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That's why the Fed needs to stop hiking before a system collapseThis is a quite interesting chart showing a ratio (black trend-line) of the Interest Rate, 5Y Yield and Federal Debt trading within a Megaphone pattern since the 1990s. Its (Higher) Highs have naturally coincided with peaks in Rate Hikes (red trend-line). The last peak was on October 2018 and currently the ratio just broke within that range again (red area). This shows that the Fed is on a timer and has only limited time to act and stop hiking before they jeopardize collapsing a system that is in place for three decades now and brings balance to the market. The S&P500 (blue trend-line) has seen great periods of growth and stability systemically with this in place as long as the Fed doesn't go off limits with hiking. Do you also think its time they act now and stop or at least ease this round of hiking before total collapse? -------------------------------------------------------------------------------------------------------- Please like, subscribe and share your ideas and charts with the community! --------------------------------------------------------------------------------------------------------
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FRED:FEDFUNDS
by TradingShot
46
Real National Debt - Not as high as we think?When you take the total public US Federal debt divided by gold you get this chart. Interestingly it shows we are in the middle of several year range. Maybe our current debt isn't as bad as we thought? Note that I call this our "Real" National Debt because gold helps take out all the money printing and serves as a better store of value and/or currency. 2018 shows the highest ever 'real' debt according to this data which was under President Trump.
FRED:GFDEBTN
by JSiminoski
The myth of hyperinflation series- #3. Fed's effectivenessHow effective are Fed's monetary policies and tools? Fed has three simple goals- Grow GDP, keep inflation rate steady and keep the unemployment rate low. Some argue that Fed's perceived power over the market was exposed during several occasions- #1. During the 2008 in the midst of sub-prime mortgage crisis, the market continued to plunge despite the Fed's efforts to bail out Fannie & Freddie and other financial institutions, implement the Troubled Asset Relief Program (TARP) and issue $800b stimulus package. The market finally stopped the bleeding in early March 2009. #2. When Fed ended the QE3 in 2014 by announcing its attention to raise the interest rate and slash the Fed balance sheet, many people believed market would crash. Instead, market shot up to ATH in 2015. #3. This year during the onset of the Covid-19 crisis, Fed started out by cutting the rate by half percentage to no avail. Afterwards, Fed intensified its intervention effort by reducing Fed fund rate to zero. Nonetheless, the market tanked another 15% before it hit the bottom. One can point to the Fed-induced booming housing market in early 2000 as the major factor for the fast economic recovery after the Dot.com bubble and uses it as the counter example. Market is driven by crowd sentiment, but crowd sentiment, which in turns, is partially driven by Fed's decision. It is a chicken and egg conundrum. They both influence each other, but the degree to which each influences one another is impossible to discern. The safe conclusion to draw is that it would be overly optimistic to rely on Fed to get us out of the next financial crisis unscathed as it will take more and more stimulus package to get the job done. The best it can do is to mitigate the severity of damage. Next, let's examine some of the conditions and criteria that are related to inflation.
FRED:GFDEBTNEducation
by Libratus
1
The myth of hyperinflation series- #1 Fed's decisionEven as Fed balance sheet keeps climbing up and U.S takes on more national debt in the current low-interest rate environment, I am not eager to jump to the premature conclusion and entertain the idea of hyperinflation. I'm not saying that it is improbable, I am just saying that it is an unlikely and low-probability event. Yes, it is a fat tail risk that shouldn't be overlooked because it comes with the devastating consequence. However, several conditions and criteria need to be met before we can even realistically begin to talk about the probability of hyperinflation. Federal Open Market Committee's (FOMC) recent decision to keep the fed fund rate unchanged within the target range of 0-0.25% pretty much signaled FED's intention to hold rate effectively to zero until 2022, for at least two years. why? Based on the CPI of the past decade. Since great recession ended in mid-2009, inflation has stayed below 2% for all but two years, therefore; Fed is more worried about disinflationary risk than inflationary risk. Fed's initiative of "average inflation targeting" is determined to hit 2% inflation while keeping the employment low. Since Fed has been missing its inflation goal for a decade, people speculate that Fed may let the inflation run up to 3% or 4% to make up for it being below 2% for so long, thus triggering and opening the doorway to the potential hyperinflation. While such theoretical risk is not completely unfounded, the fact remains the same that we need to have the inflation first before we can have hyperinflation. Next, we will look at Fed's tools and to what extent Fed can influence the market.
TVC:DXYEducation
by Libratus
4
#DXY ANALYSIS.. The US Dollar Index is currently on the verge of a very critical resistance, #DXY can be considered as an important leading indicator in the course of the markets on a global scale.. The increase of # DXY significantly reduces the risk appetite of investors in the markets and the demand for the dollar increases. In this context, examining the #DXY chart gives serious clues about the fluctuations that may occur in the markets.. If we look at the #DXY chart within the technical framework, we can easily express that the price movements from past to present constitute a structural similarity.. I firmly believe that #DXY is ready to go up, we will wait and see.. 102 is a very important resistance point and, if exceeded, #DXY can reach levels 112 and 120.. Just watch fractals.. The increase in demand for # Dollars in the crisis times from past to present brought strong sales in the stock and commodity markets, and also caused deep depreciation in the developing countries' currencies.. I think markets will become very interesting after 3,4 months.. Please do your own due diligence when it comes to trading.. Invest at your own risk.. I wish you all the best..
TVC:DXYLong
by OguzhanSengor