BALTIMORE \u2013 The U.S. stock market broke its losing streak on Thursday [and even more so on Monday, ed.<\/em>]. After five straight losing sessions, the Dow eked out a 92-point gain. The financial media didn\u2019t know what to say about it. So, we ended up with the typical inanities, myths, and claptrap.<\/strong><\/p>\n <\/p>\n \u201cInvestors\u201d are pushing the DJIA back up again..apparently any <\/em>excuse will do at the moment. The idea may backfire though, as exactly the same thing<\/em> happened shortly before Sweden\u2019s euro referendum (a prominent pro-euro politician was killed by a \u201clone nut\u201d a few days ahead of the vote), and Sweden still had the krona last we looked\u2026 \u2013 click to enlarge.<\/p>\n \u00a0<\/span><\/p>\n \u201cBrexit panic may be your big chance to buy the S&P 500,\u201d<\/strong><\/em> says a headline at\u00a0Marketwatch. The article claims investors have pushed down the value of the S&P 500 in fear of a so-called \u201cBrexit.\u201d<\/p>\n This Thursday, in a national referendum, British voters will decide whether to end Britain\u2019s 43-year membership in the European Union. But there are a number of problems with this\u2026<\/strong><\/p>\n First, there has been no big rout in the S&P 500; it\u2019s only slightly below its all-time high.<\/p>\n <\/p>\n Second, Brexit is a mystery to most U.S. investors, not a cause for alarm.<\/p>\n <\/p>\n Third, nobody knows which side will win \u2013 or what it will mean.<\/p><\/blockquote>\n Would a Brexit be good for Britain? Would it be bad for stocks? Nobody knows!<\/strong> Meanwhile, the\u00a0Financial Times<\/em>\u00a0focuses on \u201cslowing job growth and risk of Brexit\u2026\u201d<\/p>\n It notes that a possible Brexit next week is one reason Fed chief Janet Yellen cited for holding off on raising U.S. interest rates at last week\u2019s monetary policy meeting. <\/strong>The newspaper also notes that the Fed has left \u201cthe door open\u201d to rate increases.<\/p>\n We\u2019ve been saying the same thing for years: The Fed will NEVER follow through on its pledge to return interest rates back to \u201cnormal.\u201d Never is a long time; but so far, so good. The door is still nailed shut.<\/strong><\/u><\/p>\n <\/p>\n The \u201crate hike cycle\u201d has even become a topic for cartoons these days, a sure sign that the idea is in deep trouble\u2026<\/p>\n <\/p>\n <\/p>\n First, the Fed waited until last December to pry open a single quarter-point rate increase. That took the federal funds rate \u2013 the base lending rate of the entire economy \u2013 to all of 0.25 \u2013 0.5%.<\/p>\n When that set the world\u2019s nerves on edge, the Fed did as we warned it would: It put away the crowbar\u2026 procrastinated\u2026 hesitated\u2026 mumbled\u2026 and dragged its feet.<\/strong><\/p>\n Every month brought a new meeting of the Fed\u2019s monetary policy committee\u2026 and each meeting brought forth an effluent rich in waffle and hocus-pocus.<\/p>\n The Fed\u2019s chief witch doctor, Janet Yellen, says the committee will make its decision based on the incoming data. The next move toward normalization of interest rates will be \u201cdata dependent,\u201d she insists.<\/strong><\/p>\n That idea is preposterous, too.<\/strong> These are markets we\u2019re talking about; they go up and down. After so many years of a bull market on Wall Street, Mr. Market must be planning for a change. Stocks gotta go down sometime. Can the Fed raise rates in the face of falling stock prices? We don\u2019t think so.<\/p>\n And with the annual rate U.S. GDP growth falling below 1% in the first three months of the year, a prudent investor should prepare for a little backsliding in the economy, too. Will the Fed cling to its \u201cnormalizing\u201d program when a recession sets in? Nah.<\/p>\n <\/p>\n Fed economists studying \u201cincoming data\u201d.<\/p>\n <\/p>\n Bear markets and recessions are facts of life.<\/strong> Because mistakes are facts of life. That\u2019s why markets go up and down. People pay too much for stocks; they need to take a breather until their companies are worth what they paid for them.<\/p>\n Businesses invest too much\u2026 hire too many people\u2026 produce more than they can sell. <\/strong>Occasionally, they, too, need to slow down, work down their inventories,\u00a0 lay off workers and prepare for the next growth spurt.<\/p>\n <\/p>\n There is no magic to this, nothing new to these patterns.<\/strong> Yet investors are surprised every time! The headline news is still relatively good \u2013 positive GDP growth, high stock prices, and presidential candidates who will \u201cMake America Great Again.\u201d What more could we want?<\/p>\n And yet, even with these benign conditions, the Yellen Fed is fearful.<\/strong> It won\u2019t take a chance. It won\u2019t make a move. The door is not open; it\u2019s closed. Of course, the Fed knows that the headlines mask the real weaknesses in the economy.<\/p>\n Industrial production has been falling for nine months in a row. Factory orders have been going down for the past 18 months. Commercial bankruptcies are rising. And tax receipts are beginning to fall, as they typically do before a recession.<\/strong><\/u><\/em><\/p>\n <\/p>\n![\"1-Brexit](\"http:\/\/www.acting-man.com\/blog\/media\/2016\/06\/1-Brexit-Industrials-Average.png\")
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<\/p>\nOn Edge<\/strong><\/u><\/h3>\n
<\/p>\nUpsetting the Applecart<\/strong><\/u><\/h3>\n