Lots of cross-currents during today’s tape. Let’s start with the fact the Fed is making themselves look ridiculous, being dragged around by Trump. Also, the 2s and 10s tightening like a motherfucker today. In the past people cited bullshit treasury duration spreads as warnings. But listen to me pal, the only one worth paying attention to is the 2s and 10s and that’s only 14bps now.
Gold dropped. Bitcoin surged. Stocks dropped.
I won’t make any definite determinations here, however. It’s tempting to call for a collapse — but the market has proven to be resilient. That being said, this Master Ace Trade sold out BEFORE the Fed meeting and raised his cash to 40%. So I was already ahead of the curve.
Did I mention I bought SOXS too? No I did not — because free picks on the free site is illegal now. Sue me.
I’m only up 6.5% for the day, no big deal. Nothing to brag over.
The policymaking Federal Open Market Committee drops the target range for its overnight lending rate to 2% to 2.25%, or 25 basis points from the previous level.
The Fed cites “implications of global developments for the economic outlook as well as muted inflation pressures” in its first rate cut since December 2008.
The Fed also leaves the door open to future cuts, saying it will “act as appropriate to sustain the expansion.”
The central bank also ends its balance sheet reduction two months earlier than planned.
2nd biggest 2s30s flattening since Brexit pic.twitter.com/5d1lWtkKhM
— zerohedge (@zerohedge) July 31, 2019
POWELL: I DIDN'T SAY IT'S JUST ONE RATE CUT
this is an absolute disaster
— zerohedge (@zerohedge) July 31, 2019
yuge flattening on 2s10s pic.twitter.com/u5V3QKvEpm
— Alastair Williamson (@StockBoardAsset) July 31, 2019
I’m thinking we fucking plunge thru the floorboards and fuck everyone tomorrow. But I could be wrong. I also think gold is a steal here. Whenever it drops it pops the next day. But my best advice is to raise cash. We’re in a dangerous spot now, because of the bond market and because we’re doing something with rates that has never been done before — cutting while at record highs.
But get this statement out of Powell. What sort of shit is this?
Powell on not fearing the extension of this recovery: "There’s no sector that’s booming and therefore might bust."
Fed officials have also been comfortable with a continually tightening labor market that hasn't resulted in huge inflationary pressures
— Brian Cheung (@bcheungz) July 31, 2019
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FED cuts -> Treasuries up, stocks down. So damn obvious. How many times did I tell you guys: you don’t want to hold stocks through the July meeting. FED panic cuts signal the end of the Bull market.
Also, if the FED is panic-cutting at ATHs, then you can gurantee they’ll be buying long term Treasuries during the next recession. 30 year will hit 2.0%. Do the math on that.
Also, Gold down, another move that will only come to a shock at those that weren’t investing in 2008.
Someone said that gold initially drops on market downdrafts because it is used as collateral. This is not generally the case for Bitcoin.
Seems to make sense and seemed to work today, but in the long run – we will see.
Gold has a long history, but Bitcoin is still new and untested in the heat of a recession.
Is Bitcoin a true store of value or just a (bubble) trading vehicle? Bitcoin was a non-factor in 2008, so we’ll see if it correlates with stock or Treasuries in the next recession. I’m guessing the former.
PMs did fine for about 6 months after the stocks peaked back then. It was only when stocks were severely being beaten in ’08 that the last resort liquidity from gold was tapped.
Anyway, the coming big adjustment (whenever it happens) will be different for US investors in that the people will be seeking to get out of dollars, and out of fiat generally, on an unprecedented scale.
Right, but that bull market ended based on high oil prices and high inflation expectations. When the market realized that high inflation was a passing fad, PMs crashed.
S&P peak: Sep 2007
OIl peak: May 2008
PM peak: Feb 2008, double top (May 2008)
QE than re-energized PMs, but again peopel realized tha the stimulus wasn’t creating inflation (because the stimulus went to the Investor calss, not the Consumer class).
I’m one of those Exodus Insiders and yes I was perplexed by Dr. Fly’s $SOXS move but yea congrats on that trade Sir. Regret not following. But I’ll make it up NP.
oops