5.00% FED Funds Rate;
and Gold Bugs Said It Couldn’t Be Done
Don’t you love irony? The national debt alarmists, who have been predicting chaos for nearly 45 years, while the markets have largely soared, real estate has largely surged and gold has performed epically, have said the “FED is stuck” for ages now…
Interest rates will remain at zero. The FED wants to juice markets… it can’t make hard decisions… I’ve heard just about every opinion out there, including that of billionaire Ray Dalio, who keeps getting plenty of air-time, but is turning into a Jim Cramer Indicator, where anything he says turns out to be the opposite.
Why is it that so many experts are not really getting the full picture of today’s economic environment? That part Ray Dalio did get correct. He said that what is happening in the economy today has happened several times during the course of human history, but not in our lifetimes, so unless we study the past 200-500 years, we won’t really comprehend the shake-up in global politics.
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What we can see is that money-market accounts are screaming that the public is frightened. The average person has been hearing about the recession on national TV, been seeing the lending standards tightening all around him, been watching, as many of his friends are either losing their jobs or can’t make ends meet, with rising food and gasoline prices and was shocked to see war break out in Europe.
Ultimately, though, he has been reasoning, just like my neighbors are telling me, that we haven’t seen distress yet… everyone is waiting for that 2008-vibe.
I even texted a money manager I know very well, to see if he’s prepared for this week’s double-whammy of FED rate hike and Apple’s earnings release, and he replied that meditation isn’t calming him down.
I didn’t try to offer solace, but I reminded him that there are two opposing forces here, both equally determined to win.
Inflation on the one side of the field, and central banks at the opposite side of the pitch.
“You know, in boxing, the referees must declare a winner and in basketball, they play the game until a winner arises, even if 20 overtime-sessions are needed. In tennis, there’s tie-breakers and the match could last for hours, but in soccer (football), a draw is normal.”
That was my text to him.
What did I mean?
Inflation could be a worthy opponent this time around and the FED has really done some historic things to put a lid on it, but at some point, if both sides are ready to call a truce or to live with the gridlock, then they’ll choose that fate.
In the world of monetary policy, we call that strategy “higher for longer.”
I’ve seen all of the recession indicator charts and there’s no doubt in my mind that the economy can’t fully hit bottom, until the mainstream media calls it a recession out in the open. What I will tell you is that I’ve found the quarterly earnings calls of CBRE Group, the world’s largest commercial real estate firm, to be the best gauge of recession.
As of just a few days ago, the CEO said he expects a mild recession in the second half of the year and I believe that is as precise a prediction as I can find.
Recession is the excuse for rate cuts, and those eventually form the bottom that is necessary for a recovery and a bull market.
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!
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