USA: Never forget – NOT allowing price discovery for a long period of time – then forcing the process onto markets with a “bayonet in the back” – at an ever-accelerating rate – is a virgin-central bank experiment. It comes at a high price. Never happened before.
Inflation is forcing central bankers to allow price discovery. There was always price discovery before Lehman – but for much of the last 12 years markets have been in a Fed zombie trance. We mean a real – free market – “cost of capital.”
Light on this process is emerging through the cobwebs of “Pandora’s Box.” After leaving it closed for far too long. Indeed, the Fed ripped open the box with panicked shaking fingers. As academics – they cannot possibly measure the risk in what they are doing. They are focused on backward-looking economic data – NOT the thousands of NEW risk metrics flying out of the crypt.
Financial conditions are tightening, at the fastest since Lehman. And even when central bankers do see the new emerging risk – they certainly will NOT tell us until the beast inside the market forces them to.
That said, much like our weekend notes delivered near March 14 (QQQ counter trend rally +17%) and May 20 (QQQ counter-trend rally +12%), buy signals are mounting yet again.
Central bankers are NOT idiots – they clearly see the emerging risks we see but have to stick to the stale script and bleed out the truth — one drop at a time. BUT colossal market pressures and fast economic deterioration will force them to acknowledge the new risk landscape. The greater the systemic risk pressure, the faster the clowns will react.
It ́s all about the rate of change of information. In a bull market, under normal conditions – central bankers do NOT have to get out of their cozy recliner – for years they are conditioned to sit back and relax.
As the bear ́s claws arrive – fresh tracks can be seen on the trail staking Powell and Co. The fierce shift in the rate of change of both economic and systemic risk data presents fresh wounds to the reputations of our brain trusts.
For months – their pawns (sell side banks and journalists) have been talking up a 4-5% Fed funds rate – pure lunacy on today ́s stage. The beast will NOT have it.
We love the gold and silver miners here – and see the Fed moving toward an “attempted” controlled unwind position. They have acknowledged their inflation fight, now they must come clean on the financial stability – recession front.
By Larry McDonald, author of the Bear Traps Report
Posted by Tyler Durden
Join: 👉 https://t.me/acnewspatriots
The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of AC.NEWS
Disclaimer: This article may contain statements that reflect the opinion of the author. The contents of this article are of sole responsibility of the author(s). AC.News will not be responsible for any inaccurate or incorrect statement in this article www.ac.news websites contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, health, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner. Reprinting this article: Non-commercial use OK. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.
Disclaimer: The information and opinions shared are for informational purposes only including, but not limited to, text, graphics, images and other material are not intended as medical advice or instruction. Nothing mentioned is intended to be a substitute for professional medical advice, diagnosis or treatment.
Discussion about this post