• 3 minutes Natural gas is crushing wind and solar power
  • 7 minutes OPEC and Russia could discuss emergency cuts
  • 11 minutes Is Pete Buttigieg emerging as the most likely challenger to Trump?
  • 46 mins So the west is winning, is it? Only if you’re a delusional Trump toady, Mr Pompeo, by Simon Tisdall
  • 40 mins Fight with American ignorance, Part 1: US is a Republic, it is not a Democracy
  • 8 hours Blowout videos
  • 10 hours Question: Why are oil futures so low through 2020?
  • 4 hours “The era of cheap & abundant energy is long gone. Money supply & debt have grown faster than real economy. Debt saturation is now a real risk, requiring a global scale reset.”"We are now in new era of expensive unconventional energy
  • 7 hours Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 5 hours CDC covid19 coverup?
  • 13 hours The Arithmetic Of Fracking
  • 19 hours Charts of COVID-19 Fatality Rate by Age and Sex
  • 1 day Shorting Gold
  • 5 hours Who decides the Oil costs?
Oil Prices Slump On Renewed Coronavirus Concerns

Oil Prices Slump On Renewed Coronavirus Concerns

After several consecutive days of…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Fed Says Market Rally is BS

Fed Says Market Rally is BS

Well, they didn’t really say that, but they could have, and perhaps should have, and the bond market wholeheartedly agrees with them. That is my takeaway from the Fed minutes released yesterday indicating that the Federal Reserve intends to extend its hyper accommodative policies for at least another 6-9 months to “late 2012.” It also lowered its long term economic growth forecast from 2.5%-2.9% down to 2.2%-2.7%, a major downshift from the 3% plus it was predicting a year ago. That also brings them nicely to my own estimate of 2%, which I nailed on the mast over a year ago.

The reasons offered were many. Business fixed investment is slow, inflation is stable, unemployment is declining only slowly, and international risks are substantial. It was enough to create one of those odd trading days where everything went up. The Dow flipped a 100 point loss to a near 100 point gain. Bonds rocketed, with ten year Treasuries dropping 10 basis points in yield, and five year paper utterly collapsing from 0.89% to 0.77%.

The risk markets rallied like this was a new quantitative easing, which it isn’t. Bernanke is just “thinking” about QE3, which is nothing new. If the economy worsens again, he’ll pull the trigger. If it continues to poke along as it has done, he’ll do nothing.

I have said this countless times before, but I’ll say it again. When the stock and bond markets deliver a contradictory message, you always believe the bond market. It is right 90% of the time. Right now, the stock market is saying that the economy is growing a 4%, while bonds say it is expanding by 2% or less. I’ll go with the later and wait for a great entry point to short more stocks.

Looking forward, I see a coming drought in upside surprises. Tomorrow, we see Q4 US GDP, which should be over a healthy 3%. Next week promises another sizzling nonfarm payroll on Friday. After that, there is nothing on the horizon until we get the final word on Greece, or the next Fed meetings in March and April.

All of this encourages me to hang on to my tiny short positions in the (SPY) and the Euro, even though we are trading close to my stops. Bernanke’s easing yesterday could be the “buy the rumor, sell the news” event that the market has been rallying on for the last three weeks. If it is, then the downside could be just around the corner.

By. John Thomas



Join the discussion | Back to homepage


Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News