As we kickoff trading, this is hard to believe but it’s true.
Why Are They Doing This?
June 29 (King World News) – Peter Boockvar: We know the Fed was beginning to buy corporate bonds but now that it has been released exactly what they’ve bought so far, one can only ask “why?” Monetary policy has now reached a new low in the US as Apple, Walmart, Berkshire Hathaway Energy, CVS, McDonald’s, AT&T, Coca-Cola, Comcast, the US bonds of foreign car makers like Daimler and Toyota to name a few have been purchased. The total number of company bonds bought is 119 of up to 794 they will buy…
The Fed in March used the claim that market dysfunction was why they announced this program. That is a bad rationalization when you are talking about these high quality bonds because it assumes there is not enough private buyers for them which is nonsense. In fact, the deeper the Fed gets involved, the WORSE the market functioning will become. Look at the Japanese bond market where on some days JGB’s don’t trade. So now that market dysfunction is not apparent, the Fed is just doing it just to do it because they said they would. These companies don’t need a lower cost of capital in order to prosper but instead the Fed is further limiting the investment opportunities of investors and created further distortions in the pricing of private sector assets.
Hard To Believe
We saw last Wednesday a near extreme in the weekly Investors Intelligence Bull/Bear number with the spread nearing 40. Here is an updated chart of the Citi Fear/Euphoria index. (See below).
Investor Sentiment Remains Euphoric On The Stock Market
***To listen to the timely and powerful audio interview where Alasdair Macleod discusses this setup with gold being on the verge of a historic breakout that will trigger a massive short squeeze click here or on the image below.
The Silver Maginot Line Will Fall
***Also Released: Greyerz – The Silver Maginot Line Will Fall And The Price Of Silver Will Explode CLICK HERE.
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