For
weeks now, investors have invested based on the idea that the Fed would
announce some major program during its Fed’s June FOMC from June 19-20. The
whole notion was absurd for several reasons.
First
off, even the Fed doves such as Charles Evans and Bill Dudley have begun to
state in public that the
consequences of more QE outweigh the benefits. Bernanke’s been saying this since May 2011. The fact that
his more dovish colleagues now agree with him makes the likelihood of more QE
minimal.
Moreover,
the Fed has already become a political hot button for the 2012 Presidential
Election. For the Fed to launch a new major program so close to the election
now would be a death knell for Obama whom the Fed has been moving to support
throughout his Presidency (Obama did re-elect Bernanke after all).
Indeed,
all of the primary arguments for QE have now been rendered moot. In terms of
liquidity, banks are sitting on over $1.5 trillion in excess reserves. Interest
rates are at record lows. And as for boosting the economy, the Fed now realizes
that QE pushes the cost of living up which will in turn make the Fed a target
of political outrage (again, this is an election year).
Finally,
we have to consider the Spanish €100 billion bailout.
NO
In
simple terms, we’ve gone from a time in which the Fed can unveil new massive
programs to help the US economy to a time when the Fed can only act when it
absolutely has to (a major bank
collapses or the system begins to collapse a la 2008).
We’re
now seeing the same game occurring in
They
won’t.
The
reasons are obvious. The EU’s less solvent countries want free money.
As we’ve
already seen with
Spain will not immediately implement
the International Monetary Fund’s latest recommendations, which include cutting
government workers’ wages further, because they are nonbinding advice, the
prime minister said Saturday.
The
IMF is one of three organizations Mariano Rajoy’s
government turned to for an assessment of the state of
http://www.businessweek.com/ap/2012-06/D9VEB8UG1.htm
In
simple terms,
With that in mind, I believe the
market has topped and we will be heading lower in the coming months,
culminating in the collapse of the EU in its current form and very likely the
EU banking system.
If you have not already take steps
to prepare for this, I highly recommend doing so now.With that in
mind, I’ve begun positioning subscribers of my Private Wealth
Advisory for this very possibility. We’ve already locked in
over 30 winning trades this year by finding “out of the way” investments few
investors know about and timing our positions to benefit from the various
developments in
