As Investors, we are also trying to figure out where the market is heading
I have been talking about how the markets are broken.
And The Fed Issues A Warning About The Stock Market
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The Fed has been pumping them full of liquidity, not allowing a corrective market cycle to do its a thing.
So the Fed headed up by Chairman Jerome Powell seems to be
The force to watch in all of this. We’ve been hearing a lot from Chairman Jay Powell and his colleagues on the Federal Open Market Committee.
Powell spoke last Wednesday on a webinar for the Peterson Institute for International Economics. He just appeared before America on CBS’s “60 Minutes.” This week, Powell is expected to testify on the CARES ACT
Before the Senate Banking Committee; and he is also expected to give the opening remarks at a “Fed Listens” event on COVID-19.
These frequent appearances suggest, among other things,
that the Fed doesn’t want people to misunderstand what it’s doing from a policy perspective. And that its communication is an important part of hammering home what its policies are designed to do and not to do.
because as Powell seems to be pointing out there is a big discrepancy or miscommunication as what people expect from the Fed and what the Fed itself is planning on doing
first – what are people expecting from the fed?
if you have been watching my videos, like this recent one titled “The Fed Just Bailed Out The Stock Market” you know that the fed has been saying it will backstop the markets Through many different programs, including bond purchasing and use of the SPV’s it appears they are doing just that
In addition, Powell has told us repeatedly the fed would “do whatever it takes” and said “QE Infinity” and even used the word “Unlimited”
So a combination of the Fed’s actions and words they have been saying has led to a lot of investor confidence, and even overconfidence
and it appears it’s this overconfidence coming from the Fed’s actions and statements that Powell is now trying to reign back in
In its latest biannual Financial Stability Report published Friday,
the Fed aims, among other things, to make clear that when you put money into the market, you risk losing that money. There is no explicit Fed backstop in the equity market.
The fed said in their report – Quote
“Asset prices remain vulnerable to significant declines should the pandemic worsen, the economic fallout proves more adverse, or financial system strains re-emerge,” end quote
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