| Hello, Fellow Navigator.
Pop some popcorn. Get comfortable. And watch the show!
I’m not a fan of reality TV.
When I binge at Netflix or HBO, it’s an escape from the real world. The unoriginal banality of reality TV is depressing… and all it manages to do is further convince me that mankind is doomed.
But what about today’s Federal Reserve meeting and scheduled comments at 2 p.m. Eastern?
Does that count as reality TV?
It’s scripted… predictable… and designed to make us feel better about our lives by watching other people monumentally screw up their own. Or at least it seems that way as we watch Fed Chairman Jerome “Transitory Inflation” Powell bumble through press release after press release.
Just weeks ago, the market was pricing in at least 0.75% in rate cuts this year with the first cut starting today.
But as I write this, the futures markets are now pricing in a 99.5% probability that the Fed declines to cut rates, leaving them pegged at 5.25% to 5.50%, and a 53% probability that rates will be at current levels or just 0.25% lower at the end of January 2025.
So, what bombs will Powell drop on us this afternoon? | SPONSORED  The most urgent situation in D.C. is not the election.
An industry insider has just stepped forward to reveal a shocking policy reversal that could plunge the markets into chaos – and we’re just moments away.
Come 2 p.m., it could be too late.
Prepare while you can. | In the Election Shock Summit video that I hosted with Louis Navellier in early April – watch the replay now to prepare before 2 p.m. – I made the bold claim that the Fed would hold off on raising rates until after the election.
In a couple of hours we’ll see that I was right.
And this is just the beginning…
Federal Reserve Board Governor Michelle Bowman has been openly floating the idea of additional rate hikes for weeks, as have New York Fed President John Williams and former U.S. Treasury Secretary Lawrence Summers.
So, while Powell may utter the six words that President Joe Biden least wants to hear – “No rate cuts until after election” – or he may be more noncommittal, saying his next move will be “data dependent”...
We know “higher for longer” is our new reality.
And we know that now is the best time to prepare for the new shocks that I expect the Fed to serve between now and November. That’s why Louis and I recorded the Election Shock Summit video. That's why you should watch it now and prepare… before 2 p.m.
It’s not just the Fed to prepare against. There are also other factors at play the Fed can’t control. This is a new regime for virtually anyone investing today, but it’s certainly not the first time.
Take a look at the chart below, which tracks the yield on the 10-year U.S, Treasury note. I chose the 10-year because it’s less directly tied to the Federal Reserve. While the Fed influences virtually all rates across the yield curve, longer-term yields are determined more by market forces, supply, and demand. | SPONSORED  Forget about the election: An even bigger shock out of Washington D.C. could soon throw the financial markets into chaos – and 99.99% of analysts are completely missing it.
You have until 2 p.m. to prepare.
Click here to get ready. |  In the two decades leading up to 1982, yields marched painfully higher year after year until finally breaking and starting a 40-year trend of lower yields made possible by lower inflation. We hit the end of that road in 2020, and rates have been moving higher ever since.
I’m not going to tell you with certainty that this trend has another two decades to run. There’s too many variables to consider, and I don’t believe that the exact timing is predetermined. But I absolutely do believe that, whatever the Fed does this year, the broader trend will be one of higher rates.
For one, inflation is going to be hard for the Fed to kill because two of its major drivers are outside of the Fed’s control: - The labor shortage brought on by the retirement of the Baby Boomers
- Massive multi trillion-dollar federal government deficits.
Inflation in goods – or “stuff” – has been moderating for months. It’s inflation in services that has been sticky, and that is because labor is the single biggest driver of inflation in services.
The Fed can raise rates to infinity and beyond, but they can’t snap their fingers and make fully trained new workers magically appear out of the ether. Meanwhile, our federal government was already spending like drunken sailors on shore leave long before the pandemic hit. But the Covid experience gave Congress free rein to blow out the deficit to previously unthinkable levels… and they’ve been unwilling or unable to get it back under some semblance of control.
We’re currently running a deficit of close to 7% of GDP… in peace time… and with the economy booming. We’re adding a trillion dollars to the national debt roughly every three months.
There’s no way out of this that doesn’t involve misery.
Artificial demand from government deficits fuels inflation… and requires the Fed to keep rates higher for longer. And yet balancing the budget would cause the economy to shrink by 7%, giving us the worst recession since the 1930s.
In an Age of Chaos like this, it pays to stay tactical and follow the money. Louis and I share details of the algorithms we’re using to help you do that in the Election Shock Summit video. Watch now for the details.
Make sure you’re ready for the Fed meeting at 2 p.m. Eastern. To life, liberty, and the pursuit of wealth, |
No comments:
Post a Comment