Fed Speech Was A Warning, Not A Reprieve

Fed Speech: A Warning, Not A Reprieve

Fed Chair Powell sent the markets rocketing higher yesterday. 

His speech was the catalyst for the 700 point rally in the Dow. 

The Dow is now just 7% away from new all-time highs.

Is that crazy?

If you listen to Powell’s speech, it’s beyond crazy. 

Here’s the transcript.

If you’re a fan of doublespeak and weasel wording, you’re in for a treat.

Kidding aside, this time right now is an opportunity to get positioned for real risk of another major down leg. 

Here’s why. 

The Fed has absolutely no idea what’s going on. 

Dynamic Wealth Research watched the speech and pulled out a few quotes. 

A few of the outstanding quotes (bold) and our responses:


“Inflation remains far too high.”

OK, he’s right there. 

It was also far too high when it was “temporary” as well. 
 

"The path ahead for inflation remains highly uncertain."

Not true at all. 

The path ahead for inflation is highly certain. 

Just quit watching prices of items in real time and look at the growth in money supply. 

Money supply has correlated perfectly with inflation since the beginning of time. 

This time is no different. 

Prices must and will catch up to the 30%+ increase in money supply. 
 

“Growth in economic activity has slowed to well below its longer-run trend, and this needs to be sustained.”

That’s the gulp moment right there. 

The Fed fully believes everything it is doing it 100% the right move. 

It wants less economic growth. 

It’s getting “less growth” in a big way. 

And Powell is patting himself on the back for it. 

Investors should be prepared by looking at the rally as an opportunity to prepare for more Fed-induced economic trouble ahead than the markets took it the other way around.