CPI and Market Expectations
I’m not going to make friends after today, but I have to say this.
The Federal Reserve is an institution that must test the limits or it has no idea where the economy’s weak points are.
After last week, they know for sure.
From the perspective of the bystander, it looks like the FED has failed, but from Powell’s point of view, he now knows exactly what the situation is for the banking sector, and everyone’s on high alert.
The government and the central bank are both sleeping with one eye open, and that’s usually when the FED flip-flops and eases up on its dovish stance.
It needs to “buy time” and allow the system to remain solvent and functioning, but it can’t completely abandon its commitment to squash inflation, which isn’t letting up yet.
This is a classic case of the FED compromising on its mission to reduce inflation because the risk is that it sends the system into panic at the deepest levels in what we call a credit event.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!
Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!
Unless the entire world is mistaken, the FED will raise rates by 0.25% one week from now, reaching 4.75% on the FED Funds Rate, but the data that will come in from the real economy will prove to be very concerning.
Construction will sound the alarm, wages will fall, and layoffs will persist, but the FED will keep on fighting inflation in May.
In that meeting, the FED will probably announce the final 0.25% hike. This would put the terminal rate at 5.00%, which would have seemed not only impossible but from a parallel universe just two years ago when this very same guy named Jerome Powell thought inflation was a passing fad and a temporary hiccup.
The market is definitively seeing rate cuts in either the June meeting or the July meeting, and by the end of the year, we are expecting to be at 4.00% or 4.25% maximum.
If that’s the case, the market is strongly considering that the signs of recession will appear in the data by late May.
What the FED is seeing is that they’ve done enough for now and consumers no longer think inflation is an acute emergency.
Between plummeting energy prices and housing prices falling faster than in the first months of 2005 after they peaked last time, America is not panicking over inflation, and that means that the first step in this crisis has been accomplished.
Inflationary expectations that drive behavior are clearly diving (a good sign).
Their next challenge is to make damn sure that they didn’t overdo it, and if they are able to soften the landing, we still have historically high inflation in this country and around the globe. While we aren’t back to square one, we must admit inflation is not trending to 2% like the FED is asking the universe to.
If the FED is loosening and cutting, the dollar’s competitive strength over other currencies shrinks, and that’s why I like my odds with silver starting in May and June.
Protect Yourself Now, By Building A Fully-Hedged Financial Fortress!
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
We are not brokers, investment or financial advisers, and you should not rely on the information herein as investment advice. We are a marketing company. If you are seeking personal investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Please do your own research before investing, including reading the companies’ SEC filings, press releases, and risk disclosures. Information contained in this profile was provided by the company, extracted from SEC filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it.
Please read our full disclaimer at PortfolioWealthGlobal.com/disclaimer