Warning Signs Building, but…

No meltdown yet.  I have extended my vacation through the end of the month as I still see the turn down more in the late September,early October period, in any case my macro positions are prepared for whenever it occurs.

Turmoil around the world, whether it be Russia/Ukraine, or Irag/ISIS, or maybe something new, add a little fear to the market momentarily but the belief that the FED will be able to handle any big problems is the primary force.  As a macro trader, I still believe that the time will come when the light will come on, and it will be realized that the mandate of the FED is to moderate economic cycles, not to dictate them.  And the primary way to accomplish that is to dampen the exuberance in periods of excess, what ever they may be at the time.  We are not seeing the markets or congress reach that realization yet.

You can see the monthly S&P chart here and the periods when the FED intervened and exited since the last meltdown in 2008.  The yellow lines and date correspond to the time when a QE was started and the red line and date correspond when the QE ended.  The two rectangle boxes, one blue, one white correspond to the overlapping periods when market prices have overshot and multiplied versus the basic economic situation.

Fed Excess Boxes-2

 

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