Jim Cramer micromanages the bond market and Fed Funds for you

Jim Cramer wants you to know that Tuesday’s supposedly poor market action prior to its in-day upward reversal was the market telling you that that it wants a rate cut. What Jim is actually saying is something along the lines of “CNBC is paying me big bucks to put on a show and rationalize every friggin’ move the market makes on a daily basis, and make sense of it for you so you don’t have to use even one tiny little brain cell of your own. Hey, it’s not an easy job manufacturing rationale on a daily basis.”

Here is the real news: The market went down and then the market went up yesterday, and it had nothing to do with the Fed or rate expectations. Maybe the oncoming recession is prompting an uptick in media eyeball harvesting as its margins get compressed. Sell sell SELL!

You can click the pic for the article and read between the “head” lines, courtesy of your favorite financial TeeVee star.

According to Cramer, there needs to be “weakness across the board” for the Federal Reserve to actually cut rates.

The financial media are constantly feeding the notion that Fed rate cuts will be good for the economy and hence, for the markets. But, this…

While it could always be different this time, what is not up for debate is that the last two natural (i.e. not pandemic-induced) bear markets were preceded by a negative divergence by the 2 year Treasury yield to the Fed Funds proxy 3 month T-bill yield. Fact. Another inconvenient fact (to Jim Cramer and the media fantasy machine) is that the current situation represents a whopper of an example of a divergence with the stock market bulling along at a breakneck pace.

The conclusion is as we’ve been stating all along; it is not when the Fed is raising interest rates that you need to worry, it is when it starts cutting rates. This dovetails with more historical proof from the perspective of the Yield Curve. It is not when a curve inversion takes place that you need to worry (media began an inversion worry campaign in 2022). It is the subsequent steepener that will do the (bearish) trick. Here is the graph from Monday’s post on the matter:

Can you imagine what it will be like if/when both the 2yr yield divergence and a new curve steepener play out to historically indicated conclusions simultaneously?

The economy and markets are on borrowed time. Speaking of borrowing, those in current political power would love nothing more than to see US Federal borrowing binge ($34 Trillion+ and counting) keep things propped to and through the oncoming election. T-minus…

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