The Fed is now officially in the bubble business.
As I’ve noted over the last two months, in the span of about eight to ten weeks, the Fed went from all but guaranteeing four rates hikes in 2019 along with putting its $50 billion per month QT program on “autopilot” to pushing for NO rate hikes and possibly ENDING its QT program completely.
What was particularly striking during this time period was that every single Fed hawk on the Fed’s Federal Open Market Committee (FOMC) went from being EXTREMELY hawkish to EXTREMELY dovish… all in the span of about two months.
Let’s be clear here.
The Fed is officially DONE with interest rates for all of 2019. Moreover, it currently plans on raising rates only ONE MORE TIME in 2020.
On top of this, the Fed will taper its QT program from $50 billion per month to $15 billion per month in May. And it will cease to engage in QT altogether in September.
Finally, the Fed has completely abandoned any mention of “financial imbalances” or “robust asset price” (Fed speak for “stock market bubble”).
Putting all of this together, it is now clear the Powel Fed is officially in the bubble business. It’s going to ramp the markets as high as possible… right until we get a truly spectacular Crash… just as we did in 2000 and 2008.
This means north of 3,000 on the S&P 500.
This doesn’t make sense… but markets never make sense during bubbles.
The bigger issue is what comes after that breakout to new all-time highs.
And THAT is where you need to be worried. Because once the blow off top hits, the next stage will be the CRASH.
So enjoy the rally while it lasts, but don’t be fooled. What’s coming won’t be pretty. And if you’re interested in profiting from it, the time to prepare is now.
On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s coming down the pike when the Everything Bubble bursts.
It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here.
Chief Market Strategist
Phoenix Capital Research