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Beware the Ides of December and Your 401K. Merry Christmas!

Your First Dose of Christmas Cheer From Street Politics!

For weeks, on social networks, we’ve been seeing people who don’t know any better celebrating the recent stock market rally. They and talking heads on TV, who should know better, have been calling this the Trump rally. Concurrently, Barry Obama has been saying the rally is a further sign of the market “boom” he is handing off to Trump. It’s going to be an interesting December.

The market we see today is NONE OF THE ABOVE! As I’ve said here and on various sites over the last two years, there is no fundamental support for what the market is doing. It is a scam. And it is going to start winding down in about a week.

We’d Be Here With or Without Trump.

That the market is above 19,000 has absolutely nothing to do with the election of Donald J. Trump. He is just enjoying the happy illusion while it lasts. He has as much to do with the Dow right now as I do with how the Cowboys are doing this season. Which is to say we can both only watch and shake our heads.

31146825175_09053b7576_bThe market has nothing to do with a healthy economy. We do not have a healthy economy. None of the developed nations have healthy economies right. The U.S. and China are merely the healthiest horses in the glue factory. The stock market and the wider economy have been divorced since the Fed started the “Quantitative Easing” program years ago.

Long after they should have ended it they decided to just stop using the term and continued to loan big banks money at ruinously low rates. With this money the big banks would buy stocks in bulk. The buys would trigger computer buys on Wall Street. This would get the attention of the retail investor who would follow along. All of this would drive up the value of the stock whether there was fundamental support or not.

Then they would do it again.

Yellen Feels Like Scrooge After the Dreams…Without the Kind Heart.

But when Fed Chair, Janet Yellen raises rates next week I am predicting we will see a repeat of last December. There will be a sharp cooling off period through Christmas and into January. I expect the increase to be at least ½ point.

14373734290_d6a5a77c7b_b
Janet Yellen discussing the bane of our economic liberties.

In the early part of 2017, the market will simmer a bit in anticipation of the next quarterly meeting. But I don’t expect any real rallies again until we’ve unwound of all the damage the Fed has done.

Yellen was absolutely floating above the ground when she hinted at the increase. She has been dying to end this nonsense since she took the chairmanship but as had to carry Obama through his last two years. Now the she doesn’t have to worry about carrying Clinton, she can start moving the market back to some sense of normalcy.

Today They Credit Him, Tomorrow They’ll Curse Him.

This will be a painful transition. The reason for Yellen’s relief is, knowing how gullible the American people are, any side effects of her actions will be blamed on Trump. Her modulation of rate increases can be held over Trump’s head to dampen any desire to actually scale down the size of government. I never believed Trump ever really intended to drain the swamp in a real way. But if he gets it in his head to actually do so, he will suffer the Federal Reserve’s wrath.

Anyway, as the market flushes out all the crap the Fed has dumped on it, we may start to see a Wall Street that actually reflects our present, TRUE economic state. The picture won’t be pretty, but it shouldn’t come as a great shock.

Matt Jordan is host of streetpolitics.us and author of 16 20 24: A Path to Consistent Conservative Victory,  on Kindle as: Street Politics: It Ain’t Your Daddy’s GOP Anymore!

Kindle Version, STREET POLITICS: It Ain’t Your Daddy’s GOP Anymore! 50% of all author proceeds go to fighting Multiple Sclerosis!!

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Photo Credit: International Monetary Fund Flickr via Compfight cc

Photo Credit: KAZVorpal Flickr via Compfight cc

 

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