Zero Hedge: It is astounding to me how much market commentary I have seen over the last 48 hours placing blame for the market “volatility” (read: 2% off all time highs) on the Omicron variant.
While there are definitely still some uncertainties about the new variant, early indications make it look as though it is not going to be meaningfully deadlier than other variants and that, one way or the other, we will be able to deal with Omicron and see our way through it – just as we did with the Delta variant. That is, unless the government implements more of what one trader calls a “criminal” response to Covid and issues more lockdowns and mandates.
While Omicron uncertainty has likely contributed slightly to market volatility, I don’t think it is the driving force behind it. Rather, I believe that current volatility is a result of Jerome Powell’s surprising, and so far unrelenting, hawkish stance that a taper and rate hikes look to be necessary.
In fact, several Fed governors have commented over the last 48 hours about potentially accelerating both rate hikes and tapering. This language, as I noted days ago, is an admission that the Fed has lost control of inflation.
In fact, it looks as though inflation has gotten so bad that the Fed is going to have to try and attempt to “stick the landing” of presenting hurried tapering and rate hike plans to the market. Of course, the Fed won’t really be able to stick the landing on either because politicians on the left and castrated on-air finance personalities will cry foul as soon as the market has a 10% pullback as a result of higher rates (just as they did on the Covid crash).
But for now, the company line is that we are going ahead with rate hikes and looking to accelerate the taper. This – not the Omicron variant – is what is moving markets. Read More …
Opinion: On October 3, 2018, new Federal Reserve chief Jerome Powell said “we’re ‘a long way’ from neutral on interest rates”, indicating more hikes would be coming. By Christmas Eve 2018 the US stock market cratered 20% …
… falling 2.9% on Christmas Eve alone, until the Fed capitulated and kept the money printing going until now. The Fed plans to reduce $120 billion in monthly asset purchases by 15% for now.
So what is the 2021 taper all about?
Textbook definition: Taper refers to a post-crisis asset purchase plan, where the Fed, at a predetermined pace, starts to slowly and gradually decrease how many assets it’s buying each month (the process of purchasing securities for stimulative purposes is commonly called quantitative easing, or Q.E. or money printing.
Making it simple: The Fed prints new money and buys US treasury bonds driving down interest rates and providing stimulus to the banking economy. The result drives stock prices higher, creating a counterfeit sugar high (inflation) in the markets making divide between rich and poor much wider.
In Revelation 6:5-6. the third judgement of the tribulation, the Black Horse Rider carries scales with which to measure the comparative value of money and food.
When He opened the third seal, I heard the third living creature say, “Come and see.” So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. And I heard a voice in the midst of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine.”
A quart of wheat, representing one person’s food for the day, will cost a day’s wages. But many will be forced to buy barley, a less expensive food usually used for animals. Three quarts of barley will also cost a denarius, but only the 1% will still be able to afford the luxury of oil and wine. Affordable access to economic commerce will be strictly limited.
Now the true picture of hyperinflation emerges, that a person will be forced to work a full day to have enough money to feed themselves for one day.
This economic event can happen suddenly following war and pandemic with the collapse of a major currency. Money printing (QE) will erode the value of a nations currency.
When hyperinflation grips the world, food prices will rise out of control as happened in the post-World War I Weimar Republic, and in Venezuela today.
So here we go again. Christmas 2021 is 3 weeks away. Will Fed Chief Powell capitulate again? Or will the Fed go cold turkey? I’m betting the former.
See our paper The 1% and Revelation: Do not Harm the Oil and Wine HERE