The Fed Just Did What! Federal Reserve Go Brrrrrr
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OHHHH The good old fed is at it again federal reserve is 1 step away from straight-up buying stocks… We are at the last step now… Absolutely unreal. The feds balance sheet has gone crazy lately and it is now over 7 trillion dollars! The fed is now buying corporate bonds My word.
The economy we know is in a bad place Unemployment is in a bad place GDP is in a bad place and while that is all going on we have a potential massive asset bubble brewing Who would have ever thought an asset bubble would be created during a really bad economy haha! Can’t make this stuff up. More stimulus checks are likely coming by the way.
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Well guys, though, is doing some more unreal stuff out there in this stuff a matter of Okay, there’s some unbelievable things I can’t really believe what I’m kind of seeing out of the Fed here recently. This is unbelievable. I mean, absolutely unbelievable.
If you’re an investor in the stock market and investor in any market for that matter, you’ve got to like pay attention that you got to at least care about this, because it’s pretty unprecedented stuff that is going on right now at the Federal Reserve.
And I feel like there’s actually not enough attention around this at the moment. Okay. So if you’re wondering the Federal Reserve, what is their job really, okay, I will tell you the honest truth on what their job really is. It’s to keep asset prices up and it’s to bring the economy up, okay.
That is what the feds job really is, at the end of the day, those two things right there. Now, if you look up what is the Fed job technically, they say things like this, the responsibilities of the Federal Reserve include influencing the supply of money in credit.
Regulating and supervising financial institutions serving as a banking and fiscal agent for the United States government and supplying payment services to the public through depository institutions like banks, and blah, blah, blah, the feds job really is to keep asset prices up and to bring the economy up, okay.
And especially in this day and age that we are in right now, that is really what the Fed is doing. Okay, they’re supposed to try to keep, you know, inflation in check and deflation and check, they’re supposed to not allow the dollar to decrease too much in a short period of time, or increase in too much in a short period of time.
But honestly, guys, those are the two realist jobs. Okay, I just got to hit you with some real facts. Those are the real facts. Okay. But let’s be very, very clear. Who influences the Fed, okay. legislative branches, executive branches, they have huge influences, you know, politicians, they have huge influences.
On the Federal Reserve. These are supposed to be separate entities. The US government supposed to be its own thing. The Federal Reserve is supposed to be its own thing. But we would be absolutely doing a disservice. By the way, smash that thumbs up on I think I forgot to mention that.
How can I even not mention, that’s the most important thing in the whole video. Okay. The influence coming from the US government is massive on the Federal Reserve. Okay. And it’s just denying the fact if you’re assuming like the Fed does not care what whoever’s in office things, and what the legislative branch things like.
Absolutely, there’s a massive influence on fed decision making coming from whoever’s in office at that particular time, okay? The Fed is the scapegoat for politicians.
That’s what the Federal Reserve, it’s, it’s a scapegoat for politicians, you have this massive crowd, right? And a massive crowd of people are always saying the feds doing too much or the feds not doing enough, or you just have a lot of people that was suing the fed the fed the Fed, you know, it’s the feds fault.
And at the end of the day, guys, the Fed is really just a scapegoat for you know, what the US government really wants in the end, that’s just the truth of the matter. Okay, now, the Fed is taking more dramatic actions right now.
And here’s the problem. We’re looking at some crazier things that could be coming next after this thing we’re about to get into. Okay, no, real quick here. I haven’t brought up the Federal Reserve balance sheet in a while.
The last time I brought this up in a video, I guess it was May 26. I brought this up in the video. So I thought, let’s go ahead and check how the Fed’s balance sheet is doing. I’m sure it’s probably increasing, but I don’t know.
Yep, it is. Okay. Now it is well over well over $7 trillion of Federal Reserve’s balance sheet. I think last time we checked on this, and by the way, that was last week. I’m sure it’s even higher than that.
Yeah, you know, this week now, but last time, I think I showed this, I think it was under 7 trillion. Now we’re well over $7 trillion dollars for the Fed’s balance sheet, when you just pull up a one year, it’s really it’s just really get the breadth of how much the Fed has added to its balance sheet recently, and it’s continuing to add, okay, it’s continue to add, it hasn’t ended.
But I mean, look at last year, at this time, you know, the Fed’s balance sheet somewhere in the 3 trillion era, okay, maybe 3.8 trillion. And now here we are, well over 7 trillion if we were to get an actual updated number.
As far as the Fed’s balance sheet, we’re probably at about 7.3 trillion as of right now, if not $7.4 trillion. And here we have, you know, something like this. And this is even the craziest part. We’ll get to the crazy part in just a second.
Then you have a lot of talk, more stimulus checks are coming another round of 12 $100. I’m very confident we will get more stimulus checks out there. I think probably September, you know, probably September, maybe August, something like that.
Don’t be surprised if more stimulus check money and where’s that money coming from? Do you think it’s coming from taxpayers? No, it is not coming from taxpayers. It’s just you know, created out of thin air.
That’s the Federal Reserve infinite money. Okay, the infinite money loop. It’s just, it’s just money that will be created. Okay. That’s where it’s coming from in the end. But this is a craziest thing i’m about to share with you.
And this is going to lead to some you know, potential more dramatic things. Okay. The Fed has started buying corporate bonds now. The Federal Reserve started buying corporate bonds Tuesday, just cut days ago, literally within the past 48 hours, as part of its $250 billion funded by the cares Act.
Which was approved back in March, the cares act it was so you know, in depth, I didn’t get to see this part. But literally the Fed is now buying individual corporate bonds, guys. This is massive. And I realized some of you guys are kind of newer to the financial markets, you know, that are watching this video right now.
And you’re like, why is this such a big deal? Okay, when a company wants to borrow money, it can issue bonds to the buyer of those bonds are lending the company’s money. And usually it’s like investors go ahead and they buy the bonds.
But now the Federal Reserve is stepping in and buying these, okay, this is this is this just doesn’t happen. Okay, this doesn’t. This is one step away for the Fed. What is the one last step for the Federal Reserve now that they’re going to buy individual corporate bonds, there’s one last step for the Fed.
It’s buying individual stocks. We’re literally one step away now. Okay. That’s the only thing more dramatic than buying individual corporate bonds is literally buying individual stocks and the Federal Reserve’s saying, we’re gonna go ahead and buy every stock in the s&p 500.
Today, we’re gonna put, you know, $7 billion in the stock market today, we’re gonna we’re gonna put $10 billion in the stock market today. That’s we’re literally at that point now, where we’re at real risk of the Federal Reserve buying individual stocks. Okay.
By the way, I’m not the only one that thinks that’s okay. This is actually a real possibility now, okay, look at this. Okay. The Federal Reserve is buying junk bonds and corporate debt ETFs as part of its campaign to revive the American economy.
Next on a shopping list. US stocks, as Scott Menard, global Chief Investment Officer at Guggenheim partners told CNN business, this gentleman global Chief Investment Officer thinks it’s a possibility that the Fed could end up starting to buy us stocks.
And after you’re talking about the Fed buying corporate bonds, individual core bonds were literally the next step. The literally the next step for the Federal Reserve, whether it be this year or in the next time something happens is the Fed stepping in and buying the stock market.
Actual stocks. Were right there. This is the guys this is crazy. Okay. And all I got to say about this is let’s hope not okay, let’s hope the Fed does not buy individual stocks does not start buying into the stock market directly. Okay.
You just say the feds helped a lot of things as far as the stock market indirectly through a lot of their actions and you know, making people feel comfortable to invest money. And if it wasn’t for the Fed that the stock market is probably not in its place.
But the Fed actually starts directly buying stocks. Okay, guys, let’s just hope not, because it’s already hard to find deals. It’s like finding needles in a haystack in terms of finding deals out there in the stock market right now, coming from somebody that’s been this market for 11 or 12 years now.
It’s really, really hard to find great deals. It is not a moment in time for me, where I’m just like, Oh my gosh, there’s good deals everywhere. We just buy the stock. But no, it’s like, it’s literally like finding needles in a haystack right now, in terms of trying to find good deals.
Okay, what is the Buffett indicator, Warren Buffett, you guys know, I look up to him as an investing legend, business legend. Everybody should Okay. What is the Buffett indicator both have made the statement above about a metric called market capitalization to GDP ratio.
And this is called the Buffett indicator. And a lot of folks look at this as a ratio to kind of figure out is the stock market as a whole, overvalued or undervalued at a particular time. Okay. And the Buffett indicator is so high, it is ridiculous recently, okay.
Let me look at how high the market cap to GDP is right now for the Wilshire 5000 to GDP ratio. Like look at that, guys. I mean, the buffet, the buffet indicators is just it’s in the sky right now. Let’s just put it that way. Okay.
It is in the sky, it’s higher than in the tech bubble days. Look at weird top down tech bubble days, you know, insanely high it looked like I mean, literally from 1995 to 2000 went up in like a straight line.
Okay, till finally it bottomed out looking at where it wasn’t a great recession. great deal. I mean, great deal as far as the stock market, if you’re looking at around that perspective of 2009 ish, right?
I mean, it was it was low, okay, very, very low look, by far and away the lowest in any time in the last 2025 years. And now we’re sitting at, you know, numbers market cap to GDP, the Buffett indicator higher, literally higher than the tech bubble days.
Okay? That is a little scary. And honestly, that might be why Warren Buffett’s not buying stocks right now you really think about, you know, why is Warren Buffett sitting on 140 billion in cash with like, like, one of the reasons probably is if he really values this as far as the Buffett indicator, if he really pays attention this. Yeah.
Why is he going to want to buy stocks that heavy right now? It really wouldn’t make sense. Okay. So the Federal Reserve, please don’t buy stocks. Please don’t buy stocks. I mean, the Buffett indicator is already off the charts.
I don’t want to see it go any higher, like please. Okay, I showed this in a video I think yesterday or today or something like that. This was from Yardeni capital. This shows you four P’s of the s&p 500 and the s&p four 100 and look at that they’re by far and away the highest, the highest they’ve been anytime in the past, you know, 14 years.
It’s just by far and away, please don’t just stay away from buying stocks Federal Reserve, you make an argument that the feds already causing potentially some asset bubbles, never mind that the Fed gets in here and starts buying stocks.
And we’re literally one step away from that happening, which is the scariest thing. Okay, who else is begging the Fed not to buy stocks? Oh, these investors sitting on ridiculous piles of cash right now.
You know, like I said, it’s hard to find great deals in the stock market as it is right now. Imagine you’re sitting on the biggest cash house ever, like investors are sitting on right now. Right? Look at us $4.6 trillion $4.6 trillion in cash right now.
Okay. That’s not even just cash cash. But that’s money and money market funds. Never mind, you know, the cash that can be sitting in savings accounts, checking accounts, everything across the board.
They’re all at pretty much all time highs, you know, those individuals are definitely in a situation where like, please Federal Reserve do not buy stocks. We’re already you know, in a tough enough situation, when it comes to you know, looking to where to put your money.
That would just be ridiculous. Okay, you guys know, I have cash on the sideline, right? Yes, I’m heavily invest in the market, but I got a lot of cash on the sidelines. And it’s so hard for me to find deals in this market.
It’s ridiculous, okay, I’m not the type of person that’s just gonna put deals in any companies with any balance sheet, I got to really find something I really believe in for the next 510 years that I really liked a lot.
And it’s hard to find those deals, and I have this cash in silent right now. And I’m like the Fed, like you’re already devalue my dollars, like, you know, please don’t, please don’t start buying stocks, you’re one step away. But please don’t do it. Okay.
Is the Fed doing too much? Here’s how I feel. Imagine you got $1. Right, you got $1? Well, how I feel is that dollars just getting shrunk. I mean, as more and more money’s flushed out there than the dollar is getting shrunk again.
And then you know, now my dollar is only worth like George Washington’s face. Now at this point in time. That’s honestly personally how I feel when the Fed continues to buy assets. And when the Fed continues to pump money out into the financial markets, or just out there in the economy in general.
So I think this is why the Fed is so confused right now where they keep pumping money out there. You see moves like this are not buying individual corporate bonds. The Buffett indicator right now is sky high.
Okay, we have four peas that are sky high, but unemployment is also sky high, right? GDP declines are sky high, right? We have corporate losses that are sky high right now, right? corporate profits are awful right now compared to where they were just literally a few months ago. corporate debt is sky high.
And so you look at this. And it’s like, it’s such a weird moment. Because I feel like the Fed has almost created an asset bubble that think about this. This is one of the craziest things ever. The Fed is almost like creating an asset bubble.
I feel like in the in the middle of a massive global recession, right? That this is one of the weirdest situations, you can ever This is going to be one of the weirdest times to look back on throughout history in economic history.
Because you can’t there’s no there’s no other there’s no other like time period, we can look back to where an asset bubble was potentially created during a massive recession. Okay, that this is like literally the weirdest thing in the world that is going on right now.
Usually, if you have if you’re talking about any time period in the past, which once again, for the four P’s are pretty much about this highest we’ve seen in modern history, buffle indicators, the highest pretty much every now like we’ve ever seen it right?
If you’re thinking about that, you usually think about a market that is super hot, the economy is super strong, and it’s getting too frothy, and people are speculating too much. And it’s getting too, you know, scary.
It’s just like, it’s, like do to come down right? There. jusy what you think, and here we are, we’re not in that type of time, we’re not in a time where the economy is great, no, my gosh, things are so strong, and everybody’s got a job, and everybody’s making money.
And everybody’s like, Let’s go, you know, it’s not like, the situation you had kinda, you know, 2005 2006, where a lot of people were doing very good for doing very well for themselves. And they’re like, let me go buy another house, another house, no one can buy it, you know, no money down.
And so you had this frothy moment where the economy was also, you know, very strong in those years until eventually things can come crumbling down. Then the recession started roaring into 2007 2008 housing market comes down.
You had that happen, but the bubble was created during a time period where things were really strong. And here we are, you know, we almost have this asset bubble being created artificially, while things are pretty awful in the economy, let’s be very clear.
The stock market’s not the economy, just because the stock market hasn’t had a great last two and a half months does not mean the economy has had a great last two and a half months. And it also doesn’t mean that the economy is going to have a great next two and a half months.
Okay. Let’s be very clear about that. At the end of the day, what drives the stock market over time, or what are s&p 500 earnings and we don’t know when that’s going to come back. And so it’s just it’s a it’s a weird situation.
And I feel like the Fed almost has to just cool it right now. And I feel like we have to just let things play out a little bit. Let’s just see if the stock market falls 10 20%, like the stock market fell 10 20%, okay, if that’s what it’s going to take.
Like, you can’t, if the Fed keeps doing this type of stuff, man, all they’re going to create is a bigger and bigger potential bubble in the stock market. And it’s not, it’s not gonna be good for anybody in the end is this just not, it’s not going to be good for people that are in the market, because eventually the bubble will pop and then those people will get hurt really bad.
And it’s not good for us investors who have money on the sideline, you know, there’s trillions dollars out there that would love to buy in, but they’re looking and they’re like, looking at all these indicators and all the metrics and I’m like, Wait, what?
Why do I have to buy in at NASDAQ 10,000 right now? Like, how does that make any sense? Why is the NASDAQ at 10,000? All Time record highs when we got this, this and this? It’s just it’s just it’s pure craziness right now. Okay.
So the Fed just chill, man, just chill and please don’t start buying stocks. That’s all I got to say. Because my goodness, guys, the Fed starts buying stocks. I might have to stop stock stock market investing. I might just have to stop and I don’t know what I’ll do. Man, I don’t know what I’ll do, man. So I’ve got to say thank you for watching and have a great day.