No Recession in 2024
Yesterday, on December 13th, the FED kept rates the same.
Everybody knew that, and Wall Street was fully priced in and hedged for it.
What would determine the significance of the meeting is what Powell said about the future with the first rate cut bouncing between March and May and multiple rate cuts now priced in for 2024. Wall Street is having a hard time deciding whether or not recessionary forces are actively putting pressure on growth.
Keep in mind what the Federal Reserve and other central banks wanted to achieve in the opening phase of the global economy: inflation was running rampant, and there was a massive shortage of job seekers. This made it difficult, if not impossible, for employers to run their operations.
The threat of uncontrollable inflation is gone.
It’s important that you recognize this because it was painful, and many still think that we’re in hyperinflationary mode, but we’re not. Decide here and now to stop viewing the world as going to hell in a handbasket because of money printing! No one is printing currency.
Central banks were concerned, and for good reason. Americans were not going back to work because their assets were so in the money that they really didn’t need to, but the bubble isn’t real life, and it would have been devastating to make career decisions based on artificial capital gains.
The jobs market is much more balanced than a year ago, and it is stable. Again, I would make a resolution in my heart to stop obsessing over dysfunctional employment figures.
Basically, the two most pressing issues that led to the tightest economic conditions in modern memory are no longer threats.
In fact, the risk factor has slightly moved to the over-tightening camp, and that has led to a huge rally in gold prices.
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So, what are the market’s next big pills to swallow, digest, and decide on?
The big one is the American consumer who is straddled with debt that carries interest rates in the 20% range! Can this continue for much longer?
I don’t think so, and I do believe the Federal Reserve will cut rates into a weakening economy while GDP won’t go negative again.
In other words, I don’t see another recession, and that means I don’t think the markets are going to crash.
On December 15th, 2015, the FED raised interest rates for the first time after the Great Financial Crisis.
It was also the very day the Federal Reserve signaled to the world that inflation was an issue. After this, gold bottomed at $1,083 and began a bull market that is still underway today.
The price of gold in 2024 will be decided by the dropping of real rates, which we believe is happening.
In other words, cutting interest rates is surely going to weaken the dollar.
This, as I see it, plays into the hands of silver. If I need to choose between the two, I bet silver will be the big winner of 2024.
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