GOING FOR THE JUGULAR: Squeezing Bulls – BOMBS AWAY!

This article was contributed by James Davis with Future Money Trends.  Stock markets have been UNDERGOING MURDEROUS conditions. September has BEEN ROUGH, as we predicted with incredible precision in our alerts sent out in LATE AUGUST! We literally wrote that September will be the worst for investors and that in the month of September, division, polarity, and hatred WILL EXPAND and will reach epic proportions, just like they are. The BULLISH HYPE is over; we believe markets have largely ended their retail euphoria phase and that institutional buying is READY TO EXPLODE. As for the amazing comparison between the Dow Jones Industrial Average in 2020 and 1930, we believe that the LINE IN THE SAND gets drawn here. We’re in a recovery – stocks will bottom soon and will be trading IN A RANGE for a while until the WATER CLEARS. This isn’t the Great Depression. Courtesy: Zerohedge.com This is a PRETTY BIG correction, though: Half of the NASDAQ 100 has broken below its 50-DMA, so if you were waiting for a HEALTHY PULLBACK, you have it. I have spoken to many who are “waiting for March lows” before they pull the trigger, but my personal view is that we WILL NOT see those returning. We just issued a BRAND-NEW Tech Watch List, which you can DOWNLOAD HERE. In it, we feature a number of NASDAQ players, two of which are actually trading below their proposed limit orders! As you can see, the last time the downtrend WAS THIS STRONG was on June 8th, when most of the market components peaked in price, many of which HAVE NOT returned to those price levels. Many companies are growing sales and market penetration rapidly and are, therefore, priced OUT OF PROPORTION to normal standards, but they may stay like this for years (delivering good returns). Have your own Watch Lists ready at all times to capitalize on double-digit DOWN MOVES! Courtesy: Zerohedge.com The digital realm is making life so much MORE EFFECTIVE and cost-efficient. New companies are springing up with capabilities that will blow your mind and our lives are going to be much more interesting, full of joys, and well-balanced in general, thanks to these innovations. In healthcare, businesses are working on detecting faulty genes and fixing them by treating specific defects. Think about blind babies being able to see and cancer patients who are able to RID THEMSELVES of their disease once and for all. In robotics, think about companions that help you with tasks, advance your business when you sleep and solve problems before you even RECOGNIZE THEM. Take any profession on the planet and know that if it can be done CHEAPER, BETTER, or SAFER, a robot is coming to assist in that! There are many implications for all human beings, due to these technological developments; we’ll keep covering these topics constantly, including the rapid progress of blockchain technology and Bitcoin’s ecosystem. Courtesy: Zerohedge.com As you can see, there’s a CLEAR CORRELATION between the FED’s balance sheet flattening out in early June and the market’s peak on June 8th. The FED has said its piece; from here on, earnings will dictate prices, not stimulus. In SIX WEEKS, the world’s biggest powerhouse nation heads to the ballots – what a WHIRLWIND of TROUBLE is coming! President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now!

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Who Bought the $3.3 Trillion Piled on the Incredibly Spiking US National Debt Since March?

Trillions flying by so fast, it’s hard to even count them. But somebody had to buy these Treasury securities. And it wasn’t just the Fed. Here’s who. By Wolf Richter for WOLF STREET. In the 12 months through February, before the Pandemic started – those were the Good Times when a government shouldn’t have to borrow heavily – the US government added a breath-taking $1.4 trillion to its already huge pile of debt. And then came the Pandemic and the bailouts and the stimulus payments and all the other stuff, and over the six months since then, the US government added another $3.3 trillion to the Incredibly Spiking US Gross National Debt that now amounts to $26.8 trillion: With the release yesterday afternoon of the Treasury Department’s Treasury International Capital data through July 31, Fed balance sheet data, bank balance sheet data from the Federal Reserve, and the Treasury Department’s data on Treasury securities, we can sort out who bought those trillions of dollars in Treasury Securities over the past 12 months. Foreign investors: Foreign investors all combined – central banks, government entities, companies, commercial banks, bond funds, other funds, and individuals – added $287 billion to their holdings in July compared to July last year, including $48 billion during the month of July. This brought their holdings to a record of $7.087 trillion (blue line, right scale in the chart below). But due to the Incredibly Spiking US National Debt ($26.5 trillion on July 31), their share of this debt (red line, right scale), after plunging in June to the lowest since 2008, only held steady in July, at 26.7%: America’s biggest foreign creditors, Japan and China: Japan increased its holdings in July by $32 billion, to a total of $1.29 trillion. Over the 12 months, its holdings increased by $162 billion. China whittled down its holdings further in July. Over the 12-month period, its holdings fell by $37 billion, to $1.07 trillion, following the trend (green line) since 2015, with exception of the plunge and recovery around its capital-flight phase. Combined, Japan and China held 8.9% of the Incredibly Spiking US debt, the second-lowest share in many years, with the lowest having been in June (8.8%): The next 10 largest foreign holders (in parenthesis their holdings as of July 2019): UK (“City of London” financial center): $425 billion ($406 billion) Ireland: $330 billion ($257 billion) Hong Kong: $267 billion ($235 billion) Brazil: $265 billion ($309 billion) Luxembourg: $265 billion ($229 billion) Switzerland: $251 billion ($228 billion) Cayman Islands: $213 billion ($233 billion) Belgium: $211 billion ($203 billion) Taiwan: $210 billion ($179 billion) India: $195 billion ($160 billion) This list is studded with tax havens and financial centers, including those where US corporations have mailbox entities that hold assets in an effort to dodge US taxes. So some of these “foreign” holders are US entities, such as Apple in Ireland, with accounts registered in their mailbox operations there. Missing from this list are Germany and Mexico, which hold only $78 billion and $48 billion respectively in Treasuries, despite their mega-trade surpluses with the US. US government funds The Social Security Trust Fund, pension funds for federal civilian employees, pension funds for the US military, and other government funds shed $15 billion in July and $21 billion over the 12-month period, which whittled down their holdings to $5.89 trillion (blue line, left scale), amounting to 22.2% of total US debt (red line, right scale). Even though the Treasury holdings of these government pension funds have more than doubled over the past 20 years, their share, given the Incredibly Spiking US National Debt, has dropped from over 45% in 2008 to 22.2% in July: These Treasury securities, often called “debt held internally,” are assets that belong to the beneficiaries of those funds. They’re an actual debt of the US government, despite the old nonsensical saw that “it doesn’t count because we owe this to ourselves.” These are funds that the US government owes American beneficiaries, just like the funds that the US government owes Japan and China. The Federal Reserve. In July, the Fed added $89 billion to its Treasury holdings, bringing its total holdings at the end of July to $4.29 trillion (blue line, left scale), amounting to a record of 16.2% of the Incredibly Spiking US National Debt (red line, right scale) – that’s the portion of the US debt that is has monetized. Over the 12-month period through July, the Fed added $2.18 trillion in Treasuries to its holdings, most of it since March, doubling its pile: US Commercial Banks. US commercial banks added $66 billion in Treasury securities to their holdings in July, and $228 billion over the 12-month period, to a total of $1.14 trillion, according to the Federal Reserve’s data release on bank balance sheets, amounting to 4.3% of the total US debt. Other US entities & individuals Above, we covered all foreign investors, plus US government funds, the Fed, and US banks. What’s left are other US investors – both individuals and institutions such as US bond funds, US pension funds, US insurers, cash-rich US corporations, private equity firms to park cash, hedge funds to use them in complex trades, etc. During the market tumult, they all piled into Treasury securities, some possibly in panic, others to engage in or get out of risky trades, adding $1.8 trillion over the three-month period through June. But in July, they shed $93 billion, bringing the holdings down to $8.1 trillion (blue line, left scale), amounting to 30.6% of total US debt (red line right scale). The surge in holdings was followed by the spike in the US debt, and the percentage that these investors held in July (30.6%) was roughly level with their share at the end of the year (30.5%): The chart below shows Treasury holdings by category of holder combined into one chart, with the US debt piled up in all its majesty: Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

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The Government Has Released Their Initial Plans To Force a Vaccine on EVERYONE

Earlier today, the Trump administration released its plans to vaccine everyone in a short time.  Three potential vaccines are currently in Stage 3 trials in the United States and could be ready in weeks, President Donald Trump said Tuesday. Time is running out. And Trump has the military lined up and ready to distribute this vaccine to the public, whether you want it or not. The plan is to distribute the vaccine first to health care and other vital workers, as well as those most vulnerable (likely the older populations). After production ramps up, it will be made available to all Americans who want it. If you decide you don’t want it, don’t worry, the military will help convince you. The Department of Defense and federal health agencies have outlined plans for a coronavirus vaccine, which includes having them available for free for all Americans. We have warned that the DoD is about to become the enemy of the public. Instead of committing terrorism abroad, they will be going that here. Prepare yourself. The Pentagon & CDC Will Join Together To Mass Distribute The COVID Vaccine This toxic concoction will also be “free.” The government says they will foot the bill (borrow money from the Federal Reserve) to get everyone vaccinated, according to the Watauga Democrat.  “Preparing for the implementation of the safe and efficacious COVID-19 vaccine programs is a critical next step in the efforts to protect Americans and reduce the impact of COVID-19 and restore our normal way of life,” Centers for Disease Control and Director Dr. Robert Redfield said Wednesday, according to CNN. The plans came in the form of a report to Congress and a “playbook” for states and local governments, according to the Associated Press and Fox News. The agencies are looking at January for a potential beginning of a vaccination campaign, although it remains possible that this could come later this year. According to the Centers for Disease Control and Prevention’s playbook, the vaccination campaign will be “much larger in scope and complexity than seasonal influenza or other previous outbreak-related vaccination responses.” President Trump said in a “Fox & Friends” interview Tuesday that a vaccine could be approved “in a matter of weeks.” Time is almost up. Once this vaccine gets into your bloodstream, you cannot take it back out. This one is different from every other vaccine made, and it’s going to be necessary if you want to get groceries or leave your house. Mandatory or not, they will do what they can to convince you to take this vaccine. Stay alert and be prepared. President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now!

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Americans Are CONSTANTLY BOMBARDED With Propaganda

Mac SlavoSeptember 16th, 2020SHTFplan.com It’s been often said that people were shocked as they watched Nazi Germany descend into complete fascism without anyone putting up a fight, and now, we are watching Americans do the same thing. It has a lot to do with the constant brainwashing and propaganda bein shoved on people all day, every day, manipulating them into being compliant with anything government commands. Since the fear-mongering of COVID-19 started, there has been non-stop “beast mode” propaganda everywhere. There are media puppets actively pushing Big Pharma’s drugs and trying to convince everyone to take the coronavirus vaccine. This goes for all media outlets. It is becoming too obvious to ignore unless you’re willfully trying. Trigger warning: this video calls out right-wing propaganda pushing for the vaccine. If you dislike hearing the truth about the left vs. right paradigm lie, you may not want to watch.  It shouldn’t matter “which side” is saying you should take the vaccine. The fact is, everyone in media, politics, and big Pharma, want you vaccinated. This should be a massive red flag.  “The bottom line, and the tenor of this whole thin, is that they want to convey to you that if you question this, if you question Big Pharma, if you question the biotechs, if you question the Gill Bates of the world, if you question science and all the experts they roll out, and especially if you question politicians…then we can’t have any of this critical thinking stuff.” Ivanka Trump Says She’ll “Take The Vaccine” on The View These talking heads in media actually want to believe that if you don’t take the vaccine, you’re a democrat suffering from “Trump derangement syndrome.”  Is it starting to make sense of how the media plays both sides in this illusion? The left vs. right paradigm is nothing more than theatre designed to distract you.  This segment was set up to play Trump supporters, and brainwash them into getting the vaccine. Why The Federal Reserve Chose Trump Over Hillary In 2016 Truth is treason in the empire of lies, and we have reached a point where we have some critical decisions to make. We can go the way of the New World Order and just be docile slaves forever, or we can wake up and live as free and sovereign human beings we were meant to be. The choice is ours. President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now! Author: Mac SlavoViews:Date: September 16th, 2020Website: www.SHTFplan.com Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats. SHTFPLAN is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

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Coronavirus Debt to Swallow Entire U.S. Economy – Swamponomics TV

Andrew Moran Economics Correspondent at LibertyNation.com. Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of “The War on Cash.” You can learn more at AndrewMoran.net.

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Cost of Living Continues to Rise RAPIDLY As Americans Struggle to Get By

Mac SlavoSeptember 15th, 2020SHTFplan.com The Bureau of Labor Statistics just released new data that says the cost of living is going up as the main street economy crashes and the dollar loses its purchasing power. This also comes as more and more Americans continue to struggle to get by in the aftermath of the government’s reaction to the scamdemic. The new numbers released are comparing the consumer price index, which is essentially the price of common things we pay for all averaged together, of 2019 to that of 2020. The number has gone up. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis after rising 0.6 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment. –BLS.gov Since the Federal Reserve, the central banks, is continuing to bail out corporations and create money out of thin air, inflation and costs for basic necessities will continue to rise. Some areas of the economy are being hit harder than others too. The cost of food has jumped in the Bay Area of California, propelled by meat, poultry, and fish prices that have skyrocketed, joining soaring electricity costs, according to a report by Mercury News. Meat, fish, and poultry prices have soared a whopping 17.4 percent over the past 12 months ending in August in the Bay Area. This means that these prices are at a super-heated pace that’s 11 times greater than the region’s cost of living during the same one-year period. Because the cost of living is going up as the economy is struggling for everyday folks, it’s important to make a plan. Preparedness should include financial emergencies. Even though the dollar is crashing, having a little extra money on hand to be able to pay 3-6 months’ worth of bills will help you get through tough times. All it would take to eliminate the middle class is one more lockdown. Financially Prepped: The Importance of an Emergency Fund President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now! Author: Mac SlavoViews:Date: September 15th, 2020Website: www.SHTFplan.com Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats. SHTFPLAN is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

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WARNING: COULD GET NASTY FOR SILVER!

This article was contributed by Lior Gantz of the Wealth Research Group.  I know many want to hear that silver is ON ITS WAY to hitting $50/ounce at the SNAP OF A FINGER, but it might take a while for that to occur. In March, $30tn worth of stocks and bonds WAS SOLD, creating enormous demand for dollars. This squeeze caused the paper price of silver to drop to $12/ounce, EVEN WHILE the physical metal was selling for double that amount. The spread was big as it ever was. The return of liquidity to markets, ORCHESTRATED by the Federal Reserve, reassured businesses and individuals the world over that this isn’t a credit contraction. Instead, they can safely resume MARKET ACTIVITY and they did, with bullish fury. Millennials and, in general, retail investors, who have either been staying at home, laid-off or put on paid/non-paid leave, have been looking for ways to replace their NORMAL WAGES. They have turned to the stock market, a phenomenon that has pushed valuations for certain stocks to LA-LA-LAND. This recent correction in the NASDAQ has brought down some of the greed factor, but it’s still here and won’t be COMPLETELY DIMINISHING for the foreseeable future. Courtesy: Zerohedge.com Market forecasters thought that once the professionals STARTED SELLING, these retail traders would be shaken out and run back to their caves, but as you can see, hedge funds have begun buying, NOT SELLING. What’s really interesting is that the wealthy and the institutional money have been either SELLING or MARGINALLY BUYING throughout this period, certain of themselves that cash is better than owning stocks. While central banks have been SHOWERING LIQUIDITY, the wealthy have been sitting in the stands LIKE SPECTATORS, viewing the match from the sidelines. This has been A HUGE MISTAKE! Contrary to their tactic, we’ve not been fighting with the FED and, INSTEAD, have been buying LEFT AND RIGHT, which has resulted in MASSIVE GAINS. Courtesy: U.S. Global Investors Is it time to RECONSIDER BULLISHNESS? The true answer is that it’s an ETERNAL QUESTION that an investor ought to ask himself on a daily basis. We believe that the STRONG BOUNCE is largely over, in both silver and tech stocks. The justification for higher prices will come after the UNKNOWNS become known: Who will win the elections? American historian Allan Lichtman, who has correctly predicted all election results since 1981, save for Al Gore’s loss (cheated by voter fraud and voter count suppression in Florida, though), has predicted A BIDEN VICTORY- we shall see… If that happens, corporate taxes and probably CAPITAL GAINS taxes are going higher, thus companies will be worth less. Consider that possibility for a second, because it’s one reason that Ray Dalio is diversifying OUT OF U.S. EQUITIES and into other regions. Courtesy: Zerohedge.com Could anyone have predicted how much FANGMAN (Facebook, Amazon, Netflix, Google, Microsoft, Apple, and Nvidia) would be COLLECTIVELY WORTH, driving the indices into all-time highs, even while the other 490 companies are relatively flat? NO! This is the value of owning AN INDEX FUND! Now, though, with the index at all-time highs and with this HUGE BOUNCE back, the best investors are looking at the DICHOTOMY, which is to say that they’re investing in the distressed industries, which are cheap, not solely in the ones that enjoyed a STRONG TAILWIND from stay-at-home orders. With regards to silver, you can see that investors are taking profits, AT THE MOMENT (the red lines are monthly NET OUTFLOWS): Courtesy: Zerohedge.com This is GOOD if you understand that it means that there’s NO BUBBLE in silver, but it’s BAD if you leveraged and are overweight on silver at present. Silver is up more than 100% since March. Trade with AGGRESSIVE PATIENCE; in other words, let opportunities come to you! President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now!

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The Fed Bought No Bond ETFs (None, Zero, Zilch) in August. ETF Holdings Actually Fell. Bought Almost No Corporate Bonds

The Fed stepped away from the market after its jawboning created the biggest bond bubble ever. By Wolf Richter for WOLF STREET. The Fed started buying corporate bond ETFs for the first time ever in May and corporate bonds for the first time ever in June. These programs had been ballyhooed with enormous fanfare in the media – that the Fed would load up its Special Purpose Vehicles (SPVs) with $750 billion of corporate bonds and bond ETFs, including junk-bond ETFs. These pre-announcements and announcements and announcements of expansions of prior announcements triggered the biggest corporate bond bubble and junk bond bubble in history before the Fed even started buying. Bond prices surged and yields plunged and ETFs soared, and junk bonds soared and their yields plunged, and junk-bond ETFs soared as everyone was trying to front-run the Fed’s massive purchases. So the Fed accomplished its handiwork – creating a bond bubble and bailing out asset holders during the worst economy of in a lifetime – mostly by jawboning, and actually bought very small amounts of bonds and bond ETFs through July. It really just dabbled in them. But then Tuesday afternoon, the Fed disclosed that over the period of July 31 through August 31: 1. It bought no bond ETFs – and I mean, zero, none, zilch, nada, null. And its spreadsheet was devoid of the usual entries of names, tickers, CUSIP numbers, dates, and mounts. Instead, it said, “No purchases were made over the current reporting period.” The Fed had not bought a single share of anything, not even symbolically. Screenshot of the spreadsheet: 2. Its bond ETF holdings actually fell by $64 million, or by 0.7%, over the period through August 31, to a total of $8.67 billion, as the market value of these ETFs ticked down a smidgen. This ETF debacle comes after the Fed had only bought $520 million in bond ETFs in July, in a sign that it was already winding down this operation. 3. It bought almost no corporate bonds – and I mean, just a minuscule $456 million with an M, of corporate bonds, which by Fed standards – having tossed out the number $750 billion with a B and measuring its balance sheet in Trillions with a T – is not even a rounding error. 4. Its holdings of corporate bonds ticked up even less because about $21 million of previously purchased bonds matured and were redeemed by the companies, and the total balance of its corporate bond holdings increased over the period by only $435 million, to a total of $3.99 billion. The Fed’s total corporate bond and bond ETF holdings rose by only $370 million over the period, to $12.66 billion – a far cry from the hoped for $750 billion. The Fed’s jawboning had done all the heavy lifting. It created enthusiasm for even risky bonds, and the Fed, by just using its “communication tools,” as it likes to say, was able to manipulate the entire bond market into a frenzy. For example, the junk-rated Ford Motor Co. bonds show how little the Fed bought, inconsequential amounts essentially, but those bonds soared anyway, and the yields plunged, thanks to jawboning. The Fed holds $15.5 million in bonds issued by Ford Motor Co., spread over two bonds, a two-year note and a five-year note, that Ford issued on April 22, 2020. The Fed accumulated its position in various smallish trades over time. Ford is junk rated because it had enormous problems and huge losses before the Pandemic, and then the Pandemic made everything a whole lot worse. The Ford five-year 9.0% notes, CUSIP number 345370CW8, traded at a yield of 10.2% shortly after being issued on April 22. Then, amid announcements and hope-mongering about the Fed’s entry into the corporate bond market, the price began to surge and the yield began to drop. One of those trades in the five-year 9.0% notes, according to the Fed’s data disclosed a month ago, took place on July 2 for $2.2 million. The Fed paid 109.2 cents on the dollar. The bonds then soared to 119 cents on the dollar by August 10, for a yield of 4.3%. That’s less than half of the yield in April! Since then, the bond has backtracked and on Tuesday closed at 114 cents on the dollar, for a yield of 5.39%. (Chart via Finra-Morningstar): This shows how powerful the Fed’s tool of jawboning is. And it also shows that the Fed doesn’t think it’s necessary to drive the credit market bubble any further. Fed Chair Jerome Powell has explained this many times – that the Fed has succeeded in achieving its objective of creating loose credit market conditions. It has in fact succeeded in blowing this bubble in the shortest amount of time, and the Fed itself is perhaps stunned by the magnitude of the bubble and its own success. And it stopped buying ETFs in July, and it trimmed it corporate-bond purchases to near nothing. Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

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Have You Noticed How Push-Back Against Powell-Fed’s Actions Is Getting Louder in the Mainstream Media, from NPR to CNBC?

Still a lot of fawning coverage, but big dissenters are now given prominent spots, and loaded questions are used to politely hammer Powell into telling obvious nonsense. By Wolf Richter for WOLF STREET. This is an interesting turn of events, in a world of Fed-fawning mainstream media. In one version, the push-back takes the form of loaded questions about asset bubbles and wealth inequality caused by the Fed’s asset purchases. Fed Chair Jerome Powell then answers, following what looks like a script because these loaded questions are now being thrown at him regularly. He admits that the Fed’s policies have increased asset prices, then says the Fed as a matter of policy doesn’t comment on asset prices, and hence cannot comment on asset bubbles, but then assiduously denies that this increased wealth of the asset holders, which he admits the Fed has engineered, widened the wealth inequality to the majority of Americans who hold no or nearly no assets, and who got shafted by the Fed. It’s like getting pushed on live TV into saying that, yes, indeed, two plus two equals three! This happened many times, most notably during the July 29 FOMC press conference when a Bloomberg reporter pushed Powell on that (transcript of my podcast on the Fed’s role in wealth inequality); and during the interview with NPR which aired on September 4, when he was pushed on both, asset bubbles and wealth inequality. In another version, the push-back in the mainstream media takes more accusatory forms expressed with exasperation and dotted with exclamation marks. In early August, notable push-backers were former president of the New York Fed William Dudley and Bloomberg News which carried and promoted his editorial. Dudley said that the Fed purchased these huge amounts of Treasury securities and mortgage-backed securities in March to bail out hedge funds, mortgage REITs, and others through the backdoor as the Treasury market went haywire. Hedge funds, he wrote, “were caught in an untenable trade of being long cash Treasuries and short Treasury futures,” and those highly leveraged huge trades began to blow up (transcript of my podcast). And this, Dudley wrote in the editorial, “brings us back to moral-hazard problem: investors win during good times (they can assume more risk and earn higher returns) while the Fed and the U.S. Treasury (ultimately taxpayers) assume part of the downside risks when there is trouble in financial markets. This is likely to encourage even greater risk-taking down the road, making it more likely that investors and markets will need to be rescued in the future,” he said, adding, “This doesn’t seem to be a good road to stay on.” And this morning it was CNBC, which interviewed hedge-fund founder-manager Stanley Druckenmiller on Squawk Box, which has a large audience, and the video spread across the internet, and most financial publications covered it, multiplying the reach of the message. And by airing the concerns of a famous investor, like Druckenmiller, on the show, CNBC spread the word far and wide. Druckenmmiller didn’t get into wealth inequality, but he got into asset bubbles and the “massive, massive raging mania in financial assets,” as he said, that the Fed has caused, the “de facto MMT,” and how this was “dangerous.” Here is my transcript of portions of his take: “I think the merging of the Fed and the Treasury, which is effectively what’s happening during Covid, sets a precedent that we’ve never seen since the Fed got their independence. And it’s obviously creating a massive, massive raging mania in financial assets, and as you just pointed out, Joe, it has not spilled over to Main Street.” “I would just say that I hear a lot of people on the air lauding Jay Powell, saying he saved the world. And I do think that he did a great job in March. But I think the follow up has been excessive.” “And I just want all you guys cheering him on to remember the Maestro in 2005, and how that worked out. Look, everybody loves a party,” he said, “but inevitably, after a big party, there’s a hangover, and right now we are in an absolutely raging mania.” He then goes on to explain just how crazy markets have gotten. “And what the Fed has done, in my opinion, if you listen to the Jackson Hole speech on the framework, it’s quite amazing. It sounded like an apology because inflation has been 1.6% instead of 2% the last 10 years. Well, their mandate is price stability, where I think 1.6% is. They hit a home run. But they actually sound like they’ve been too tight the last 10 years.” “And look what they’re risking in terms of financial stability to hit that 2% mark. My own sort of central case is that for the first time in a long time, I am actually worried about inflation.” “De facto MMT, which is what we are doing right now, because we actually have the Chairman of the Federal Reserve – with a three-and-half-trillion-dollar deficit – out lobbying Congress to do more spending, and guaranteeing to those of us on Wall Street that he’ll underwrite it.” “I think it’s dangerous. I think we could easily see 5% to 10% inflation in the next four or five years. Ironically, I think he has also raised the risk of deflation…. Every [deflation event] was proceeded by an asset bubble, and he has created this massive asset bubble.” “So ironically, he has raised the two tails: The risk of inflation is much higher, I’d say, than it was 12 or 24 months ago; and the risk of deflation, I’m talking like minus 3 or 4%, because if things don’t work out, and we get a bust here, that is a…” He didn’t complete the sentence, and maybe that was a good thing. “I think the odds here of us hitting the sweet spot – which I would say is around the 2% area, which is where we’ve been – have actually gone way down with the Fed activity.” Whether it is due to these forms of high-profile push-back, or whether it’s because the Fed actually has come to see on its own what it is fabricating with its policies, the Fed has effectively backed off already with its asset purchases. Its total assets peaked in June and have declined since then. And yesterday it disclosed that it had stopped buying corporate bond ETFs entirely back in July, and that it has almost wound down its corporate bond purchases. Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

Continue Reading Have You Noticed How Push-Back Against Powell-Fed’s Actions Is Getting Louder in the Mainstream Media, from NPR to CNBC?

“Don’t Fight the Fed?” Fed’s Assets in Week 13 Since Peak-QE

SPVs to nowhere. By Wolf Richter for WOLF STREET. Total assets on the Fed’s balance sheet for the week ended September 9, released this afternoon, fell by $7 billion from the prior week, to $7.01 trillion. Since the peak on June 10, total assets have declined by $158 billion: The Fed has numerous asset accounts on its balance sheet that are unrelated to QE. Some of them fluctuate from week to week. Others, such as its holdings of gold or SDRs (IMF’s Special Drawing Rights) do not fluctuate. But to see where the Fed is going with QE, we look at the five major QE-related categories on the Fed’s balance sheet: Repurchase Agreements (repos), Special Purpose Vehicles (SPVs), central bank liquidity swaps, mortgage-backed securities (MBS), and Treasury securities. In total, balances of the five categories combined fell by $11 billion on today’s balance sheet compared to last week: Repos: unchanged (at $0) SPVs: -$2 billion Central Bank Liquidity Swaps: -$17 billion MBS: unchanged Treasury securities: + $7 billion Repos: at $0 for the 10th week: Central-bank dollar liquidity-swaps: -$17 billion. The Fed provided dollars to a few other central banks with these swap lines, but they are falling out of use and balances declined by $17 billion during the week, to $72 billion, from a peak of $449 billion in May. The Bank of Japan accounts for 79% ($56 billion) of the remaining total. Swaps with the ECB fell to $6.5 billion. Swaps with the Bank of Mexico have been at $4.9 billion since July. The central banks of Switzerland, Singapore, and Denmark had small balances left. The rest are gone: SPVs: -$2 billion, to $198 billion; -$16 billion since July 1. The Treasury Department provides the equity capital to the SPVs, and the Fed lends to them. The SPVs then buy assets. The amounts shown on the Fed’s balance sheet include the loans the Fed made to the SPVs and the equity capital contributed by the US Treasury: PDCF: Primary Dealer Credit Facility MMLF: Money Market Mutual Fund Liquidity Facility PPPLF: Paycheck Protection Program Liquidity Facility, with which the Fed buys PPP loans from banks CPFF: Commercial Paper Funding Facility CCF: Corporate Credit Facilities: Buy corporate bonds, bond ETFs, and corporate loans. MSLP: Main Street Lending Program MLF: Municipal Liquidity Facility TALF: Term Asset-Backed Securities Loan Facility SPVs to nowhere. For example, the CCF (yellow) with which the Fed buys corporate bonds and bond ETFs, is showing a balance so of $44.8 billion, essentially unchanged for weeks. On September 9, the Fed disclosed that it had bought not a single ETF in August, and that ETF balances actually ticked down, and that its balance of corporate bonds edged up by only $435 million with an M. This is an indication that the Fed has essentially stepped away from the corporate bond market. Its total holdings of corporate bonds and bond ETFs amounted to $12.7 billion at the end of August. The remaining funds in the CCF account are unused. MBS: unchanged at $1.95 trillion, level with June 24. The balance of MBS shows an erratic pattern due to two factors that push it in opposite directions: One, holders of MBS receive pass-through principal payments when mortgages are paid off, and in today’s refinancing boom, this torrent of principal payments reduces the MBS balance by large amounts every month. And two, the Fed’s MBS purchases take 1-3 months to settle, which is when the Fed books the trades. Since June 24, the Fed’s MBS balance has essentially remained flat at $1.95 trillion, as the Fed’s purchases just replaced the declines from the pass-through principal payments: Treasury securities: +$7 billion, to $4.39 trillion. Since late May, the Fed has increased its Treasury holdings at an average pace of $14 billion a week. This is the net of purchases minus maturing securities that the Treasury Dept. redeems. This week’s increase of $7 billion was within but at the low end of the range: So it seems the Fed has pulled back from bond-buying. Its Treasury purchases would amount to QE of similar magnitude as seen during QE-3. But the government is issuing so much debt so rapidly to raise the funds for is various stimulus efforts – counted in the trillions – that the Fed is essentially just funding a slice of that spending by buying Treasuries. And that seems to be a signal that the Fed is letting the markets fend for themselves for now. How does that old saw go? Don’t fight the Fed? There is still a lot of fawning coverage of the Fed in the media, but big dissenters are now given prominent spots, and loaded questions are used to politely hammer Jerome Powell into telling obvious nonsense. Read… Have You Noticed How Push-Back Against Powell-Fed’s Actions Is Getting Louder in the Mainstream Media, from NPR to CNBC? Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

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