A Fed & Bank of Japan Two Step

Overnight that Bank of Japan refrained from adding any additional stimulus to their monetary system. It was a mild surprise, although many of us thought they’d wait until some sort of market turbulence to add more money to the money fire. 

GDPThe Federal Reserve sounded, well, like the Federal Reserve yesterday. In a written statement nothing really changed from before. It was so boring, it’s barely a headline today. There was an important message though that continues to be overlooked. The Fed is very concerned about a coming slowdown triggered by international factors. 

Today, GDP clocked in at the slowest pace in two years with business investment the lowest since -buhm, buhm, buhm – 2008. The low business investment plays into my theme of “slow growth forever.”


A year ago, I warned that some bearish signs are starting to creep into the market and used the phrase “skip-straight recession.” Since then the stock market has been trading within a range and has had the August 24th 1000 point plunge and the worst January since 2009. We have also seen a pair of disappointing quarters for GDP. 

Going forward, a lot is going to depend on how things go this summer. There is a very real possibility that central banks and governments kick their problems down the road another year. However, it is getting very hard for them to keep doing that. It would not surprise me to get a tiny rally here in May only to see a June swoon that knocks people’s wallets out of their back pocket. 

The list of risk factors stacking up – which I listed in my crash alert – are really quite overwhelming. Will there be an unknown risk factor, a black swan, that ignites a market fire. Probably. When? Hard to say. This summer looks so scary that even if Janet and the Feds can sing a soothing song, I don’t think it’s worth the risk to reach out for a few points of return. I am happy being heavy in cash and waiting for a great set of opportunities. 




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