either case, it's possible that once markets are high enough for banks and hedge funds to unwind their leveraged long positions from February, that they will short the markets.
I believe this is evidenced by the rising wedge we see in this chart. I believe this is the bull traps of all bull traps and that it will play out this week, in one direction or another.
I hope for everyone's sake that we see a downturn with new lows and the PPP (directly bailing out wall street) is ended.
There can be no doubt that The Treasury Department has been tasked to accomplish market inflation (not stabilization) at ALL costs.
I see one of two scenarios playing out.
1) Fed gets on board w/ Executive desire to see a V(ish) shaped recovery.
2) Fed refuses to ignore reasonable monetary policy and allows the market to beautifully deleverage.
Scenario 1: They continue to inflate the markets and we see higher highs. Every step in this wrong direction makes it even harder to deleverage beautifully and is exactly what caused the massive economic destruction in The Great Depression. I'm terrified that this is likely the case.
Scenario 2: The Fed decides to allow markets to fall in a controlled manor through reasonable monetary policy. No negative interest rates, continued reduction to bond buying, and a move towards higher interest rates sooner than later. I hope this is the case for the sake of the country.
In either case, it's possible that once markets are high enough for banks and hedge funds to unwind their leveraged long positions from February, that they will short the markets.
I believe this is evidenced by the rising wedge we see in this chart. I believe this is the bull traps of all bull traps and that it will play out this week, in one direction or another.
I hope for everyone's sake that we see a downturn with new lows and the PPP (directly bailing out wall street) is ended.
