The Stage Is Set

Well the Fed is now out of the way so we can get on with the next act. The Fed’s forecasts improved which is only useful inasmuch as it shows it probably does not intend to increase its securities purchases. The Fed’s forecasts, historically, are pretty much random numbers. The only number they are close on is unemployment, which is a made-up number based on a dubious “out of workforce” calculation and of little value in evaluating the state of the labor market. The Fed has the actual data, here it is from their own St. Louis Fed site, showing that there has been no recovery in employment. None, Nil, Nada, Nichts, Nul, Niets, Nada, Niente. QE = Epic FAIL.

We now await Bernanke’s press conference, at which the most powerful man in the world will attempt to further pump up the stock market in search of the elusive “wealth effect.”

I expect that the next act will feature at least throat-clearing from the fat lady. The economy is sagging badly and the financial markets are a massive bubble. Interest rates are rising, inflation is declining implying rapidly rising increasing real yields. Historically, this has been a sign of trouble. Be careful out there.

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