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It's hard to forget the brief, pandemic-induced bear market of 2020. Perhaps even more memorable is how the Federal Reserve responded.

Respect the Bear in the Room By Carlton Neel, CEO, Chaikin Analytics It's hard to forget the brief, pandemic-induced bear market of 2020. Perhaps even more memorable is how the Federal Reserve responded. The central bank said it would use "any means necessary" to shore up the economy... and the markets. The freefall stopped and reversed. U.S. stocks went on to new highs. And the markets ignored ongoing lockdowns, deaths, and concerns about the economic damage COVID-19 might cause. The Fed pumped so much money into the economy that stocks had nowhere to go but up. But now, it's a different story. The Fed needs to fight inflation... It's higher than at any time since 1982. So the central bank is tightening the money supply and has stopped buying bonds. You see, when the Fed puts money into the system, it's like going to a party where the host keeps filling the punch bowl. But now, the Fed is taking the punch bowl away. The party's over, folks... Recommended Links: NEW: Severe Stock Warning for July 2022 Ninety days ago, Wall Street legend Marc Chaikin issued a dire warning for U.S. stocks that quickly came true. Today, his systems just detected the next massive shift headed straight for U.S. stocks. And just like before, you have a very narrow window of time to prepare. In fact, history shows it could arrive by the end of July. Click here for full details. 'Interest Rate Hikes Will NOT Save You!' It didn't work in the '70s and it won't work now. In fact, if history serves as a guide, then nearly two DECADES of runaway inflation could be on the horizon. The good news is there's a straightforward, one-step plan to protect yourself. Just do NOT delay... because when the next inflation report releases, you might be kicking yourself for not paying attention sooner. Click here for your inflation protection plan. We've already seen about a 24% drop in stock market averages. That's bear market territory. And the Fed is just getting started with reversing its easy-money policies. Two simple charts show how dramatic this shift is.. The above chart shows the Fed's balance sheet. In simple language, these are the assets the Fed owns. The Fed has bought nearly $9 trillion worth of bonds... mainly U.S. Treasury bonds. That puts a lot of money into the system. Before late 2008, the Fed never did this. The chart looks like a patient who flatlined until the middle of the Great Recession. Then everything changed... The Fed started using a technique called quantitative easing ("QE"). QE has been a massive economic stimulus measure – and a huge boon for the markets. Here's another chart to show you what I mean... This is the M2 Money Supply. It's the amount of dollars the Federal Reserve has circulated into our economy. Because of the pandemic, the Fed put nearly $7 trillion into the system. That money bolstered the stock market. But it also created another problem... inflation. As we wrote back in December 2021, the famous economist Milton Friedman said, "Inflation is always and everywhere a monetary phenomenon." In other words, the Fed's actions cause inflation. Now, the central bank is shrinking both its bond holdings and the money supply. It's barely perceptible on these charts. But it's happening in real time.  And in the world of monetary policy, even "small" changes on the chart have huge economic impacts for mom-and-pop investors. Folks, we had it easy. The Fed was pumping up the economy and the markets. But now, that party is over. The Fed is battling inflation. And the markets will take it on the chin. The punch bowl is gone. A bear just entered the room. Don't try to fight it. And make sure your investment decisions respect the reality we're facing. Good investing, Carlton Neel   Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +1.00% 5 21 4 S&P 500 +1.03% 49 326 122 Nasdaq +0.66% 10 56 33 Small Caps +1.26% 256 1140 502 Bonds +1.03% Utilities +2.45% 8 19 1 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed. *  *  *  * Top Movers Gainers ETSY +9.02% PHM +6.54% WBD +6.18% DHI +5.89% LEN +5.71% Losers LRCX -7.35% KLAC -7.15% AMAT -5.18% MPWR -4.97% NVDA -4.20% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close ACI F No earnings reporting today. Earnings Surprises No significant Earnings Surprises in the Russell 3000. *  *  *  * Sector Tracker Sector movement over the last 5 days Utilities +4.12% Energy +1.38% Staples +0.51% Health Care +0.37% Real Estate -0.53% Industrials -0.81% Financial -1.36% Materials -3.06% Communication -3.72% Information Technology -4.53% Discretionary -4.75% *  *  *  * Industry Focus Oil & Gas Equipment Services 0 27 3 Over the past 6 months, the Oil & Gas Equipment Services subsector (XES) has outperformed the S&P 500 by +32.54%. However, its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #21 of 21 subsectors and has moved down 1 slot over the past week. Indicative Stocks CLB Core Laboratories N. DRQ Dril-Quip, Inc. RIG Transocean Ltd. *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. 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