So, how are all these Fed programs working out for Americans? Lets look at the data:
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| Americans begin going back to school and living off their credit cards to maintain standard of living |
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| As Free trade agreements get passed sending jobs overseas and more money gets printed by the Fed causing food inflation, Americans can no longer afford to eat |
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| The housing collapse should have had a reaction effect by lowering the cost of gasoline based on lower demand; however, the Fed money printing machine made sure while Americans went broke, rich oil executives continued to get paid more |
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| As more and more laws and executive orders get signed limiting the constitutional rights of Americans in order to pump up the Military Industrial Complex, and the Fed prints more money pushing up cost, Americans lose jobs |
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| Wars and Keynesisan Voodoo Economics push more people into despair |
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| As more and more people get a college degree, taking on more and more debt, Americans incomes go lower and lower |
To try and get a handle on 2012, we have to look at bonds vs stocks their reaction to Fed actions; then make a guess as to what the FED will do next.
Here we have TMF, which is the 20 bond bull etf, overlayed against the S&P. I have marked on the S&P the QE and Operation Twist beginning times. Its clear that without FED money pumping the S&P would have continued its collapse from the housing bust. What we also see is, when the FED takes foot off the gas peddle, the S&P begins to move lower, which is the natural order of markets reflecting actual real world economies. The FED is determined to go against the Laws of Natural Order. Its clear the FEDS mandate is to keep stocks up beyond all other objectives, and at all cost, no matter how destructive to the real world economy.
The latest Fed action, Operation Twist, has done nothing more then create a bear wedge in the S&P, a reaction to the action of a Head N Shoulders top. Notice TMF has closed outside its upper Boilinger Band and the ADX is signaling this extreme upside move in TMF induced by FED action is now beginning to change course. Same as with all other FED actions, the positive results are short lived and come with a long term destructive cost.
The TMV is the 20 year bear etf. As the FED continues to pull out his bag of tricks, the TMV suffers along with the American public. However, TMV is showing divergence of trend in RSI and is at a Bear extreme in ADX. Once again we are seeing FED action having a temporary effect that has about run its course, soon to move out of the way for the markets to price in reality.
The UUP represents the US Dollar. As the FED prints more dollars, the value of the product moves lower, by extension Americans standard of living. Notice QE1 as it runs its course, the effect on the dollar begins to lessen and natural order takes over. In other words, the dollar begins to price in inflation. The S&P does a Head N Shoulders pattern and thus triggers panic phone calls from Wall St to the FED. The Fed responds with QE2, sending Americans into further debt leverage abyss, but pumping up corporate profits and stock prices. Notice the same Natural Market Selection begins to take place, another Head N Shoulders forms and the dollar bottoms; more calls from Wall St to the FED, here you go, Operation Twist.
Conclusion: The path of total destruction of America and the constitution is set on a path of no return. The short term fix/kick the can will always be the path taken. Expect inflation and depression to continue to squeeze America until WW3 is finally declared. Expect QE3,4,5,6 until the final collapse.
Most of all, Natural Order will prevail. Expect markets to price in the reality of run away inflation, jobless, homeless and starving world populations, under Fascist dictator rule. Rome is burning once again and history is set to repeat.
Tim Kathlina
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