I stopped in New York City on my recent travels, and I got a little nostalgic.
I headed down to the place where I began my career on Wall Street in Downtown Manhattan.
See, when I was 19 years old, I got a job as an analyst inside 28 Liberty Street. Back then, it was called One Chase Manhattan Plaza.
It’s a stone’s throw away from the New York Stock Exchange, and from the New York Federal Reserve Bank.
That’s the most powerful bank in the Federal Reserve System.
Why? Because it enacts all the policies that the Federal Reserve Bank in Washington, D.C. sets.
Nomi visits One Chase Manhattan Plaza, where she started her 15-year career on Wall Street
At the New York Fed, just a stone throw’s away from Nomi’s old office at Chase Manhattan Bank
But here’s a story…
Right after I started working at Chase, we had the 1987 market crash. To me, it was trial by fire.
There was tension at Chase, and all around Wall Street in general. And there was a lot of drinking…
But my boss told me something very important back then: Markets don’t care about how you feel.
They’re going to be choppy. But they’re also going to be resilient. The key is to maintain your strategy and remain calm.
The Fed’s Hidden Mandate
The markets have been choppy for many reasons, as I’ve been discussing with you, and as I’m sure you know.
One of the main reasons, outside of the war in Ukraine, is uncertainty about what the Fed will decide to do with interest rates…
And what it’s going to do with its massive $9 trillion book of assets.
But veteran traders know that markets bounce back. They trust that the Fed has their backs.
You know why? Because it always has.
As I’ve been telling you, the Fed must navigate inflation. But it also doesn’t want to upset the markets too much.
Remember, in 1977, Congress gave the Fed a dual mandate: to ensure full employment and price stability.
But the Fed also has a third, hidden mandate: to protect the markets.
That is the very crux of The Great Distortion – the permanent disconnect between the markets and the real economy.
It’s why, since the 2008 crisis, the markets have outperformed the real economy by miles.
It’s also why, as I’ve showed you in these pages, the Fed will have to start walking back its hawkish stance pretty soon.
What This Means for Your Money
Today, I want to discuss how the lessons from my time on Wall Street helped me navigate the Fed and the markets. And how they can help you.
First, again, I get that things are choppy. Among other things, markets have been on edge about this year’s rate hikes.
The Fed and other central banks have been walking this line between raising rates by enough to be perceived to be fighting inflation…
But not so much that they jeopardize the markets or especially Wall Street past the point of no return.
See, the relationship between Wall Street, the Fed, and the markets is super cozy. It’s steeped in history from the inception of the Federal Reserve in 1913.
And don’t forget, Fed Chair Jerome Powell cares about his stock portfolio, too.
So no matter how bad things have gotten this year – and how much more choppiness might be ahead – remember that the markets do ultimately prevail.
They’ve got support. So keep calm and carry on.
We will continue to guide you through our five sectors – New Energy, Infrastructure, Transformative Technology, Meta-Reality, and New Money.
And we will continue monitoring for the optimal investment times in these choppy market conditions.
But know this: I see this period of Fed policy uncertainty as a strategic buying opportunity in the midst of all of this other global turbulence.
Happy investing, and I’ll be in touch again soon.
Editor, Inside Wall Street with Nomi Prins