Monthly Archives - March 2020

Some Silver Linings in the Midst of Crisis

With stock markets having been on a roller coaster over the past few weeks, and numerous investors undoubtedly watching their 401(k) balances in horror, financial markets haven’t been too kind to most people. Couple that with the prospect of GDP falling almost 25% as a result of business shutdowns due to coronavirus, plus an increasing number of coronavirus cases and fatalities, and it looks like there isn’t much to look forward to. But amidst all the negative news, there [...]

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The New Gold Rush

Many investors may have been looking worriedly at the gold price over the past couple of weeks, seeing the price decline back to where it began the year. They may have been second-guessing their decision to invest in gold, wondering if it was really such a good idea after all. But events this week had to have restored their trust in gold. And some of those events are forecasting an especially bullish market for gold in the coming weeks. We’ve [...]

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Fed Official Proclaims Fed’s “Infinite Amount of Cash”

If you’re one of those people who trusts that the people at the top know what they’re doing and have things under control, you might want to stop now, because it’s becoming abundantly clear that they don’t know what they’re doing. That’s particularly true within the Federal Reserve System, which is throwing unlimited amounts of money at the various economic problems occurring, without regard for what will happen once all that money enters the financial system. Typical of the Fed’s [...]

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Fed Goes All In: Is Hyperinflation in the Cards?

The last couple of weeks have seen an unprecedented amount of Federal Reserve intervention in financial markets. Just to recap, here’s what the Fed had already done as of last Friday: Pledged up to $5.5 trillion in repo market liquidity; Cut its target federal funds rate to zero; Promised at least $700 billion in quantitative easing; Re-opened the Commercial Paper Funding Facility (CPFF), the Primary Dealer Credit Facility (PDCF), and the Money Market Mutual Fund Liquidity Facility (MMLF); Opened up US dollar swap lines [...]

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If You Thought a 2008-Style Crisis Was Avoidable, Think Again

We’ve been warning about an oncoming financial crisis for a while now. The fact that a financial crisis would occur was all but inevitable, given the massive bubble blown by the Federal Reserve’s extraordinarily loose monetary policy over the last 12 years. But despite the numerous warning signs that markets were flashing, many investors just didn’t want to heed those warnings. Not even financial media, which should have known better, heeded the warnings. And now we’re in the middle [...]

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Does Timing Play a Role in Investment Success?

You’ve probably heard it said that you can’t time markets. There’s definitely a lot of truth to that. Try to time when to get in and out of markets and you can second guess yourself into losing thousands of dollars. In many respects, trying to time markets is just gambling, not investing. But that’s not to say that timing doesn’t play a role in investment success. For instance, many retirement plans make investments at certain times of the month, like [...]

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Helicopter Money Is Here: Are You Ready?

The raft of Federal Reserve actions to bail out Wall Street had many people thinking that we’re going back to the days of 2008, when big banks got bailed out while the little people were forced to suffer. Major banks received trillions of dollars worth of federal assistance to stay afloat, then turned around and put the screws to their creditors, foreclosing on home after home. This time around, things look a little different. The Trump administration is proposing a [...]

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Another Day, Another Federal Reserve Bailout

The bad news just keeps getting worse and worse. After a 100-basis point rate cut and $700 billion in quantitative easing, the Federal Reserve has announced that it is opening up a new Commercial Paper Funding Facility (CPFF) to provide a bailout of commercial paper markets. The new special purpose vehicle (SPV) will purchase commercial debt that is rated at least A1. While that’s good news for some companies, it’s not good for the numerous companies whose debt is [...]

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Is the Fed Trying to Destroy Stock Markets?

Another Fed move, another day of collapsing stock markets. The Federal Reserve on Sunday evening announced its third consecutive unscheduled monetary policy move, making a 100-basis point cut to its target federal funds rate, cutting to a level of 0.00-0.25%. So after only a couple of years in which interest rates never even got back to pre-crisis normal levels, we’re back to zero interest rates. And while the Fed said that negative interest rates are not on the table, [...]

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How to Make Sense of the Federal Reserve’s Repo Market Moves

Last week the Federal Reserve made waves in markets by announcing that it would immediately offer $1.5 trillion in funding for repo markets. While that made for a nice stock market bounce in the immediate aftermath of the announcement, it couldn’t keep stock markets from losing the most points in a single day in their history. Markets bounced back on Friday, however, although it isn’t certain that was due to the Fed’s actions. But what exactly is the Fed [...]

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