Executive Take: Russell momentum is Yellow, but it’s in a positive direction. We had a nice pop yesterday that crested and finished the day back at even. The Fed’s fiscal repression exercises are trying to keep the T-Bills clear and the front end of the curve lower… but it’s a sign that we have too much debt… and we’re going the way of Japan and Turkey very fast. The market will eventually have to reject all of this. But not yet. Good morning: Gold pushed above $4,500 today, while silver peaked at $70.16 in what is just another reminder of what the Money Printer is all about.
The incentives that we want to discuss today belong to the Federal Reserve… I don’t think anyone will formally admit this, but the last 13 months have been a period of perpetual crisis. It looks calm on the surface right now in the MOVE Index… and the VIX is sitting at 17. But it has taken incredible coordination and consistent effort to keep the plumbing in place to manage this ongoing path of volatility. Japan has engaged in stimulus 15 months after its Nikkei crash. The Fed has pumped tens of billions into the repo market and will now buy $40 billion a month in Treasury Bills to help engage in the Fiscal Repression that I outlined in May.
But it’s not the policy that has really altered everything in the last few months since silver prices have gone parabolic. And that’s what I want to explain today… People are Waking UpWe don’t beat our chest here at Capital Wave and Money Printer. We point a camera at the world and explain the risks ahead. Sometimes we’re ahead of the risk… and sometimes that risk comes out of nowhere. We knew the market was going down in April 2024 due to money-market stress. We didn’t know that the banking sector would implode in March 2023. But our signal caught both ahead of time. We also recognize that steep downturns cost traders and investors money, because that’s where the stress points come. The fear of losing money is significantly higher than the joy of winning it from a behavioral perspective. So, we try to help get investors and traders out of the way, tell them when to hedge, and then look for bottoming trends through insider buying, a lack of momentum, or a policy shift that can act as a catalyst. The selloff points – the negative momentum shifts – haven’t been adopted by the masses. They’re not doing what we do because the sentiment is that there is always a bull market somewhere. The thing that has changed is something that I’ve been talking about for five years. Investors now see the charade of monetary policy for what it is. Across the internet – right now – a lot of people have woken up to the fact that there really isn’t a difference between Quantitative Easing and other Fed programs that have different names and structures but lead to the same result: Stability. Because financial stability IS the Federal Reserve’s mandate. Not just here, but all around the world. Recall, the Fed opened up the swap lines to foreign banks in 2008, BEFORE there was any chatter about bailing out Main Street. The Fed did the same in March 2020 – long before the CARES Act and any mention of helping ordinary people. The Fed’s chatter about labor markets and inflation is largely theater to the bigger picture… which requires incredible coordination and effort to keep the world swimming in a dollar that refinances trillions and trillions in global debt. Recall, the refinancing nature of the global economic system in 2008 is the fundamental core of what we’re actually seeing. We don’t make money to create new economic growth. We refinance to stabilize debt and prevent deflation, which keeps the economy going. Michael Howell argues that six out of every seven NEW dollars in circulation go to refinancing debt… not fueling actual growth. The world is seeing this. And it’s seeing it to openly now that the Fed isn’t even trying to hide it. Recall that Jerome Powell said not long ago that their attention would be on the Repo markets, a massive tell about what their true policy is: Stabilization. Yes, we still have Fed’s John Williams running around saying the Fed didn’t engage in QE. He said that they weren’t trying to impact the 10-year bond… but no one accused the Fed of doing any of this. But he did admit that the purpose was to stabilize the banking system's reserves. Because that’s what really matters… We are now in the era of Fiscal Repression. It seems to have taken longer than I predicted to be a mainstream story, given that I outlined this in October 2023. But here we are. Continue reading this post for free in the Substack app
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