Stocks fell hard again Friday, December 7th, after another disappointing employment report. This was not according to plan. Large corporations were given a massive 40 percent tax cut on the theory they would expand and hire. Not happening. The tax cut would have been more efficacious had it gone to small businesses and middle-class households, who are responsible for 70 percent of job creation and 70 percent of spending.
Our key trend-finder indicators remain on Sell signals this weekend. Housing is in the tank, auto sales are struggling, and the stock market is plunging. The Fed is sucking $80 billion per month from the economy to clean up its bloated balance sheet of securities they purchased over the past decade. It is too much, too fast. This is a contractionary policy. The Fed will announce its latest policy on interest rates this month, and if it raises rates again, in the face of the slowdown that the economy is showing, not only should Powell be fired, he should be arrested. His focus is more on normalizing the Fed’s balance sheet than the U.S. economy, which is dereliction of his Congressionally mandated duties. This is what happened at the start of the Great Depression, the Fed tightened as the stock market and economy sank.
