The chief cross-asset strategist at Morgan Stanley, says the recent correction was just an “appetizer, not the main course.” Coupled with the Fed’s incitement of panic over inflation, it seems a perfect storm is brewing.
“The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.”
~Congressman Charles A. Lindbergh, after the passage of the Federal Reserve act 1913.
As Morgan Stanley rakes in record-breaking billion dollar profits, their outlook on the rest of the market is bleak and according to the megabank, the recent crash in the stock market was just a taste of things to come.
“Appetizer, not the main course,” is how the bank’s strategists led by London-based Andrew Sheets described the correction of late January to early February. Although higher bond yields proved tough for equity investors to digest, the key metric of inflation-adjusted yields didn’t break out of their range for the past five years, they said in a note Monday, according to Bloomberg.
“Our cycle models suggest that [developed markets] remain in the late stages of a late-cycle environment,” said Sheets. “Rising equities, rising inflation, tightening policy, higher commodity prices and higher volatility are (in our view) a pretty normal pattern if that view is correct.”
Earlier this month, a series of market corrections sent stocks down 10% in a single day for the first time in two years. Although it was brief, the correction, according to Morgan Stanley is just the beginning. And, the megabank is not alone in their assessment.
With the market stable for now and the Dow having recouped about half of its recent losses despite Tuesday’s 255-point slide, it’s time to plan for the next scary plunge, USA Today reported.
“People should take this as a reminder of how markets behave,” says Brad Bernstein, senior vice president of wealth management at UBS Financial in Philadelphia, referring to the 10% drop that stung investors during nine worrisome days. “They have been spoiled by a long period of low volatility and no market corrections.”
To top off the ominous warning from the bankers, the president of the Federal Reserve in Texas has sounded panic this week over the level of US debt.
As ZeroHedge reports:
Nearly a decade after the US unleashed its biggest debt-issuance binge in history, doubling the US debt from $10 trillion to $20 trillion under president Obama, which was only made possible thanks to the Fed’s monetization of $4 trillion in deficits (and debt issuance), the Fed is starting to get nervous about the (un)sustainability of the US debt.
The Federal Reserve should continue to raise U.S. interest rates this year in response to faster economic growth fueled by recent tax cuts as well as a stronger global economy, Dallas Federal Reserve Bank President Robert Kaplan said on Wednesday.
“While addressing this issue involves difficult political considerations and policy choices, the U.S. may need to more actively consider policy actions that would moderate the path of projected U.S. government debt growth,” Kaplan said.
Ironically enough, the Federal Reserve has said very little over the last decade as the federal debt skyrocketed by $10 trillion. Indeed, under Trump’s new budget, the debt is on track to increase another $10 trillion in the next decade.
What’s more, as these elite money changers funnel the wealth upward from the masses using programs like quantitative easing, they are systematically destroying the US dollar through inflation and hedges against foreign countries who are moving away from it to avoid US imperialism.
When the day of reckoning comes, Americans will be left footing the bill and holding worthless paper.
This is the reason cryptocurrencies provide so much value and why they are a threat to the establishment. They take the power of a centralized form of monetary control and decentralize it.
The monetary system is set up to empower those who control it. This is why we are seeing so many attacks on the crypto world and it is also why we are seeing the money changers hedging their bets that crypto is the future.
While the outlook may seem bleak, those who pay attention and plan for the worst while hoping for the best will use this an opportunity to flourish.
As former Congressman Ron Paul recently said, “I think our stature in the world and our empire will end, and that’s when, hopefully, the doors will be open and [people will] say, ‘Hey, maybe these libertarians have some answers to this.’”
Now may be a good time to get your answers ready.
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Contributed by Matt Agorist of thefreethoughtproject.com.
The Free Thought Project is dedicated to holding those who claim authority over our lives accountable.