Bill Fleckenstein On The Fed’s Propaganda And How It Impacted Markets, Plus A Bonus Q&A

On the heels of the Fed continuing to spew out propaganda, while doing nothing, one of the greats in the business sent King World News a fantastic piece covering the Fed’s propaganda and how it impacted markets, plus a bonus Q&A.

By Bill Fleckenstein President Of Fleckenstein Capital

October 28 (King World News) – Overnight markets were modestly green for the most part, although that had no real bearing on the SPOOs, which essentially went nowhere. However, once New York opened for business, the market ground steadily higher, and by midday it had gained about 0.75%, with virtually everything green…

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Apple was deemed to be a success at beat-the-number, but only rallied a couple of percent and, as was the case last quarter, the devil was in the details, with “only” 48 million units sold versus expectations ranging from 49 million to over 50 million for some dead fish. Next quarter is liable to be a bridge too far, but that thought had no bearing in the early going today.

The pace of the rally slowed a bit as folks waited to find out if the FOMC was going to change its ideal hiking time to “never,” or continue to kick the can in a “data-dependent” fashion.

After the FOMC statement, in which the Fed attempted (with a straight face, no less) to put a December rate hike back in play, the indices tanked straight back to unchanged before laughing at the Fed and rocketing back to the highs of the day, gaining 1%-plus. Away from stocks, leading up to the Fed “news,” green paper was weaker, oil rallied about 4%, fixed income was lower, and the metals were higher, led by silver, which was up 2.5% to gold’s 1%-plus.

Doves In the Hen House

Following the Fed “threat,” the dollar screamed higher and fixed income stayed weak, while oil didn’t flinch. As for the metals, they sold off once again, as fear of the Fed being hawkish (which is absurd) led to that kneejerk reaction, leaving gold 1% lower. Conventional wisdom seems to be that rate hikes are terrible for the metals, but not for stocks, even though that’s not true. 

Included below are two questions and answers from today’s Q&A with Bill Fleckenstein.  The questions are from his subscribers and they get to read Fleckenstein’s answers every day.

Bonus Q&A

Question: VRX, IBM, Theranos….lot of fraudulent activity being exposed. These type of thing tends to come out at the end of a cycle, no?

Answer from Fleck:  “As the tide starts to go out, rot is exposed, yes.“

Question: The economy is doing OK, sure:
S&P 500 Revenue Growth*
2015: -2.9%
2014: +3.8%
2013: +3.1%
2012: +4.1%
2011: +11.2%
*average quarterly YoY
Bloomberg

Answer from Fleck: “The Fed is incompetent, but that isn’t new news.“

***To subscribe to Bill Fleckenstein’s fascinating Daily Thoughts CLICK HERE.

***ALSO JUST RELEASED: An Important Update On The Silver Market CLICK HERE.

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