Recall when the Fed first hinted at the possibility of “tapering” QE4 back on June 19th – i.e., two FOMC meetings ago. This horrific miscalculation sent interest rates soaring; prompting essentially ALL Fed Presidents to immediately back-peddle; i.e., by giving speeches assuring they didn’t really intend to taper; and that – incredibly – the FOMC statement was “misunderstood.” Helicopter Ben himself “completed the circle” on July 10th, when he unequivocally stated tapering was out of the question – and July 17th, when he told Congress, “If we were to tighten policy, the economy would tank.”
That satiated the “taper crowd” for a full month, but come August the “taper talk” again intensified – to a fever pitch – despite my ongoing exhortations to the contrary. Meaningless, manipulated diffusion indices like the “Philly Fed” fluctuated wildly, but HARD economic data like retail sales, durable goods orders, home sales, and mortgage applications plunged – as the miniscule rate increase catalyzed by the Fed’s blunder did in fact “tank” the economy. And today’s news that Caterpillar’s global sales are in FREEFALL only emphasizes the REALITY of the situation – with more “fun” yet to come, I ASSURE you.
Here we are, just two days following the “no taper” statement, and already the jawboning and spin are back with a vengeance. Coincidentally, St. Louis Fed President James Bullard gave a speech at EXACTLY the 8:20 AM EST COMEX open, stating the Fed may do a “small taper” in October – albeit, only if economic data supports such a decision; and here we go again with the insanity. Zero Hedge says the market is “unhappy”; but the FACT is that stocks are flat, Treasuries higher, and only PMs under pressure – with essentially ALL of today’s PAPER losses occurring at EXACTLY the 10:00 AM EST “KEY ATTACK TIME”; i.e., the second the global PHYSICAL market closed for the weekend.
Bank of America’s fall from grace was completed earlier this week when it was banished from the Dow, but we’re expected to listen to their updated assertion that QE tapering will begin in December; while the Fed’s former “mouthpiece” – John Hilsenrath of the Wall Street Journal – once again says the Fed “failed to communicate.” The world has gone MAD – as the MSM tiptoes through the graveyard, catering to the very people destroying it. And all this going on, with nary a peep of last weekend’s ballyhooed U.S./Russia accord postponed indefinitely; major uncertainty heading into this weekend’s German elections; House Republicans threatening to shut the government next week – and for good measure, dramatically reduce food stamp funding and defund Obamacare; or a potentially calamitous “debt ceiling” debate next month.
There’s a reason public trust in government is plunging, as the realization of who really runs the country becomes common knowledge; and the faster it spreads, the more rapidly the flimsy scheme to suppress REAL MONEY will end. Either that, or because the collapsing mining industry no longer produces gold and silver!
As for “tapering,” Peter Schiff puts it best below – regarding the Fed’s so-called “strategy”…
Following their playbook, the Fed will likely maintain the pretense that tapering is a near term possibility, and that it has a credible plan to bring an end to QE. In reality, the Fed is stalling for time and hoping the economy will inexplicably roar back to life. Unfortunately, hope is not a strategy.
–Euro Pacific Capital, September 18, 2013
Here at the Miles Franklin Newsletter, all we can do is provide the FACTS. It is up to you to do due diligence about what’s really going on in the economy; and subsequently, to make the appropriate investment decisions. Hopefully, our track record of macro-economic calls convinces you to consider our commentary; as NOTHING is more important to us than empowering you to PROTECT yourself.