By Gregory Mannarino TradersChoice.net
Let us look at the current situation. We are currently smack in the middle of a global economic meltdown, with round after round of bad economic news hitting the airways daily. Debts and deficits are surging out of control and rising inflation is sparking talks about price controls.
Just last week the economic news here in the U.S. was so bad, with retail sales missing the mark by nearly 100%, that there is now talk that a Fed rate hike may even be off the table—make no mistake, a Fed rate hike will happen this time, moreover, the stock market will rally off of it.
Surging global debt, regardless of anything else, will continue to fuel the current stock market hyper-bubble. Moreover, artificially suppressed rates will also continue to manifest price distortions across the spectrum of asset classes. Understand, the Federal Reserve is determined to continue to inflate, and ANY rate hike moving forward will do NOTHING whatsoever to slow the current rising rate of inflation.
THE POWER OF ANY CENTRAL BANK EXISTS IN THEIR ABILITY TO ISSUE DEBT.
The Grand Deception.
The current narrative coming from the Federal Reserve is this, “by raising rates the Fed will slow the current pace of rising inflation.” Allow me to let you in on a little secret—with the Fed raising rates, inflation will continue to rise.
The Federal Reserve is desperately trying to convince people, with a message being pushed directly by the Propaganda Ministry/MSM, that by raising rates inflation will abate. First off, the Federal Reserve has NO INTEREST at all in slowing the current pace of rising inflation, in fact, they will continue to inflate and the market knows it.
Right now the stock market is pricing in an upcoming rate hike, and with that, we have seen the entire yield curve/yields move higher. The current rising yield environment has caused increased volatility in the stock market especially in the rate sensitive tech sector.
It is my belief, and this is the most likely scenario, that when the Fed actually does raise rates the stock market will gain.
The bottom line for the market is this: the debt hyper-bubble will continue to inflate globally, and this in turn will fuel global stock markets higher. To put this another way, central bank easy money will continue to fuel what is now the most expansive stock market bubble of all time.
Expect the stock market to do the opposite of what most people are being led to believe that it will do.
Generally, when it comes to the market, invariably the crowd is always wrong.