Analyst/trader Gregory Mannarino says the Federal Reserve just did an about-face on raising interest rates in a matter of weeks. Mannarino contends, “This is incredible and hard to get my head around. This has got to be the flip-flop of all flip-flops. At the last FOMC meeting, Janet Yellen was practically pounding the table talking about how they were going to be continuing to raise rates, that they are going to start unloading their balance sheet here, and then she does an absolute 180. I am sitting there in real time watching it (this past week). My face dropped, and the moment I heard this, I started buying everything I could. . . . I thought this is it. The market is going to keep going higher. . . . The Federal Reserve has created a freaking monster. These distortions are now going to get much worse because Janet Yellen has given these markets the green light to go record up, record up and record up.”
But not everything is distorted upward. The dollar is going down, and Mannarino says, “It is interesting to see what’s happening to the U.S. dollar. It’s getting melted down. . . . Janet Yellen has promised to keep interest rates suppressed artificially. There is no normalization in sight for the Fed balance sheet, and the dollar is going to continue its downward trajectory.”
Don’t get comfortable with the Fed or all the other central banks keeping this all going forever. Mannarino says mistakes will be made and contends, “The Federal Reserve never had a plan to do this, and it never had a plan to unwind their $4.5 trillion balance sheet. They are flying by the seat of their pants. This is uncharted territory, and the Federal Reserve does not have one, not one viable model to gauge how this is going to affect our economy or the global economy as they try to normalize their massively abnormal balance sheet. There is huge potential for mistakes to be made. Would anybody be surprised if the Fed gets it wrong once again? The Fed is always wrong. The Fed is never, ever, ever right.”
In closing, Mannarino says, “I’ll tell you what concerns me. Despite the fact we have a stock market at a record high, housing near record high, interest rates near record lows, tax receipts are down, money velocity is near historic lows and our economy is stuck. . . . So, without the Federal Reserve keeping their foot on the floor, and that’s what Janet Yellen is going to continue to do, this will all melt down in a blink of an eye. The Federal Reserve has got to keep the juice going. The moment they decide to take away the juice, all of this is going to correct to fair value. It’s going to do it no matter what. It will either do it when the Fed decides to pull their foot off the pedal, or it’s going to happen from some random event where people are going to start selling. I think it will begin in the debt market.”
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.