Why has the US Federal Reserve suddenly changed from supporting Clinton to supporting Trump ?

10 Sept 2016

Dear Fellow Investor,

On Friday, we had a hawk scare as the Dow Jones dropped 408 points.

Weekly Dow Jones as of Friday 9 Sept 16

 

Major support at 18000- 18050  held which was a bullish  line change going back to May 2015. Volume was relatively moderate. If volume was ultra high that could have signalled a bearish trend turn.  If price holds above the support it means the bullish May line change is confirmed and expect higher prices medium term.

Federal Reserve board members have been exceedingly hawkish in the last few days. They have been beating the drums for higher interest rates to be administered on 28 Sept, the next FOMC meeting.  That was all that was needed to precipitate a market correction by program traders.  The hawks stirred up the retail crowd and they joined in the panic selling.  Everything was sold- crude oil, gold, commodities and bonds world wide.    

If prices continue to fall as happened on the December 2015  hawk scare when the Federal Reserve raised interest rates ¼ point, Donald Trump will get a substantial boost to his election chances in the upcoming November election. That could be the reason the Federal Reserve officials orchestrated the market drop. 

Why has the US Federal Reserve suddenly changed from supporting  Clinton to supporting Trump ?  

Clinton and her socialist supporters such as Bernie Sander, Elizabeth Warren  have said last week they will take away the independence of the US Federal Reserve and place it under political control. It means taking away the independence of the bankers and putting control back in the hands of the people.  

This is a radical and dangerous policy.  The US  people will vote for more entitlements, more welfare, more hand outs, free healthcare, free university education, and open borders to let in more migrants who will become fast tracked to become voters .  

The Chinese will not stand by idly. They will devalue the Yuan and this could precipitate a world recession/ depression. They will do so to protect their vast store of US Treasury bonds which would lose value should the US raise interest rates. 

From a practical point of view, Clinton would have a difficult time implementing this radical proposal as she does not control congress who pass the laws. It does not look like Clinton’s party  will take back congressional control.

For this reason, expect the Fed Reserve hawks to fly back to their nests for the time being.  The selling panic will subside. 

To protect against interest rate rises, we have allocated your capital to only the most solid companies with low or no debt . We  also have increased our cash holdings in HK and Sing Dollars.

Invest well and grow your wealth,
 

Bill 

One of our clients rescued 4 abandoned orphan pups from a drain. The mother was killed. They are healthy, frisky and very active. If anyone wishes to adopt, please let me know.