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July 21, 2019 | Investors Blinded by Greed, but Not for Much Longer

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.

Traders dumped stocks in the final hour on Friday, hinting that there actually is a threshold at which bad news begins to matter. For one, Black Rock, arguably the smartest money on the planet, reported a 7% drop in profits. If they can’t cut it, is there any hope for the rest of us?  In the Middle East, Iran was doing more than merely rattling its saber: agents of the mullahs boarded and seized a British-flagged tanker in the Strait of Hormuz, escalating the threat to global oil supplies. The U.S. and Iran continue to insist they don’t want war, but no one is offering any guarantees. Worst of all, the Fed was delivering the kind of news we are supposed to sell: a rate cut of 25 basis points is coming in July.  Since investors’ earlier exuberance was focused on rumors of a 50-basis-point cut, it’s a wonder the Dow Industrials didn’t fall by 400 points rather than a mere 68.

A Transparent Ponzi

It is predictable that investors, even blinded by greed as they are, will eventually see where the Fed’s transparent Ponzi scheme is taking us. By monetizing even more debt, Powell would purport to cushion the U.S. against the effects of an economic implosion that has been gathering force in China and Europe. All he is accomplishing, in fact, is pumping U.S. stocks full of hot gas, including growing leakage from China and Europe.

The scheme will likely work for a while, assuming one can contrive to view the gratuitous inflation of U.S. stocks and bonds ahead of a global economic slump as somehow working. Although further enabling this fallacy could produce a veneer of benefits for yet another month or two, only a fool could believe the supposed benefits will last. Most foolish of all would be to think Wall Street cannot see this coming and that there is therefore plenty of time to prepare. The Mot

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July 21st, 2019

Posted In: Rick's Picks

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