Did the Fed Prevail this Past Week?

Despite some drop in stock prices this past week, nothing too dramatic happened. Did the Fed prevail after all was said and done?

Gold took it on the chin - but not too badly. It's likely still bottoming before gathering strength for a new rise. Bonds have been falling in price, as interest rates creep up slowly. But that may simply be a correction in a longer-term trend down for interest rates, which will result in bonds continuing their rise, despite the constant warnings that the bond bull market - like the stock bull market - is due for a reversal.

Our last post focused on gyrations in stocks and other investment items. We brought up then the possibility that some assets - beginning with stocks - may be on the verge of correction, maybe something bigger than just a correction. This past week could have been the tip of an iceberg. Or maybe not. Maybe the Fed's continual pumping of "liquidity" (money) into the economy and the markets will continue to stave off the inevitable. They do say "Don't fight the Fed," don't they?

So it looks like financial markets continue to linger right where they've been for months - kind of flopping around - when it comes to stocks, bonds, and gold. All this even in the face of those "divergences" we (and others) have noted, with a degree of concern.

And as financial markets have been holding on, so it seems the economy tracks in the same fashion. After the disaster of the C-Virus lock-downs, there's been recovery. Oh, maybe not the mighty upsurge some predicted and even insisted was happening. In fact, not a mighty surge at all. 

For example, we keep hearing there are "10 million" (or some similar number) jobs to be filled. Sounds promising, right? Except they're not being filled, for the most part. We could dissect this claim, but let's not now - except to say that the jobs may well be seeking able and willing bodies, but the able may not be willing, for some reason. Either that, or some of the jobs available require skill sets that those who could fill them don't have. Or maybe many of those jobs don't pay enough to entice those collecting unemployment off the sidelines, or...hey, I thought we weren't going to dissect this for now.

Could it be that despite the offsetting weak points in this economic recovery, between the Fed and government hand-outs, the economy keeps getting shots of "stimulus" that keeps the lungs breathing and the heart beating, despite the underlying weakness?

There is one area, though, that the Fed may not be able to prop up: our society. Divisions that began before the C-Virus Mess descended haven't disappeared. Let's remember that, while "The Vaccine" takes up most of the media's attention these days, the vaccinated and unvaccinated aren't the only divisions that exist. Those divisions seem, if anything, to have grown wider. Add to them now the Vaxed/Un-Vaxed.

And while the Fed can't really help here, the government - our fearless "leaders" - might, don't you think? If you do think this, you likely missed our top fearless leader's address to the nation last week. Referencing the un-vaxed, he said "We're losing patience with you," or words to that effect. So much for a leader healing divisions.

The Fed's doling out continuous shots of stimulus drugs may hold the markets together for a while. (Who knows how long?) But will the government's continuously pushing that other "shot" manage the same when it comes to our society? (It's a rhetorical question.)

The Fed prevailed in its sphere. Some welcome this. They think they're doing a good job. Okay, let's leave it at that.

As for the government healing divisions, well, we'll leave it at that too.