Dollar can stabilize but stocks and bonds will see the worst bear markets in the history as Federal Reserve has lost the confidence of investors
Fred Day
Jun. 29, 2008

Most of us are focused on the stock market’s fall in the first half of this year. But silently the bond market has performed worse than the stock market. In an economy threatened with recession, the bond market should have prospered while the stock market suffers. This time it is different. People wonder why and how that happened. Those who exited stock market and put their money in Treasuries suffered actually more than those kept their money in the stocks.

In a nutshell other than precious metals, foreign currencies and commodities, there was safe heaven in the last six months.

It just shows how devastating the stagflation is and how callas the Federal Reserve is. Saving Bear Sterns was good although the way it was saved is questionable. But the way Federal Reserve failed to contain inflation is noteworthy. Investors have lost their confidence in the Federal Reserve as Bernanke has called the market and economy wrong again and economy.

All that Federal Reserve has done is to let fires break out and then fight it with high powered hose called US taxpayers hard earned money. That is not the way to operate world’s largest central bank.

The dollar probably will stabilize and the precious metals as well as the commodities consolidate here. But the stock market and the bond market will the worst bear market ever because of fiscal mismanagement by the Federal Reserve.

Dollar can stabilize but stocks and bonds will see the worst bear markets in the history as Federal Reserve has lost the confidence of investors
Fred Day
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