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July 31, 2019 | The Fed Has Turned a Brat Into a Monster

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

Powell gives Wall Street a scoop of ice cream, and how does the spoiled little brat react? For starters, by setting the curtains on fire and peeing on the living room carpet. The Dow Industrials plummeted 480 points Wednesday after the Fed announced a 25-basis-point rate cut that had been universally expected. Some gratitude!  It’s safe to say this won’t be the last time investors act like a five-year-old throwing a tantrum as they try to pry another 50 basis points from the Open Market Committee.

Every parent has been through this and knows the consequences of giving in. The correct reaction is to deny the kid his treat or he’ll start demanding one before every meal. The first few times, the kid will stomp his feet, cry, kick and scream. But once a parent gets past the withdrawal stage, things will calm down.

How Far?

Unfortunately, the banksters have done just the opposite, serving up a dollop of ice cream when the stock market is trading at record highs, America is at full employment and GDP growth is stronger than it’s been in a generation. It is unprecedented for the central bank to loosen under such circumstances, but by doing it anyway they have created a monster. How far will stocks have to fall to make Powell & Co. cough up another 50 basis points? We’re about to find out

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July 31st, 2019

Posted In: Rick's Picks

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