Why I’m concerned about the FED’s attitude (and how I think it will affect things)

I have very little trust in politicians, banks and regulatory bodies. This problem stems from my love of the film The Big Short. The foundation of my trading is simply looking for things that are wrong, companies under scrutiny, errors of judgement, things that are obviously way off the mark, finding the technical entry and entering at that point.

The FED decided not to have an interest rate hike but to continue with low-interest rates until the economy heals. This is very unusual, normally they pre-empt inflation rises by increasing interest rates. Sure this did a lot of good and all my stocks, shares and everything else went up in value. But I’m worried. It doesn’t sit right. The reason they are holding back? Because they think an increase in inflation is only going to be temporary.

It’s likely the UK will go the same way today with the BOE speech from the Governor of the Bank of England. But I find the whole thing really worrying, it’s like the USA and UK are completely ignoring what is happening and just carrying on as normal, making no changes. But this is not normal, my worry that this is going to hit and hit hard and they know it. So my questions that I have no answer for as yet. I’m going to be looking for patterns and anything that can explain this madness to me.

The dollar rallied on the news against the already struggling EURO but this inaction could hurt a lot more in the long run.

In the short term, I’m bullish but I’m watching very closely and doing a lot of analysis all the time, looking for a crack in the armour. People around the world are really really struggling, governments have spent trillions of dollars they don’t have. This sounds very much to me like the housing crisis depicted in The Big Short, where everyone thinks everything is rosy because of what everyone is doing. It’s called plank road syndrome. Where one town bought plank roads because everyone else did. Little knowing these roads were nearly useless and would hardly last.

I would have expected more pre-emptive moves. But I see nothing.

I predict a rally in sterling today if we go the same way as the FED. But I don’t like it,  I don’t like it at all.

Yields are going up, everything is going up but in my mind, it doesn’t add up. Leaving inflation to run riot is a bad idea. Yields going up means bad for stocks. But this does look so much like the housing crisis.