“See-You-in-September – bye-bye, so long, farewell – bye-bye, so long, farewell… have a good time, but remember there is danger in the Summer Moon above… baby I’ll see you – in-September”… with another large Rate Hike! 🙂

There was a popular song from the 1960’s with this title, it was originally released by “The Tempos” then followed by the “The Happenings” and some others. A good pop tune written by a couple guys from New York. I felt the song was an appropriate opener for what I want to convey here; which is that the U.S. stock market has turned irrational [for lack of a better term]. I’ve only seen this kind of bullish behavior being exhibited in the midst of a recession and runaway inflation very few times in history, maybe before the October 1987 stock market crash? When interest rates were enormously higher than they are today…

HEY DEMOCRATS, Guess what? ROME IS BURNING! But Democrats still partying like it’s 1999 with their tax hikes and needless regulatory bills targeting businesses using their fake “Climate Change Initiatives”. [This is not a political post but still there is a need to define the problem which the investing public fails to recognize which is, while major Policy Errors come straight from Washington, D.C. and take precedent, and with that our U.S. stock indices have stopped behaving “rationally”.]

Sure, I get that investors look for “bottoms” in markets, or a “bottoming process” but this sudden run up lately is to me anyway, very peculiar. Peculiar because I’m not sure the Bulls are understanding something, U.S. Treasury Secretary, Janet Yellen and Federal Reserve Chair, Jerome Powell have shown nothing but incompetence, they have [literally] been wrong at every turn in this battle to defeat runaway U.S. inflation. It’s a debacle of sizable proportions; major public policy errors have now exposed incompetence [on steroids] and there’s no way at this writing that America will suddenly get past this. In fact, these goons just got started. The existence of a magic wand does not exist to save our economic ship from sinking, posting negative quarterly GDP figures and now somehow we’re supposed to look forward to future sub-2 percent annual growth prospects? Couple that with 10-15% annual inflation [or pick a number for pain] and we’re not going back to inflated asset prices, no way – no how! Not under the watch of these folks now in control of THE MOST IMPORTANT Economic Policy decisions in Washington.

Needless to say, this economic engine is in need of a major overhaul – beginning with both Janet Yellen and Jerome Powell being replaced. Federal budget cuts and tax cuts need to be implemented immediately. Biden’s entire cabinet needs to be replaced by competent leaders who can get things accomplished, be it closing down our open Southern border, or eliminating “Climate Change” mandates from business regulations and de-weaponizing IRS agents while re-weaponizing metropolitan police departments. I don’t see any of this happening, not anytime soon. So why the sudden surge in tech stocks and major stock indexes? When historically, September is less than 30 days away. September is not just any old month on the calendar, September holds the distinction of being the worst month for the U.S. stock market on record. Most people would guess that October is the worst month for stock market downside volatility. True that a couple major market crashes did take place in October, [1929 and 1987 come to mind], but the truth is September is historically the worst month for equity investors, even worse than October for shareholders in the United States. So I’m weary and wondering, will we see the stock market finally come to its senses in September? In the context of this fact: Short-term rates set [by the Fed] at the current 2.25-2.50% level will never make a dent in an environment while a realized 15% annual inflation rate prevails in these once United States!

So I’m very interested in seeing my question of what happens [in September?] play out. I know that there is no scheduled meeting for the Federal Reserve during the month of August. If they do announce a rate hike this month it would have to be between meetings and that would no doubt roil the markets, sending ripples across both the bond and stock markets, but very constructive just the same. I’m all for tightening rates and money as it will leave no doubts that this Federal Reserve Board is indeed serious about quelling inflation; something they have failed over and over to do. This Federal Reserve Board is the worst I’ve ever witnessed and so this particular course of action – as effective as it would be, probably is not in the cards. Hence, inflation will keep roaring @ 15% [including food and energy], and guess what? The next Fed rate meeting is not until September. I suppose that the Fed will be required, given the highest runaway inflation since the 1970’s, to once again and for quite awhile thereafter, deliver yet another large rate hike. And since there’s no meeting in August, a full 2.0% hike in rates would be appropriate for September in my opinion…
Yours Truly [with chuckles intact],
Brant