Summary: Fed is on track to commit $11.5 trillion in “gross cumulative support”<br> Minsky - Moment comes when stability begets sudden instability<br> Carl Swenlin says Apple’s vertical blow off months away from reversal<br> <br> <br> <br> The McAlvany Weekly Commentary<br> with David McAlvany and Kevin Orrick<br> <br> "Not QE" Is Costing Every Man, Woman, & Child $183 Per Day<br> November 20, 2019<br> <br> "Here is the present tense reality. It’s simple. The markets are on a tear higher. So we have, as we described earlier, a form of stability. And I would just remind you of Minsky, at this particular moment in time, so you don’t have to blindly go to the financial slaughter when instability becomes a reality of the moment, and I think that moment is not far from now."<br> <br> - David McAlvany<br> <br> Kevin: Ah, David, the price of prosperity, and the price of calm, and the price of low volatility. All you are really asking me, and my kids, and my wife, and my parents, and every other man, woman and child in the United States, is for $183 a day. That’s it. For every head in the United States, every soul on this boat, $183 a day right now. Good thing that we have prosperity.<br> <br> David: Yes, QE-4. So we have yield curve and that yield curve has now a positive slope once again.<br> <br> Kevin: Ah, I’m so glad we’re back. No recession, right? That’s what that means?<br> <br> David: Yes, because the inversion which was occurring and which traditionally has signaled recession, and as recently as spring of 2019 the San Francisco Fed was referencing that as a very reliable indicator of recession on the horizon.<br> <br> Kevin: And an inverted yield curve is simply shorter-term rates paying higher than longer-term rates. And when it inverts, it usually says there is going to be a recession. That happened this spring.<br> <br> David: We’re actually back to normal. It no longer suggests signs of a recession, and we’re glad to see the mechanics of the Fed intervention working effectively, where QE-4 they are buying down the rate at the short end of the curve and eliminating those inconvenient signals, and it reinforces the market uptrend and buttresses confidence. That is kind of how it reinforces the market uptrend. God forbid the inversion remain and investors look at that and then begin to act on the suggestive recessionary period ahead.<br> <br> Kevin: What you are talking about is it is artificially being changed. In other words, this $183 a day, every man, woman and child in America is paying, that is this QE-4 or what Powell called, “Not QE.”<br> <br> David: (laughs) That’s right, so all is well thanks to the benevolent, powerful steering committee at the FOMC, the Federal Open Markets Committee, and so we have established the price of peace, we have established the price of calm, at this moment, and it is 60 billion dollars a month, roughly 2 billion dollars a day. Again, if that seems like an expensive habit, or what it would take to maintain a perpetual buzz, you just look at that national addiction, divide by every man, woman and child, and as you said, it is a measly $183 a day, which, at some point, if we’re not careful, is merely going to be the cost of a cup of coffee.<br> <br> Kevin: I wonder if the Fed has ever been this powerful in history. A few days ago Trump invited Powell into the oval office. It was a completely unexpected meeting, but I know that Trump tweeted afterward that he was quite pleased with how it turned out.<br> <br> David: Fascinating. You always have two sides of the story. On the one hand, Trump says, “Very good, cordial meeting. Discussed, including interest rates, negative rates, low inflation, easing dollar strength, its effect on manufacturing, trade, etc. Powell walks out and one of his first comments is, “We’re going to operate according to our legal mandates.”<br> <br>
