October 2, 2017

An added comment to today’s newsletter…

THROUGHOUT THE ENTIRETY OF 2016 AND THROUGHOUT THE ENTIRETY OF THIS YEAR, THE OVERWHELMING MAJORITY OPINION ON WALL STREET HAS BEEN EXACTLY THE OPPOSITE OF WHAT THE STOCK MARKET ACTUALLY HAS BEEN DOING...AND RIGHT ALONG WITH THAT, I SAY IT WOULD BE A MISTAKE TO THINK THE FED HAS BEEN EXISTING IN SOME SORT OF FINANCIAL COCOON, TOTALLY OBLIVIOUS TO, OR TOTALLY INDEPENDENT OF, ALL THE ENDLESSLY WRONG-WAY BEARISH CRISIS-AND-SLOWDOWN “LOGIC” THE BANKS AND BROKERAGE HOUSES HAVE BEEN SPEWING…QUITE THE CONTRARY…THE FED IS WALL STREET. EVERY ONE OF THOSE FED GOVERNORS (GOOD MEN ALL) TRAVELLED THE SAME ROAD IN THEIR CAREERS AS EVERYBODY ELSE IN THE FINANCIAL INDUSTRY…AND THEY ARE NOT A GROUP OF RADICAL BANKERS AND ECONOMISTS WHO VIEW THE WORLD THROUGH SOME DIAMETRICALLY DIFFERENT LENS THAN ALL OF THE BANKERS AND ECONOMISTS WITH WHOM THEY HAVE BEEN CLOSELY ASSOCIATED…FOR DECADES REALLY. WHETHER THEY ARE ON THE FED…OR ON WALL STREET…THEY BASICALLY ALL THINK THE SAME WAY. SOME MAY BE CONSIDERED “DOVES”, AND SOME AS “HAWKS”, BUT IN THE END, THEY ALL THINK ALIKE.

SO…REGARDING INTEREST RATES…JUST LIKE THE ENTIRETY OF WALL STREET, NOBODY ON THE FEDERAL RESERVE BOARD HAD EVEN THE SLIGHTEST IDEA THAT THE DOW WOULD HAVE RALLIED 4500 POINTS SINCE LAST NOVEMBER.  NOBODY ON THE FED HAD ANY INKLING WHATSOEVER THAT THEY WOULD FIND THEMSELVES DEALING WITH A NON-STOP AND POTENTIALLY OVERHEATING STOCK MARKET…AND MOST IMPORTANTLY, WITH ITS IMPLICATIONS THAT A MUCH HOTTER, AND ALSO POTENTIALLY OVERHEATING, ECONOMY MAY DEAD IN FRONT OF US…AGAIN, EVEN WITHOUT ALL THE STIMULI THAT CONGRESS IS ALSO ABOUT TO THROW INTO THE MIX.

NOT A CHANCE…I SAY THAT NONE OF THE FED GOVERNORS SAW ANYTHING LIKE THIS COMING…AND I WILL REPEAT IT: THERE ARE AT LEAST SOME OF THEM, WHO DAY BY HIGHER DAY INTO RECORD HIGHS BY THE STOCK MARKET, ARE REALIZING THAT THEIR “SLOW GO” APPROACH TO RAISING RATES HAS LEFT THEM IN A POSITION WHERE THEIR NEXT MOVE CAN ONLY BE TO PLAY “HURRY UP AND CATCH UP.”

WHY “HURRY UP?”…BECAUSE THE FED HAS TO GET OUT AHEAD OF THE ECONOMY…ANY ACTIONS THEY TAKE, AT A BARE, BARE MINIMUM, REQUIRE AT LEAST TWO TO THREE QUARTERS TO HAVE ANY EFFECT…AND AS I HAVE FREQUENTLY WRITTEN, IT HAS BEEN THE HABIT OF THE FED TO BE LATE IN REACTING TO WHAT THEY NEED TO DO. AS I HAVE PREVIOUSLY NOTED, THEY DID NOT SEE THE GREAT RECESSION COMING, AND IN FACT, EVEN AFTER IT WAS HITTING IN FULL FORCE, THEY DID NOT REALIZE HOW SERIOUS IT ACTUALLY WAS…AND IN THAT SAME VEIN, I WILL OFFER THAT THEY ARE NOW ALREADY LATE IN REACTING TO WHERE THE USA AND WORLD ECONOMIES ARE HEADING ON THE UPSIDE.

AGAIN, THE FED DID NOT ENVISION THE DOW BEING AT 22,400. IN FACT, THEY DID NOT EVEN ENVISION THE DOW MAKING NEW HIGHS LAST FALL AT A NOW RELATIVELY NOW FAR BEHIND US 18,500, MUCH LESS BEING 4,000 POINTS BEYOND THOSE OLD HIGHS AND STILL CLIMBING…AS EVER, I AM NOT FED BASHING. THEY ARE TRYING TO PREDICT THE FUTURE JUST LIKE EVERYBODY ELSE…BUT THE FACT IS, THEY OFTEN MISS…AND I SAY THEY (AND THE MAJORITY OF MINDLESS WALL STREET MONEY GRABBERS) HAVE MISSED THIS TIME AS WELL.

ALL OF THIS IS JUST MY OPINION…MY VERY STRONG OPINION AND MAYBE I AM THE ONE WHO IS WRONG HERE, BUT I CONTINUE TO RECOMMEND BUYING PUTS IN TREASURY BONDS AND EURODOLLARS…AND IF YOU ARE STILL ON THE FENCE, I URGE YOU TO SWALLOW HARD AND GET BACK ON THIS TRADE. LIKE I KEEP SAYING, IT WILL GIVE ME ZERO JOY 2-3 OR 6 MONTHS FROM NOW TO BE HEARING, “YOU WERE RIGHT. I WISH I HAD GONE ONE MORE TIME.” AGAIN, MAYBE I AM WRONG BUT I AM STILL PUTTING MY MONEY ON THE TABLE…AND ALONG THE SAME LINES, IF YOU ARE STILL ON THIS, BUT MUCH LIGHTER THAN YOU WERE, I DEFINITELY RECOMMENDING STEPPING UP FOR MORE.

YES, THIS IS A TOUGH ASS BUSINESS. BUT THERE CAN BE JOY IN MUDVILLE. BUT YOU DO HAVE TO GET YOURSELF BACK IN THERE SOMETIMES…OFTEN WHEN YOU REALLY HATE THE IDEA OF DOING SO.

Bill

866-578-1001

770-425-7241

All option prices in this newsletter include all fees and commissions.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Treasury Bonds, Eurodollars.