From This Week's "Smile File"...Best Phrase Of The Week 😏

I think Treasury Secretary Scott Bessent nailed it today when he described former President Joe Biden's economic agenda during his one term in office as "orgiastic government spending."

It seems that President Trump's goal is to reprivatize many federal government jobs via an in-depth multi-agency review of waste, fraud and abuse, along with a cost-cutting task, that was handed to the newly-created (temporary) Department of Government Efficiency (DOGE).

They have until July 4, 2026 to complete their assignment...so, we'll see how this impacts fiscal and monetary policies, as well as the overall health of the economy and national security issues by that deadline.

Source: Real Clear Politics

Real Clear Politics excerpt

U.S. DEBT CEILING: Biden Had 100 Days To Negotiate But Rebuffed Republicans

N.B. Inflation was 1.4%
when Trump left office
on Jan. 20, 2021

* See UPDATE below...

Insofar as the proverbial "buck stops at the top" saying dictates, this would then apply to U.S. President Joe Biden, who, for 100 days, refused to negotiate with Republican House Speaker Kevin McCarthy regarding the upcoming expiration of the infamous Debt Ceiling and its extension with respect to his proposed multi-trillion dollar budget.

So, here we are, with the presumed expiry date of June 1st fast approaching and no deal has been reached.

The ball is in Joe Biden's court, inasmuch as a majority of the House approved the Republican's bill which raises the debt ceiling (albeit much less than what Biden wanted), with alterations to his budget.

Democrats have not prepared a counter-plan of their own, and neither has President Biden.

So far, Biden has refused to budge on their offer, and talks have now broken down today...with no deal reached...and the President is nowhere in sight, but chose, instead to attend a G7 meeting in Japan.

The following article provides further details on today's failed negotiations and walk-out.

Source: ZeroHedge

As you can see from the following graphic, the rise of America's Debt Ceiling has become parabolic and cannot be sustained, especially with President Biden's budget proposal to raise it by another $5.8 Trillion this year!

And, with a possible recession looming in the midst of, still, high inflation (in spite of higher interest rates, courtesy of the Fed), and bankruptcies already on the rise (stressing banks), it behoves Biden to justify (to the American public) exploding the debt even higher.

Reckless Federal Reserve monetary policies, as well as the Biden Administration's out-of-control fiscal spending and radical energy policies, have led to high inflation (9.06% in June 2022) and higher U.S. debt. 

N.B. Inflation was 1.4% when President Trump left office on January 20, 2021.

Source: RateInflation

Where we go from here is anybody's guess...market players are currently undecided, as well, inasmuch as the SPX is still stuck in its large sideways "Chaos Zone," that I described in my post of March 31, after briefly piercing above its upper edge.

At the moment, price is currently sitting just beneath its channel median, as shown on the following monthly chart.

Failure of the SPX to break and hold above this median and its upper "Chaos Zone," around 4200, could send it back to its lower edge at 3750, or lower to retest 3500, or even 3000.

So, I'll leave you with this little gem...the sum total of Joe's presidency...in his own words...

Seriously, it's no joke! 😕

* UPDATE May 23...

It appears as though President Biden does not take the debt ceiling negotiations seriously and is being seen as negotiating in bad faith...suggesting that there may be some question about the actual default date that has, up to now, been proclaimed as fact by his Treasury Secretary, as described in the following report.

Markets have been fairly subdued and directionless of late, as described above, but just how long investors' patience with this political charade will last is anybody's guess. 

The longer this drags on, there is a greater chance we'll see markets drift lower, until they reach a critical velocity that produces a plunge below major support (3750 on the SPX).

Source: ZeroHedge

How Accurate Has My 2022 Market Forecast Been, So Far?

Check out my 2022 Market Forecast of January 1, and see how accurate it's been, to date.

As a quick reminder, the following was my conclusion at the time...my position hasn't changed, and I've written extensively about the markets (including "shocking surprises") since then.

P.S. Just when you thought you'd seen all the "shocking surprises" the world could handle this year, you can add one more to the growing list...

Source: ZeroHedge

ZeroHedge excerpt

* UPDATE March 10...

This follow-up report provides clarification on this issue...

Source: ZeroHedge

Best of luck...it's crazy "out there"...and rumours are flying everywhere! 😏

Bad Economic News For American Consumers

* See UPDATE below...

A variety of economic reports were released last Friday.

They're confirming rising prices of consumer goods and services, lower wages, falling consumer spending, falling consumer sentiment, and higher consumer inflation expectations, as shown on the following graphs (source: ForexFactory.com)...bad news for consumers and at variance with Wall Street's expectations for higher equity prices and higher company earnings for 2022.

I'll repeat what I said in: 

• an UPDATE to my 2021 Market Wrap-Up and 2022 Forecast, as follows...

• and, in several UPDATES to my recent article on the Federal Reserve, as follows,

* UPDATE February 3...

Stagflation and the threat of war are on the horizon...not a good combination for world markets...

Source: ZeroHedge

Indecision Grips The SPX Amid A Rising Misery Index

I last wrote about the SPX and the Federal Reserve here.

The high-wave candle forming on the following weekly chart of the SPX indicates indecision by investors.

It's formation, thus far this week, follows today's FOMC interest rate statement and Chairman Powell's press conference...about which I wrote in today's UPDATE in my above-mentioned article.

As of Wednesday's close on this weekly candle, the Balance of Power is slightly in favour of the buyers.

However, with very little price movement to the downside, that balance can shift in an instant.

It's one indicator worth watching, especially into Friday's close this week, and beyond.

With the Misery Index on the rise under President Biden's radical socialist policies, executive actions, and agenda, we're likely to see high volatility continue in both directions in all markets for the foreseeable future and into 2023, and beyond.

The Misery Index is currently at 10.94.

My post entitled SPX: The Blowoff Phase Has Begun describes the factors affecting these moves and provides links to a variety of my articles for further insights, as well as price targets and support/resistance levels for the SPX...all worth a read.

Source: Investopedia

Source: MiseryIndex.us

Volatility Bites U.S. Markets...But, Should It Bite The Fed?

* See UPDATES below...

The SPX had a wild ride today, with an intraday trading range of 194.7 points, complete with a gap down on the open, followed by a huge drop lower, and finally followed by a massive rally to close the day a bit higher than Friday's close, as shown on the following daily chart.

This volatile action triggered some interesting tweets...

...and has created an "interesting" dilemma for the Federal Reserve to digest as they examine their next moves at their upcoming meeting this Wednesday.

However, I can't see this influencing their dual mandate to maintain a 2.0% inflation target and stable prices (the U.S. inflation rate is already well above at 7.0% with no signs of abating) and to promote maximum employment (the current unemployment rate is 3.9%). 

Their current interest rate is 0.25% and is not a deterrent to curb out-of-control inflation.

If today's intraday volatility does unduly influence them, they're not performing (what should be) their impartial job of properly managing their dual mandate, in my opinion.

Source: TradingEconomics

* UPDATE January 26...

The Fed has failed to carry out their dual mandate, once again...inflation will continue to rage.

Not hiking interest rates now is foolish and signals to investors and the rest of the world that the U.S. economy is too weak to withstand higher rates. 

Therefore, this does NOT justify higher equity prices, in my opinion

They will have to revert to drastic measures soon to make any meaningful dent in out-of-control inflation, because they've waited far too long. They should have stopped their bond-buying spree and begun to raise rates months ago.

Link to FOMC statement

Morning comments made prior to the FOMC statement indicate a growing concern over the Fed's lack of leadership in calming inflation...President Biden has already thrown Chairman Powell under the bus on this issue.

However, the President is not without blame in contributing to inflation. He needs to:

• REVERSE his executive actions when he (1) restricted oil and gas exploration and drilling on federal lands and imposed further regulations on that industry, and (2) withdrew the approval of the Keystone XL pipeline from Canada...those two actions on Day One of his presidency triggered and contributed to the inflation spike.
• STOP paying people to stay home and to get back to work.
• STOP flooding the economy with fiscal stimulus programs and exploding the national debt (now at $29.88 Trillion).
• START implementing policies that tighten national security, rather than continue with those that are weakening it...e.g., resume building the southern border wall and enforce existing immigration laws.

Both men need to start doing their jobs properly...otherwise, a GOP majority win in both the House and Senate is guaranteed in the November mid-term election. 

However, with Biden's overall approval rating already in the 30's because of his reckless actions (Afghanistan), and his radical socialist policies and agenda, a massive GOP win is likely to occur, anyway.

Source: ZeroHedge

* UPDATE January 27...

It seems as though it doesn't really matter to Chairman Powell that inflation is hitting lower-income people hard...so, who's looking out for them and, really, what use is the Fed? 😕

Source: ZeroHedge

Expect:

• the market chaos to continue,
• the lower class continue to suffer under crushing inflation,
• the Misery Index continue to rise, as described in my post of January 26,
• while the Fed and the President "fiddle and fluff over" the harsh results/realities of their actions/inactions.

HOW TO CONTROL INFLATION: Once Upon a Time... 😏

More Biden Nonsense

When will President Biden begin to discern and disseminate fact over fiction? 

Eleven months later and Americans are still waiting for him to rise above the typical Washington nonsense and stop the spin. The only transparency he's displayed is his habitual and troubling penchant to utterly obfuscate actual facts.

But, he's not fooling anyone. Luckily, Americans are smart enough to know this and will remember at the voting booths in 2022 and 2024.

Source: ZeroHedge