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Created on: 5/14/2021 3:28:48 PM   Last Update: 5/14/2021 3:29:15 PM Posted by: RTT
1 POST The FED will be asked to defend risk on assets big time before Xmas (RTT Plus)
the-fed-will-be-asked-to-defend-risk-on-assets-big-time-before-xmas-rtt-plusThe heat is going to be on the FED in the next 6 months.

The $64,000 question: Will the FED defend risk on assets by buying enough debt to suppress interest rates? 

POINT: The ROCK: Inflation is pressure on interest rates. The HARD PLACE: The US has huge and growing debt, they can not afford to pay the interest bill. The FED is caught between a ROCK and a HARDPLACE. The outcome is larger FED balance sheet and the release valve is a devaluation of the currency. A lower US dollar!


The FED said inflation is expected to be 'transitory', or in other words please do not sell your bonds, pretty please.

Many expect inflation to persist, of course this will force a bond bear market and higher interest rates, if the FED buys all the debt to keep 10 year interest rates under 2% their balance will explode and the US dollar will break below $88 on the DXY and risk on assets will shoot higher at rapid pace. This is Yield Curve Control (YCC). 

If the FED does not buy enough debt quickly enough the VIX will rally and stocks will sink. Of course with US Mid terms in 2022 and a democrat populated FED they will do all they can to defend risk on assets (in RTT view).

POINT: A sharp (say) 5% to 20% drop in the SP500 is on the table, and if the FED reacts quickly at recovery spike like March 2020 Covid 'v' reversal can be expected. If not, down we go!



Inflation is going to get hot as each months data rolls in over the next few months.


The CEOs reporting inflation pressures. 


CEOs




Producer Price Index forecasts hot CPI.


Click for popup. Clear your browser cache if image is not showing.
PPI





The hot inflation is sourced from energy (oil and gas), via Transport inflation (trains, cars and trucks). The blue line below.

POINT: If oil rolls over, then so shall inflation, with a lag.



COM




SOURCE: This post was originally posted in our private RTT Plus members blog, and released on this public blog in a time delayed manner. RTT Plus members have access to private content immediately.Please be aware links to secured RTT Plus content will not work without a RTT Plus membership.


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NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.

Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, Cycles, Wyckoff and Ney logic is the best way to ride the change, after all these methods have been used successfully for 70+ years. This post is a delayed and small sample of what is avaliable to members. Sign up to enjoy the full service.


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Investing Quote...

.."Anyone who buys or sells a stock, a bond or a commodity for profit is speculating if he employs intelligent foresight. If he does not, he is gambling."..

Richard D Wyckoff


..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell"..

John Templeton


.."Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception"..

George Soros


.."It's easier to fool people, than to convince them they have been fooled"..

Mark Twain


.."Until an hour before the Devil fell, God thought him beautiful in Heaven"..

Arthur Miller, “The Crucible”
 [Contrarian Investing]






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