Segment 1: Trading with the Greats SEGMENT BEGINS AT 00:41 A rules-based approach to trading has been economist/trading coach Jerry Robinson’s clarion call for many years. Listen as he shares seven important trading rules he has learned and adopted from three...
by Jerry Robinson | FTMDaily Editor-in-Chief
HOUSTON, June 2
Wednesday was a rough day in the financial markets.
- The Dow Jones Industrial Average fell nearly 280 points, which was the biggest point decline since June 4, 2010.
- The U.S. factory sector — which has been a growing bright spot in the U.S. economy — reported its biggest monthly slowdown since 1984.
- The U.S. unemployment outlook is becoming more dismal with May’s official report expected to be released this Friday.
- U.S. housing prices have fallen by 5% since last year, while pending and existing home sales numbers are weak.
- And growing turmoil in the Eurozone is continuing to create global financial instability.
All of this gloom and doom is exactly what the Federal Reserve was hoping for as we neared the end of June. Why? Before I explain, you should understand something about the Fed. That is, they do not like the spotlight. And the spotlight is all that the Fed has been dealing with since the 2008 financial crisis began. And while the Fed doesn’t mind cloaking its destructive monetary policies in the guise of financial salvation, it does not like its current role of Public Enemy #1. The Fed has been successful since its inception in 1913 precisely because the American people have ignored it. Not so today. Media commentators, who didn’t even know what the Federal Reserve was before the 2008 crisis, now make consistent reference to “Bernanke” and “QE2” more often than not. In fact, it has become fashionable to blame the Fed for the U.S. financial crisis.
This is unacceptable to the powers that be. The last time that the U.S. central bank had so much real grassroots opposition was back in the 1830’s. In those days, President Andrew Jackson singlehandedly destroyed the Second Bank of the United States (the 1830’s version of the “Federal Reserve”) due to its obvious fraud and corruption.
Today, however, both Republicans and Democrats do little more than give lip service to bringing down the destructive policies of the Fed.
Get Ready for QE3
The press portrays the Fed as a conflicted institution. It shows Bernanke as a man who is wringing his hands in angst on what to do next to “save” the U.S. economy. It’s all a charade. It’s how the game is played. The Fed needs to be perceived as if it is on America’s side.
However, what the Fed actually desires is for the economy to take a nice dip. You don’t need a doctor when you are healthy. You only need one when you are sick. And the Fed can only get its claws deep into the U.S. economy when it is “needed.”
Since the last round of QE (QE2), the U.S. economy has buoyed. QE2 has not been able to mitigate the rise in U.S. unemployment or the stagnancy and decline in housing prices. However, the money pump has created a wealth effect in a few key areas: retirement plans, investment portfolios, commodities, etc. So there is some semblance that the Fed has “helped.”
A few weeks ago, the Fed would not have dared utter the words “QE3.” Why? It helps if you think of the Fed as a drug pusher. Pushers don’t “market” their drugs. Instead, they rely upon the addicts to come crawling back for more. The Fed doesn’t need to push QE3 on the public. This would only bring more attention to its true intentions. Instead, the Fed will let the public demand it.
Start paying attention to the headlines as we near the end of June and as we move into the summer. Note the mainstream media inspired “debate” on whether QE3 is necessary. “Should we or shouldn’t we?” will fill the airwaves.
But it is all a game. The pusher knows that you will be back for more because you can’t get enough. The Fed does too. All you have to do is ask.
Here at FTMDaily.com, we are working hard to create solutions for you during these difficult times of economic crisis. We invite your feedback and comments on how we may serve you better. Feel free to contact me directly at firstname.lastname@example.org.
In The News Today…
1. MARKET WATCH: The S&P 500 traded at a six-week low, taking out its lowest point for May at 1,311.80, as nervous investors focused on key market levels to manage risk a day after stocks’ worst one-day fall in nearly a year.
3. HOUSING WATCH: Fixed mortgage rates slid for the seventh consecutive week, but the lowest rates of the year have done little to lift the struggling housing market.
4. OIL WATCH: OPEC is considering raising oil supply targets by as much as 1.5 million barrels per day (bpd) when ministers meet on June 8. This would be the first supply target increase since 2007 in a move that could weaken $100 oil prices and lessen the drag of high energy costs on global economic growth.
5. SUPERBUG SPREADS: An entirely new super-toxic bug is causing a frightening food poisoning outbreak that has sickened at least 1,600 people and killed 18, researchers and global health officials said Thursday.
Jerry Robinson – FTMDaily.com
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.