Looks like the Fed overshot again with rate hikes

As I wrote Wednesday morning prior to Fed chief Jay Powell’s announcement of standing pat on Fed funds rate.

Stocks and the gold price took off on the news that the Fed statement took all the language out of their plan to look at raising rates, due to recessionary fears. The Fed is currently at 2.5% on the rate.

What does this mean? Well appears that Powell & Co. may have overshot — once again — restraining lending too much and may put the US economy into negative reading on growth.

As I wrote at the time, the December rate hike was not needed since the Fed had already taken much of the air out of the economy through pricking the asset bubble in stocks.

Now due to the government shutdown we will not get our first reading of fourth quarter growth, which would normally be out Thursday, until later on in the month. However the Fed probably had a good read on that GDP number, which is probably below 2% growth.

 

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The gold standard and the Fed

Fed chair Jay Powell is scheduled to give a press conference Wednesday after announcing that the central bank will hold rates steady as expected.

Powell’s comments and the language in the statement on future hikes will be what markets are looking at for direction.

We all have seen that the Fed has looked under every rock in the economy to find inflation and has come up empty. It is still trending below the 2% threshold that the Fed uses to assess its policies.

Yes Powell & Co. prick the asset bubble know as the stock market to curtail that inflationary aspect by jawboning future rate hikes much to President Trump’s ire.

When talking about the Fed it was very interesting that President Trump retweeted Tuesday a Laura Ingraham post (below).

The post links the US economy to the “Gold Standard”. The president replies, “So true and not even close.”

Trump hinted during the presidential campaign he would like to go back to a gold standard for the dollar, which would send gold prices soaring in order to sustain that move.

However, gold prices over the last 10 days have risen close to $30 an ounce and broken through the long-held sub-$1,300 mark.

We also have this drop from Dec.12, 2018 No. 2619 answering a query if we have the gold:

Yes.
Gold shall destroy FED.
Q

So we have multiple mentions of the Fed and gold from various sources. Might it be wise to pick up some of the “ancient relic” as so many modern pundits call gold?

Not advising either way, but gold appears to be having a moment. On Nov. 13, 2018 gold was trading at $1,213 an ounce. Today it is $1,318 an ounce.

Hmm.

Ocasio-Cortez is still running — after DC leadership

What does NY Congresswoman Alexandria Ocasio-Cortez mean for the country?

AOC — as she is known — has what many politicians don’t have: charisma and a plan, albeit a disastrous economic plan.

Her Green New Deal platform aims at eliminating carbon emissions in the US within 12 years and is partly funded by tax rates as high as 70 percent for the nation’s wealthiest.

Her idea of combating climate change with punitive tax rates is well received by the far left, which should not be a surprise, but AOC is not happy to stop there. She has taken to social media to push her idea further into the mainstream.

House Speaker Nancy Pelosi has her hands full with this freshman congresswoman. How she handles AOC will dictate plenty on AOC’s future. At 29 she is the youngest person ever in the House of Representatives.

Given her drive to chase Senate Majority leader Mitch McConnell around Washington on Wednesday to get an audience with him — press in tow — tells you she has far bigger plans for herself than representing just her Brooklyn and Queens NY constituents.

With just days in office AOC has already made a name for herself and her placement on the House Financial Services committee should give her some more TV air time.

While AOC may be the new face of change in Washington, my guess is that some in the Democratic leadership are looking for someone to run against her in less than two years to get this stinging bee out of their bonnet.

However, by the next election rolls around she may already be running for the Senate from NY. Nothing will surprise me when it comes to AOC.

Is Wall St. behind the border wall stonewalling?

Let’s look at an alternative view of why the Democrats are fighting so hard to not fund the Mexican border wall.

As I have written before $5-$6 billion in funding is equivalent to running an aircraft carrier  group for a week, so it’s not about the money.

Let’s look at the principals behind this stonewalling (pun intended). Sen. Chuck Schumer is the voice of Wall Street banking in the Senate. Rep. Nancy Pelosi has Silicon Valley just to her south. In this matter it’s the newer financial products, which allow digital transfers, that have a vested interest in cross-border payments.

What would a wall do to the money flows over the border? How would the wall change cash inflows to the US banking system?

President Trump in his Oval Office address last week said: “The border wall would very quickly pay for itself. The cost of illegal drugs exceeds $500 billion a year. Vastly more than the $5.7 billion we have requested from Congress.”

Well all that cash winds up in the US banking system eventually.

So between legal and illegal trading profits moving over the border and US banking firms counting on that additional liquidity to fund other revenue streams, you could make a case that larger forces are at play over the funding of the wall to keep the status quo.

This explanation makes more sense from the point of view of the protracted stalemate going on right now.

What’s that old expression? Follow the money.

Liberal media biases ignoring Trump wins at their own peril

Many of the latest drops that came Sunday point to a media bias facing the Trump administration from general journalistic coverage to a specific reporter at the New York Times.

In the general sense the posts point out that the President cannot get coverage of his many successes such as: Demilitarizing North Korea, the economic agenda, which had stock market at all-time highs and lowest unemployment levels in more than 30 years and Trump’s ability to grow an economy that was languishing for eight years by in some quarters doubling output of “The New Normal” of 2% Gross Domestic Product.

On the specific side, the Sunday drops point to a reporter named Maggie Haberman.

Their father, Clyde Haberman, worked at The Post and then was a long-time columnist for the NY Times picking up a Pulitzer Prize for Breaking News with a team investigating then-NY Governor Elliot Spitzer’s prostitution scandal, which led to his resignation.

The drop brings up Maggie’s infamous mention in the Hillary Clinton’s 2016 Campaign Director John Podesta email that was published by Wikileaks. These drops come after ex-Editor of the NY Times Jill Abramson last week cited Maggie’s reporting as being biased against the Trump White House in her new book.

This from Podesta to top campaign staff and Hillary, and was prior to Maggie joining the Times:

“We have has a very good relationship with Maggie Haberman of Politico over the last year. We have had her tee up stories for us before and have never been disappointed. While we should have a larger conversation in the near future about a broader strategy for reengaging the beat press that covers HRC, for this we think we can achieve our objective and do the most shaping by going to Maggie.”

Sunday’s drop infers that Maggie has had plenty of recent Tweets citing trains and that she may be dropping coded messages for the liberal Democrats since the language is sometimes odd.

Let’s just say none of these revelations surprise me in the least, since Maggie’s liberal leanings have been well-known for years. My hope is that she is not in over her head as the drops suggest and that there is time for her to get out of any trouble she may be in.