Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.


3 Reasons Why Catastrophe Will Be New Fed Chair Yellen's Legacy

Recommended Posts

Yesterday, Janet Yellen was confirmed by the Senate to be the next Federal Reserve Chairman. History will judge her to be the one holding the markets...

Yesterday, Janet Yellen was confirmed by the Senate to be the next Federal Reserve Chairman. History will judge her to be the one holding the markets reins as the next mega stock market bubble collapses. It is somewhat unfair she will be blamed almost entirely, as a majority of the damage will have been inflicted by her predecessor Ben Bernanke. However, she has always been as dovish, if not more than him, never dissenting.


The bed for the United States and world has already been made. At this stage it is just degrees of bad that Janet Yellen can control. How much more money is printed? How much higher does the stock market go as the bubble inflates? How much more debt will the U.S government take on and how much higher will the balance sheet of the Federal Reserve go?


Top 3 Reasons This Market Will Collapse In 2014-15


1. The Federal Reserve Balance sheet has risen to over $4 trillion. The Federal Reserve is still planning on printing $75 billion every single month going forward. As the economy continues to improve, inflation is going to jump (this always happens with a better economy, even ignoring the massive printing of money that has been done). History has shown us that when inflation starts, it is very hard to control. A good example is China in recent history. In addition, never in history has this much money been printed.


2. Rates are going much higher and soon. We have already seen the 10 yr yield surge above 3%, up about 100% from its recent lows. As much as the Federal Reserve wishes it could control rates, there will be a breaking point where the flood gates open (it likely started already). Rising rates will put a major halt to economic growth as the borrowing of money becomes too expensive for most. Housing will take another hit as well. This means higher unemployment and lower economic growth...just as the economy was starting to do better.


3. The stock market will crash. The stock market has risen 150% off the 2009 lows (without any major corrections) partly because the world is not ending but mostly because the Federal Reserve has been there to backstop any negatives with more printing of money. That money has artificially deflated rates causing money to flow into the stock market. The bottom line is that the market is on a drug called QE. There is no fear of anything because the market feels the Federal Reserve will always be there to bail it out. As the Federal Reserve lowers the amount printed, the market will stall in these upper levels (starting to see that now). As rates rise and economic activity start to stall out later in 2014, the market will hope for more intervention from the Federal Reserve, however quickly realize the Federal Reserve's former tactics will not work. This is where the major freakout will happen. Imagine drug withdrawal.


As Janet Yellen takes control of the Federal Reserve, the markets expect more of the same. While the bed has already been made, she will likely make it worse by continuing to feed the drug of QE into the market and economy. There is only disaster waiting at the end of this ride. There is no way you can print over $4 trillion dollars and not have some negative overdose down the line. The markets are priced to perfection and the dark clouds can be seen on the horizon. The Federal Reserve portrays itself as having the ability to always control the outcome. However, we clearly know from history this is not the case. Beware the bubble collapse cycle which hits in mid 2014-15.


Gareth Soloway


Share this post

Link to post
Share on other sites

I wouldn't be so sure on that Yellen thing.....


what I find kind of funny is the fact that I remember exactly that when the hearing in front of the Senate took place, Yellen told frankly that no taper is coming.....yet again, one month later, Fed delivered a taper and now markets are looking for it to continue at the next meeting.......


I would say she will try to make a point after taking the Fed and everything will be changed...


just saying



Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Topics

  • Posts

    • divvy, Without saying something about when fibs will likely resonate/hold, that statement has no more significance than saying something like “moving averages  are helpful in confirming trend-trading entry points. ... where the pullback could reverse and head back in the trending direction.” (hint:  swing ‘slope’ is good place to start... slopes of last 3 swings to hone)
    • https://bankunderground.co.uk/2018/11/13/the-seven-deadly-paradoxes-of-cryptocurrency/
    • AI works with data it is given.... just sayin’ There are rumors that the ‘artificial intelligence’ in all the AI funds may stop buying and even start selling.... just sayin’ ...not an issue --- until you consider that there is not a diverse universe of AI ‘models’ out there.  In fact, the universe of neural net models are close to a weird ‘singularity’ esp on the trading platforms.... just sayin’ ie...not an issue --- until you consider that the outputs of Unsupervised Learning models, Supervised Learning models, Semi-supervised Learning models, and Reinforcement Learning models all correlate much more than one would hope.  Ie Some ‘geniuses’ develop an original model in Boston, another team builds a new proprietary model in Chicago... another out of Princeton,  etc etc. etc etc etc and all the models learn to do about the same things.... what am I just sayin’ ?
    • Ethereum (ETH) Daily Price Forecast – November 15 ETH/USD Medium-term Trend: Bearish Resistance Levels: $240, $260, $280
      Support Levels: $170, $160, $150 Yesterday, November 14, the price of Ethereum was in a bearish trend. Price was fluctuating at the $210 price level before the bearish breakout. The crypto's price was resisted by the 12-day EMA and it is approaching the $180 price level. The digital currency has reached its oversold region, therefore traders should look out for buy setups so as to initiate long trades. This will enable traders to earn partial profits as the crypto's price commences its bullish trend. Meanwhile, the MACD line and the signal line are below the zero line which indicates a sell signal. The crypto’s price is below the 12-day EMA and the 26-day EMA which indicate that price is in the bearish trend zone. ETH/USD Short-term Trend: Bearish On the 1-hour chart, the crypto’s price is in a bearish trend. The crypto's price fell to the low of $182.05 and price is ranging at that price level. The crypto’s price is now below the 12-day EMA and the 26-day EMA which indicates that price is in the bearish trend zone. The MACD line and the signal line are below the zero line which indicates a sell signal.     The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.   Source: www.bitcoinexchangeguide.com   Top of Form   Source: www.bitcoinexchangeguide.com
    • Fibonacci retracement levels are helpful in confirming trend-trading entry points. ... where the pullback could reverse and head back in the trending direction.

Important Information

By using this site, you agree to our Terms of Use.