Maria’s Note: Maria Bonaventura here, Inside Wall Street’s senior managing editor. All this week, we’ve been bringing you special content from trading coach and expert Imre Gams.
And this afternoon, we’re taking it one step further… We’re unlocking a private conversation between Nomi and Imre. Normally, we reserve insights like these for our Distortion Report subscribers. But Imre has tapped into an opportunity so big we had to share it.
See, last year, Imre joined forces with master trader and Inside Wall Street regular Jeff Clark. They’ve been sharing a new trading breakthrough with a small group of beta testers. And so far, the results have been amazing.
Of the 21 trades Imre has recommended, 20 have been winners. That’s a 95% win rate. This has given his beta testers the chance to make $1,694, $2,239, and $3,560… in as little as a day.
And in a special briefing tonight (RSVP with one click right here), Imre is pulling back the curtain on his strategy.
It has nothing to do with stocks, bonds, or crypto. Instead, Imre is trading the world’s largest and most liquid market – the currency market. And as he reveals below, this is the best time in 15 years to tap into this lucrative market – where $7.4 trillion changes hands every day…
Nomi Prins, Editor, Inside Wall Street with Nomi Prins: Imre, in one of your recent pieces, you said this is the best time in 15 years to trade currencies. As you put it, it’s all down to a momentous decision the Federal Reserve made last year. That is, it raised interest rates faster than ever.
As the Fed raised rates, it triggered a bear market in stocks. And it wiped out $9 trillion from Americans’ wealth. But through all the carnage, 20 of the 21 currency trades you recommended were winners. That’s an astounding track record…
Imre Gams, Analyst, Market Minute: Thanks, Nomi. It’s true – if you had money in stocks last year, your wealth almost certainly took a hit.
But the Fed’s move had an unexpected side effect. Because it set the stage for the currency market to make a big comeback. In fact, it’s led to the best trading environment for forex, or foreign exchange, in 15 years.
We’re seeing dramatic moves across the major currencies almost every week. Each one is an opportunity to scalp outsized trading returns.
What’s more, we’re in the early stages of one of the biggest shifts in monetary policy we’ve seen, arguably ever. And certainly in the last 15 years.
Monetary policy and the public’s perception of central banks is headed into deeply negative territory. The idea that central banks can forever engineer economies out of the paths of major economic contractions is going to blow up.
Whether that happens this year or the next, my hunch is over the next three to four years, that seismic shift is going to happen. The Fed’s in as much of a pickle as they’ve ever been, and there’s no way out.
The good news is, it’s a great time to be a currency trader. That’s why I’m going on camera tonight, with master trader Jeff Clark, to show folks how they can take advantage. [Reserve your spot with one click right here.]
Now, cards on the table, I have an incredibly negative view of the Fed and central banks in general. We talk about the Fed as if it’s this monolithic entity. But in reality, how many hundreds of Ph.D. economists do they have on staff? How many governors are there? It’s not just one monolithic entity.
And it’s shocking to me how, throughout the history of central banking, central banks have gotten it wrong almost all the time. They’re like the ultimate trend followers, but they buy at the very top and they sell at the very bottom.
Nomi: They’re reverse indicators of the trend.
Imre: Exactly. And ultimately, the monetary decisions that the Fed has been making will bleed over in a very big way.
In 2022, when the Fed and other central banks raised interest rates aggressively, the consequences for regular folks were devastating. And it’s going to be the same this year. I can see a mountain of issues coming. I can see a number of bankruptcies and defaults around the world.
For example, in the U.K., credit card spending went up by 1.2 billion pounds in the last print they had. And that’s not because people are feeling good about things and they want to live a lifestyle on credit. It’s because they feel like they have to.
And here’s the thing with debt. It’s great so long as general economic growth outpaces the cost to service that debt. But what happens when economic growth does not outpace the cost of servicing debt?
Nomi: I couldn’t agree with you more. In a lot of ways, and because of the Fed’s aggressive stance, we’re not talking about tinkering around the edges of the cost of money. We’re talking about a very quick rate-hiking policy that doesn’t provide regular folks the ability or the time to recalibrate themselves.
And it’s coming to a point where real inflation continues to outpace what people make, how much their wages stretch to pay for the cost of services and goods that they need, and all of that. But the Fed doesn’t get that.
Like you said, they’ve got lots of Ph.D. economists, but this isn’t about just theory and numbers. It’s about the impact on people’s lives and household expenses.
Now, I’m a Ph.D. economist, but I live in the real world. And, well, I don’t see Fed Chief Jerome Powell touting his real world experience, let’s just say that.
So what really bothers me, Imre, is that Powell has positioned raising rates as a fight against workers and how much they get paid.
In many speeches last year, as Powell announced each new rate hike, he talked about the labor market being too hot and wages growing too quickly.
But if you live in the real world, you have all these extra costs. You’re paying 60% more for eggs, and you’re paying 30% more for milk, and at one point you were paying almost twice as much for gas at the pump.
And yes, in general, average wages have gone up, too. But not enough to accommodate those costs for most people in our country. In December, wages went up only 5.3%, compared to the previous year.
That’s what I’m concerned about. Because you’re right. At the end of the day, who gets hurt the most by higher rates? And who gets hurt the most when the cost of money and borrowing goes up as fast as it has?
The person trying to buy their first home, the person trying to open their first or second small business. Which, by the way, I own a small wine business, and I also work with a lot of small business owners who have questions about financing their dreams. And it’s impossible to get small business loans right now. They’re way more expensive, relative to even the increase in rates, than they were before.
Bottom line, the Fed is waging a war against the middle class and the working class. And they’re leading other central banks to do the same.
And that concerns me because in the end, Wall Street is going to be fine. Wall Street will figure out a way to make this all work. But real people don’t have the luxury of using other people’s money to trade, or to navigate their day-to-day costs versus what they make.
It makes me angry, really. Powell should have to live on the budget of a real person for a week. See if he doesn’t want people’s wages to rise then.
Imre: Well, the crazy thing with Powell is he’s not even an economist. You look at his credentials, he’s a lawyer.
That’s fascinating to me when I look at where the Fed is right now, who the governors are, and how Powell has the position he has. At the same time, when I look at the history of decision-making on the Fed’s part, it’s kind of apropos.
But to your point, it is infuriating.
I’m Canadian. I live in Toronto, home of one of the greatest housing bubbles in the world. And here’s a big difference between Canadians and Americans on a very general level when it comes to mortgages…
Canadians love variable rate mortgages, and historically they’ve outperformed fixed rate mortgages. That’s because interest rates have been trending down for the last 15 years after the world went to ZIRP, or zero interest rate policy, in the wake of the global financial crisis.
And in 2020 and 2021, you had mortgage agents and brokers that were selling these variable rate products to regular people near zero percent. And they were saying, “You don’t have to worry about it because the Bank of Canada said they will not raise interest rates anytime soon. They see inflation as a transitory threat.”
Now, I bought an investment property near that time, and I absolutely did not go with a variable rate. And I told my mortgage broker, “Shame on you for even trying to push this product on me. Let alone to folks out there who know less about interest rates. You don’t actually understand what you’re selling.”
And what happened, of course, is the Bank of Canada raised interest rates in 2022, as did other central banks around the world. And for these central banks making momentous mistakes in policy decisions, there are no consequences.
I think we forget how wrong central banks had it not all that long ago. And what do regular people depend on to make major financial life decisions?
Well, in large part, they look to the press conferences. They look to the statements that come out of these institutions that are supposed to be shepherding us along a path of financial stability.
But in reality, those same institutions are doing their very best to drive us off the edge of the road.
Nomi: That reminds me of what happened in the years leading up to the 2008 financial crisis. One of the major causes of the financial crisis was the fact that money had gotten very cheap before what we now know as the subprime crisis.
All sorts of middle and smaller lenders were pushing risky mortgages on people. They wanted to eke out as much interest as they could from them.
Rates were down. But banks were like, “Well, how do we make money? Oh, I know. We’re going to target people that are going to have to pay more interest anyway – the subprime, or less credit-worthy people. And we’ll just extract as much money as we can from them, and we’ll ignore their financials. We won’t explain the risks of our products, and we’re going to basically extend subprime loans to these people.”
And that wasn’t even the worst part. The worst part was that Wall Street banks said, “Oh, great. Okay, you extend the loans, you medium banks. And then we’re going to buy them, and we’re going to re-engineer them into even bigger assets that have literally nothing to do with either those people or their homes. And then we’re going to sell those on to pension funds, to municipalities around the world, etc. We’re going to get tons of commission on the back of that.” And they did.
I was on Wall Street until 2002, in the years leading up to the financial crisis. I was a managing director at Goldman Sachs, and I ran the credit derivatives analytics team there.
Credit derivatives were a big part of what allowed banks to take these mortgages – which they stuffed onto people who didn’t necessarily know what could happen if the economy turned down or if rates changed – and make all this money out of them.
I couldn’t stand to be a part of that, but I knew I couldn’t change it from the inside. So I walked away. And in 2004, I wrote about it in my first book, Other People’s Money: The Corporate Mugging of America. I warned how these credit derivatives were going to cause a crisis, and four years later, they did.
But going back to the Fed, what did they do when the 2008 crisis happened? They reduced the cost of money to Wall Street. They bought trillions of dollars’ worth of mortgage-related securities from Wall Street in exchange for giving them money.
Because Wall Street was potentially going to lose money on the risk that they took in this entire process. And then the government bailed them out as well, with hundreds of billions of dollars along the way.
That is why we’re in the monetary conundrum we’re in today. Because ultimately the existence of all these subprime mortgages enabled Wall Street to take on more risk with credit derivatives. And when things went south, the Fed helped them out by reducing rates back to zero and giving them trillions of dollars in the process.
And to this day, the Fed and other major central banks have used and reused that playbook. As we saw in the wake of the 2020 pandemic, the Fed doubled the size of its book.
So what does that mean? What does quantitative easing, or QE, actually mean? You and I know this, but it just boggles my mind when I break it down.
Quantitative easing means that the Fed basically fabricates money. It gives it to banks or the large players in the financial system, in exchange for mortgage securities that they own anyway, or Treasury bonds that they own anyway.
So it’s like you getting money for, say, an old, junky car that you own. The car goes to the Fed, but you still have a tie to it if the Fed wants to give you the car back. Meanwhile, the Fed’s giving you all this money in exchange for that car. And you can do whatever you want with that money – forever, really. That’s what happens with the assets on the Fed’s book, in a nutshell.
And the Fed’s book is at $8.4 trillion, down from just under $9 trillion at the pandemic peak. It’s still pretty big. That money is still out in the financial system, but not in the hands of real people.
Imre: Exactly. And that cuts to the very heart of the matter. My degree is actually in history and philosophy, so this is going to be a touch philosophical, but I think it’s incredibly important to talk about this.
Money was originally a tangible good, freely chosen by society – whether it was gold or silver, brass, copper, cowrie shells. And originally, credit was the right to access that tangible money – whether through an ownership certificate or by borrowing. In other words, credit was a simple “IOU.”
Today, however, all money is entirely intangible. It does not represent a physical good, nor is it even a physical good itself. And this kind of bleeds into the idea of a central bank digital currency, or CBDC, but we can save that for another day…
The point is, because money is intangible, it allows the Federal Reserve System to manufacture money. And over the years, the Fed has transferred purchasing power from all other dollar holders, primarily to the U.S. Treasury, by a complex and corrupt series of machinations.
Your readers might know this already, but the Treasury borrows money by selling bonds in the open market. The Fed is set to “buy” those Treasury bonds from banks and other financial institutions. But really, it is allowed by law to simply fabricate a new checking account out of thin air for the seller, in exchange for the bonds. It holds the Treasury’s bonds as “assets” against that new money.
If that’s not alchemy… if that’s not the definition of creating something out of nothing… I don’t know what is.
And it’s fascinating when you really think about what the dollar means today. It’s effectively a promise to pay a promise that’s backed by a promise. In other words, the dollar doesn’t mean anything. Which I guess is the definition of fiat currency.
But it’s hard to even wrap your head around what $9 trillion looks like. It’s an absurd number – and it’s basically just made up. And this money is still out there. It’s still in the system, and it’s clogging up pipes. It’s not in the hands of real people.
Nomi: I completely agree. This is why I wrote the book Permanent Distortion. The Great Distortion, as I call it, is exactly what you’re talking about. It’s the fact that the Fed can fabricate money out of nothing, to buy the public debt that’s in the system, which the government creates. And again, this happens around the world in similar ways for other nations, particularly the developed nations.
The developing countries can’t quite create the same amount of money. So they’re at a disadvantage anyway when it comes to creating money and debt. And that’s always been the case. But more so as QE has grown, and as the cost of money declined so much after the financial crisis, all the way up until last year.
In the process, the U.S. dollar also got stronger relative to other currencies, in countries where central banks couldn’t buy the public debt. And then, on the flipside, when the Fed started raising rates so aggressively, the dollar was again elevated by this action, relative to other countries’ currencies.
Why? Because on a global basis, higher rates are more attractive to investors than lower ones. And with the Fed raising rates, the U.S. dollar was the recipient of foreign investments.
Ultimately, the distortion is that the real people in the real economy don’t get the benefits of the money being cheap to the financial system. And they have to face the difficulties when the cost of that money increases.
So they’re shut out of this “shell game” between the government, the central bank, the financial system, and the big banks at every step of the way.
Now, I would argue that the Federal Reserve is actually obsolete to an extent. And the desperation of being obsolete is manifesting itself in all of this money fabrication.
And you’re right. There used to be a situation where loans in the economy were related to real collateral. And the exchange was related to something physical, like gold or silver.
But that started changing in ’33, when gold changed in terms of how freely people could use it relative to money. And then it changed for good in 1971, when the gold standard was abolished.
That’s when the Fed effectively got a greenlight to create money out of nowhere. It just didn’t really exercise that option fully until 2008, and in this current incarnation of the Fed.
But I agree with you, the idea of fiat currency – of it being a promise on a promise – that’s both very powerful and very scary, because it can continue to ripple forward.
I do believe we could have multiple bubbles and busts, where the Fed creates more money and where rates bubble up and down – back down closer to zero, back up, and so forth – over the next few decades.
These ups and downs can keep going because the Fed has no restrictions. It has no legal or moral restrictions. We can’t vote them out. There are no restrictions on how much money the Fed can create to buy debt from the Treasury Department through the financial system.
So everybody in that triangle gets a cut in a way that doesn’t go into the real economy. This is really scary. And the Fed in particular does this more than other central banks.
One could argue that at least the Bank of Japan, which has had zero rates since the ‘90s to an extent, does divert some of that money into the real economy.
Now, their economy also hasn’t really grown. But the speculation there by the financial system has been muted compared to the financial speculation in the United States.
So it is a global problem, but it’s also very much a U.S.-created problem.
Imre: Oh, absolutely. And we can’t overstate how important this is. The Fed has a government-granted monopoly, and that monopoly doesn’t serve the interests of regular people.
I know this is something you’ve talked about, and I’m not going to give a timeline for this… But all the dominoes are lined up for a banking crisis of unprecedented scale, in my opinion.
Nomi: Well, I think a banking crisis won’t look like a past banking crisis. And the reason for that is what we’ve been talking about. That is that banks morph to figure out how to avoid the last crisis they were just engaged in.
So for example, they dealt with the subprime crisis. They got sort of burned, but then they got very nicely saved and are still effectively being saved from that crisis.
Again, the size of the Fed’s book barely went down, even between the financial crisis and the pandemic. So the money was out there for banks. The trillions of dollars the Fed created back then – that money has never gone away.
And so one of the things that banks do is they morph, right? Burn the players, burn the game. Find a new game.
So after that, they said, “All right, well, instead of giving out subprime loans, we’re going to take our money from the Fed, and we’re going to do something else. We’re going to do high-yield corporate loans, and we’re going to see how that goes. And if we get defaults on those, we’re going to see how something else goes.”
The banks can always recreate themselves, knowing that if there were another banking crisis – let’s say a corporate loan crisis or an emerging market loan crisis – the Federal Reserve would and still can help them.
Whether that is with more QE, and instead of buying U.S. government bonds, they buy emerging market bonds for collateral… Or whether it’s just injecting little bits of money into the banking system, which then goes undetected because nobody’s paying attention.
So, on that, the Fed has these reports called H.4.1. reports. They’re weekly disclosures, really, of what’s on the Fed’s book. The size of the book, how much money they’ve injected into the financial system, and how many bonds they hold in return.
And it hasn’t gone down by that much. So that money is still available to the banking system. So I don’t think we’ll have a similar kind of crisis like we had in 2008.
What I do think we’ll have are under-the-table, mini crises, where the Fed is still helping the banking system… while the borrowing costs for real people or small businesses continue to rise relative to the cost of money for banks. So even if interest rates are rising, real people in small businesses get the short end of that stick.
That’s the problem. It’s almost like a smoldering kind of crisis, not necessarily a full-on, in-your-face crisis.
And to some extent, I think that’s more dangerous because we don’t really pay attention to it… And the Fed’s not called out on it… And banks don’t care because they’ll figure out a way to get their money, whether it’s from higher borrowing costs onto their smaller customers, or through the Fed, or through some other way.
Imre: Exactly. And I think it’s for those reasons that the next crisis is going to be insidious and extremely scary. I mean, you have people playing a game where they’re making up the rules as they go, and there aren’t any real consequences for breaking those rules. If you look at the judicial fallout from what happened in ‘07, ‘08, how many bankers went to jail?
Nomi: A couple of junior bankers. No CEOs, nobody big. And actually, a number of CEOs from that time are still running their large major institutions, even though they basically had to settle on all sorts of charges, and even though they committed felonies that meant they had to deal with the Department of Justice.
And so the biggest fish swim away, and it’s the small ones that get eaten up, even the small banks that can’t compete with the lending criteria.
Imre: The silver lining in all of this is that there are opportunities here to offset those risks. There will be winners and there will be losers in the markets. It’s a fascinating game we play, but we do it to level the playing field for people.
And that’s why I’ve been pounding the table on what’s happening in the currency markets. It’s one of the best ways I’ve found to level the playing field right now. All of what we just talked about, the Fed’s decisions over the past year, that’s driving a lot of volatility in foreign exchange markets.
Differences between global interest rates are a major driver of currency moves. Capital rushes into currencies that offer higher yields. And it rushes out of currencies with lower yields.
Put simply, ultra-low global interest rates mean low energy – and low volatility. As rates move off zero, we get higher energy and higher volatility.
Rates around the world went to zero after 2008. It was hard to make money trading currencies. But now that’s changed. Rates are rising again. And we’re moving back to a higher-rate, higher-energy market.
That’s why I say now is the best time in 15 years to trade the currency market. In fact, I believe we’re entering what we’ll look back on as a golden age of currency trading. And tonight, I’m going to show folks how they can take advantage – starting with as little as $200.
Nomi: Here is what’s particularly interesting for me. I started out way back on Wall Street as a junior analyst at Chase. I was working with the foreign exchange desk at the time. And right after I started in 1987, the stock market crashed, and we went into a big bear market.
At Chase, I worked a lot with currencies and currency options when they were babies, relative to what they became. I examined how currency movements across the world impacted this big, major domestic bank.
That whole industry has grown tremendously since then. I mean, you mentioned this – $7.4 trillion changes hands every day in the currency markets. And for traders, the opportunities that come out of central bank policy moves are, I think, higher now than they’ve ever been.
Imre: Absolutely. And by the way, I don’t see the craziness in the markets going away anytime soon. I think we’re going to have periods of relative outperformance followed by really rough periods of traumatic underperformance.
And if you don’t know what you’re doing, I can see a lot of people getting chopped up and exiting positions. Where ultimately, if they had the research, they would have the conviction to hang onto them.
That’s what I’ve aimed to do with the small group of beta testers I’ve been working with since last July. Last year, I outperformed many of the world’s top hedge funds and went 20 for 21. That’s a 95% win rate during one of the worst times for stock market investors since the 2008 crash.
And tonight, I’ll pull back the curtain on my beta strategy. I’ll even walk folks through my next live trade recommendation. The best part is, you don’t have to risk a lot of money to capture big currency moves. So it’s really a great market for new and experienced traders alike.
Nomi: I look forward to it, Imre. Take care.
Imre: Thanks, Nomi. You, too.
Maria’s Note: Maria here again. Don’t forget… Tonight at 8 p.m. ET, Imre is putting on a special briefing with master trader Jeff Clark. And Nomi and I will be tuning in.
Imre will let you in on a few secrets that enabled him to outperform many of the world’s top hedge funds last year… and go 20 for 21. That’s a 95% win rate during one of the worst times for stock market investors since the 2008 crash.
They’ll also break down how you can take advantage of the wild fluctuations in the currency market. Best of all, they’ll show you how you can get started with as little as $200.
It’s free to attend. Simply reserve your spot with one click here, and we’ll see you there.