Donald Trump May Prove To Be Right

Donald Trump May Prove To Be Right

I read in a latest web news Donald Trump saying that the markets are overheated and they are going to crash. For a change there is someone who is blowing the warning trumpet. Till now I used to be amazed how irresponsibly the Fed has put on the blinkers and is marching relentlessly towards the goal of least unemployment (terming it a mandate to justify near zero interest rates) without considering/ ignoring all the signs of an imminent crash, appearing on the expressway of the Wall Street going uphill and eventually going to lead to The Valley of Fear, which may or may not be visible to the economists as of now or perhaps they don’t wish to be the naysayers so as to displease the vested interests despite witnessing and recognising all the signs.

Here is someone who is familiar with the environment and perhaps the ground realities too. Whether he is the right presidential candidature choice or not may be a different matter altogether and for that matter the same may hold good even for the Democrat in the fray for the presidential elections.

Fed should perhaps, at least NOW, remove its blinkers and see for itself that instead of leading the recovery and launching the economy into a healthy orbit, it has in reality played the game of ‘Snakes and Ladders’ wherein towards the end of the game on the topmost row, whatever number the thrown dice may show up, there is a snake in the form of good news or bad news sitting silently coiled so many squares away. Each square is going to lead to a ride or slide – by whatever name the Fed may call it – many miles below.

Instead of deciding on which policy statement to play in the next FOMC meeting, it will be prudent on part of the Fed to decide on the kind of safety net it should be providing for the Americans lest it may end up playing a bigger game of US$ 8 trillion QE starting MIDDLE OF THE YEAR or sooner.

Here are the charts which in my wisdom support Trump and his statement.

Of the two indices shown above, Nasdaq Composite gives a better indication of the things in the offing and looks more scary in comparison to Dow.

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Disclaimer:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's/ organisation’s investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.