The Fed staged its every-six-week meeting this week, with the press conference happening at 2:30 PM on Wednesday. Did anything exciting happen? Let’s go take a peek at Wolf’s site. He’s deconstructed Powell’s remarks plus the Fed Statement released at 2:00 PM that same day.
Powell explained that “monetary policy will become significantly less accommodative,” that the Fed would “move over time to a policy that is not accommodative,” and that high inflation readings would have important implications for the path of the rate hikes.
“A significant threat to the labor market is high inflation,” he said. A long recovery, such as the last recovery which was the longest on record, requires low inflation, he said, thereby turning over the argument that the Fed couldn’t tighten because it would threaten the labor market.
The Fed has a lot of room to raise interest rates without damaging the labor market, he said.
“The Committee is of the mind to raise the federal funds rate at the March meeting,” he said. That means March 16 for liftoff.
And the balance sheet reduction would begin “sometime later this year, perhaps, we haven’t made a decision yet,” he said.
Rates are going up. And not just a little. And money printing will stop, shortly. And maybe later this year, the balance sheet is going to be run off too. Quantitative Tightening.
This was much more hawkish than expected by the market. The buck responded over the next few days by shooting up to new highs. Equities fell, as did gold and silver.
Why the dollar rally? Currencies are relative. The ECB isn’t going to rate rates ever again, so if you had Big Money, would you want to be parked in Euros at the ECB where they sucked out -0.5% per year? Your other choice: in a few months you could be actually making +0.5%, and maybe 1.5% by end of year if you parked it at the Fed. If you have a billion dollars, that’s real money.
Since money moves in anticipation of events, money is now fleeing Europe, and heading into the US bond market.
Accordingly, the buck rallied +1.66%, breaking out to a new 2-year high, with most of the move happening on Thursday. The dollar move was all about the Euro which fell -1.82%.
The Dollar: not turning to confetti just yet. Best looking horse in the glue factory, etc.
After plunging for three weeks, equities recovered somewhat this week. SPX spent the week more or less chopping sideways, ending the week slightly higher, rising +0.77% [+33.91] and printing a reasonably bullish reversal bar. SPX remains below all 3 moving averages. Sector map is bullish, with energy [+4.85%], tech [+2.32%] and financials [+1.34%] in the lead.
Is the Big Crash now over, after three unpleasant weeks? Well, I do think that some of the money flowing into the buck ended up in equities. The answer is: I’m not really sure. In spite of the rally, SPX made a new low this week, and that isn’t a good sign.
While SPX spent the week chopping sideways, JNK continued selling off, making a new low on Friday, losing -0.95% on the week. Now part of this could be because rates are going to rise, but the 10-year ended up just about flat on the week. It appears that the money rushing into the buck (or at least some of it) is ending up in the 10-year Treasury. But none of the new money ended up in JNK. That’s bearish for risk assets going forward. That’s because JNK and SPX have a strong positive correlation, and sometimes JNK can tell us where SPX will eventually be headed.
So, what’s the yield on this junk bond fund? Well, after this week’s big decline, it is yielding a massive 4.4% – yields go up, when prices drop. Just add 16%, and you might break even with inflation. If we enter hard economic times, a large number of the bonds in this fund blow up. Assuming they still do “the bankruptcy thing” when bond issuers can’t pay.
So, what’s in the crappy debt fund? Look here – it might surprise you:
Both gold and silver were hit hard this week, with gold down -45.81 [-2.49%], and silver losing -1.86 [-7.63%]. Most of the losses for gold happened on Wednesday and Thursday, following the FOMC announcement. “Coincidentally”, we are approaching end of month, and that means goldbugs will be lining up to take delivery on their COMEX contracts. Except fewer goldbugs do this when price gets smashed right before end of month.
Check out silver daily, below. The blue line is the open interest, which often follows price closely. This is because as price rises, the banksters go short (increasing “open interest”), and when price falls, the banksters close their shorts, “ringing the cash register” (reducing open interest) on the decline.
Except – this week, price dropped a lot, but the open interest hardly moved. That little blue line didn’t follow price lower. I believe that shows that a big chunk of this week’s decline was due to banksters pushing price lower – in advance of the end-of-month delivery. The banksters didn’t “ring the cash register” on the decline – because if they had, price wouldn’t have dropped very far at all. They had to add extra shorts into the market to push the price lower.
Because of this, I’m guessing silver will rally after the bankster-generated selling pressure eases in early February.
Hint: that’s why the CPI understates inflation. “It’s a big club, and you 70 million old people ain’t in it.”
Palladium continues to be on a tear this week, rising a big +12.86%, moving up 5 days out of 5; this, while gold & silver get whacked. I now have a thesis on the whole palladium rally thing: turns out, the largest producer of palladium: Russia!
And below, find the google trends on searches for “Ukraine”, which started moving higher right when palladium prices spiked higher, on January 18th.
And now, for the news items that caught my eye
While a few weeks ago the narrative focused on acknowledging President Grandpa’s unpopularity, this week’s narrative is all about wallowing in the exciting prospect of a new and expensive war with nuclear-armed Russia! Who could resist deploying tens of thousands of US troops – in the middle of winter, no less – to defend the inviolate borders of a corrupt, former Soviet Bloc nation that most (84%) Americans couldn’t locate on a map, back in 2014?
President Grandpa’s Handlers can’t resist, that’s who!
So – why whip up a frenzy about a war with Russia? I mean, besides the usual Defense/Industrial profits?
My thesis: this is how the Grandpa-Handlers are distracting Americans from inflation at 20%, the utter vaccine failure driven by vaccine-escape variant Omicron (and now – Omicron II!), the rejection of Grandpa’s OSHA vaccine mandate by the Supreme Court, and the upcoming end of the pandemic. The thought is, while we are distracted by the exciting talk of war (oh goodie! the evil (nuclear-armed) Putin will get what he so richly deserves! Because – democracy!), the pandemic will end – quietly – all by itself, without anyone noticing.
Call it: a Wag the Dog distraction plan. It exists only to push all the other (very disagreeable) stories off the front pages.
In support of this thesis, here’s a fact-check saying there’s absolutely no dog-wagging going on! After all, we can’t believe anything until we see a fact-check:
Opinion | Sorry, Right-wing Pundits, ‘Wag the Dog’ Is Just Nonsense.
When will the “Russia” nonsense end? I’m going to watch Palladium. The well-connected banksters will get the information well before we will. Palladium should tell us.
So, this week, Justice Breyer (age 83) was “encouraged” (they made-him-an-offer-he-couldn’t-refuse) to resign from the Supreme Court, so that the Biden-Handlers could replace the disagreeable Old White Man with someone who identifies as a Black Woman. “Sorry old man, your career is over. Greater good, and all that.” (Whack!) I’m a little surprised he didn’t get COVID19. Perhaps that was the next trick, if he selfishly wanted to stay in his lifetime appointment slot.
Here is Regime Media’s list-o-acceptable candidates:
Here’s a wild thought. If The Biden-Handlers really wanted to ditch the annoying and unpopular VP Cackles, and replace her with someone who might be able to swap in for President Grandpa, perhaps they could nominate her to be the Black-Female Breyer Replacement!
It probably won’t happen. But wouldn’t it be fun if it did? And it would get her out of the way very, very quickly. And without scandal.
Related: could VP Cackles vote for her own nomination in the Senate? I think – maybe yes!
And everyone’s favorite property bubble pop. How is that going? Didn’t Evergrande default yet?
Evergrande targets restructuring proposal within six months as state tightens control
“Six months is a long time for (a) draft restructuring plan.”
No. Not yet. As I thought – the plan is, extend, extend, extend. “We’ll get back to you in six months.” (Suckers!)
And the West puts up with it because – because – loaning money to a mainland company is kinda like lending money to the Mafia. If they don’t pay, what are you really gonna do? Seize their assets? Good luck with that. An “offer the bondholders can’t refuse.”
And it’s not just Evergrande:
Yuzhou said it will not repay untendered notes due Tuesday, after missing payment on another bond tranche on Sunday
Yuzhou (yet another property developer) owes $5.7 billion in USD overseas debt. How long will their “extending” go on? I have no idea.
This is why they call it “Country Risk.” 30% of GDP. Default in progress.
Our friends up in the frozen north are engaged in a peaceful revolution. The are many links in the forum post (below) – lots of videos which are just heartwarming to watch. If Justin Trudeau wasn’t such a cowardly traitorous weasel/Oligarchy-factotum, I’d feel sorry for what he’s about to go through. I really think he’s done.
The trucker convoy will blockade Ottawa – the capital of Canada – with 11,000 trucks (!) until the mandates (shorthand for an electronic pass which is now required to move around Canada, similar to what the Nazis used in Germany 90 years ago) are eliminated. This is happening in the dead of winter. -30 wind chill. Mind = blown. But – looking at the videos – the Canadians don’t seem to mind at all.
This may be the beginning of the end. I get the sense that the police and the Army are not inclined to support Trudeau/Schwab-fascism, and that the truckers are the necessary catalyst/agents of change. “What can we do? The trucks are just too big!”
The support shown by the people of Canada to their truckers is just inspiring to see.
I also think it isn’t an accident that this happened right after Omicron appeared, and showed everyone that the vaccines are useless. Chalk another one up to “the mouse that gave us Omicron.” Medico-fascism’s days are numbered.
Next up: what happens when most of Canada finds out there are actually Early Treatments for COVID19? And they’ve been actively hidden from the vast bulk of the people – by their own national healthcare system they’ve paid for, and trusted for decades?
And after that: vaccine injury. Also hidden from them by their trusted national healthcare system.
Things are going to get really, really interesting. I just can’t say what the timeline is.
Here are some observations – made two weeks ago – by Professor/Doctor Bill Gates, MD, PhD, MPH, and Lord of the Manor, vaccine and pandemic expert, and self-appointed savior of humanity in a twitter Q&A with one of his factotums. I’ve edited the questions and responses to focus on what I believe are the main takeaways for us:
Q: What scientific or tech breakthrough would make the biggest difference now to ending the COVID pandemic?
A: ….We need vaccines that prevent re-infection and have many years of duration.
Q: One major problem has been online misinformation on Facebook & other platforms around vaccines, masks and other interventions- how do we deal with this challenge? When expertise is neglected and conspiracy theories are spread as if they are truth?
A: ….People like you and I and Tony Fauci have been subject to a lot of misinformation. I didn’t expect that. Some of it like me putting chips in arms doesn’t make sense to me – why would I want to do that?
Q: Where do you think SARS-CoV-2 came from?
A: The data is pretty strong that it came from another species which is true for most pandemics….Once Omicron goes through a country then the rest of the year should see far fewer cases so Covid can be treated more like seasonal flu….Omicron will create a lot of immunity at least for the next year….We may have to take yearly shots for Covid for some time.
So, let’s see if I got that right. 1) you admit the shots don’t work vs. transmission/infection, 2) you expected your control over the information platforms to be more effective (and/or the Plebes to be more easily bamboozled), 3) now you’re planning on annual (seasonal) COVID shots because COVID19 is now basically the flu, and 4) chips? In arms?
I guess we don’t need masks, lockdowns, and vax mandates to deal with “seasonal flu.” How long until the WEF “Young Leaders” across the West acknowledge this reality? This is almost certainly in progress right now.
Oh yeah, and about chips-in-arms – this is about an “implantable birth control microchip”, but still:
Gates is backing a long-lasting implantable birth control device that can be turned on and off with a remote control. With this device — a tiny hormone-emitting microchip — women who decide they are ready to conceive can essentially flip a switch and start trying…
Bill + Chips. In arms. Maybe he forgot.
Related: Here are the nations which have announced an end to their COVID restrictions:
Masks off, vaccine passes end as England scraps COVID-19 restrictions
Prime Minister Frederiksen [Denmark] says restrictions to end on Feb. 1
Norway Ends Mandatory Entry Quarantine For All Travelers
Finland will begin gradually easing COVID-19 restrictions from Feb. 1
The Dutch government has said it will ease its Covid-19 restrictions, among Europe’s toughest, from Wednesday.