The Fed finally chose to take a breather…
Exactly like we predicted.
Since March of 2022, the Federal Reserve has raised rates 10 times to fight inflation.
But yesterday, it changed course during the June Federal Open Market Committee (FOMC) meeting. The Fed chose to pause rate hikes.
After months of its aggressive campaign, the Fed is pivoting. It now wants to monitor the state of the economy. That’s because rate hikes take time to ripple through the markets.
So the Fed is watching how rising rates affect different sectors.
But it might already be too late. U.S. GDP growth is slowing. Bank and consumer debt are both really high.
And as the days go by, more banks are set to collapse. Many are failing to keep up with the increased costs of borrowing.
In fact, I’ve identified seven banks that are flashing the signals of a possible meltdown. And I reveal the details in a special report called The 722 Bank Bombshell: Is YOUR Bank Next to Fail?
It’s a write-up I prepared to help you make the most of my upcoming emergency briefing…
I’m hosting that briefing, Countdown to Chaos, on Wednesday, June 21 at 8 p.m. ET.
During the event, I’ll go into why we’ll see more bank panic in the coming days… and how the Fed’s actions are contributing to big price swings in the markets.
To get the report, simply RSVP for my event with one click here… and then upgrade to VIP.
Remember: the Fed doesn’t actually know what it’s doing. In its Q&A, it barely addressed the state of the banking sector. In fact, officials have claimed the “banking sector is sound and resilient.”
That couldn’t be farther from the truth.
So I filmed a video to break down the results of yesterday’s FOMC meeting. In it, I’ll also break down what I think will happen next with interest rates.
Click on the image below to watch it, or scroll down to read the transcript.
Regards,
 |
Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. At the same time the Fed said that banks are sound and resilient, regulators announced more U.S. banks are scrambling for cash.
Clearly, the Fed doesn’t know what it’s doing. And it never has. Despite its “War on Inflation,” prices rose by 4% over the past year.
That’s taking away from your purchasing power… and eroding the value of your dollars. It’s also putting the state of our banking system on shaky grounds.
As the days go by, a 2008-style financial crisis becomes more likely. And Americans grow more burdened with debt.
That’s why I’m holding an emergency briefing called Countdown to Chaos next Wednesday, June 21 at 8 p.m. ET. During the event, I’ll show you why more bank panic is set to unfold starting on July 31… and what you can do to protect your hard-earned money.
Reserve your spot with one click here.
Remember, just a handful of policymakers are deciding the future of our money. And they’re doing a terrible job at it.
But you shouldn’t have to stand by and watch the elites destroy our economy. To get ahead of them, join me at my special briefing next week… Sign up with one click here if you haven’t already. I’ll see you then.
TRANSCRIPT
Hi, everyone. Nomi here. With an urgent update for you on the FOMC meeting results.
As I expected, the FOMC voted unanimously for a pause in rate hikes.
That is Stage 2 of what we consider the three-stage pivot from reducing the size of rate hikes… to this rate neutrality… to, eventually, rate cuts.
I want to reiterate, I don’t see Stage 3, or rate cuts, happening until 2024. And I never have.
Now, let me break it all down.
The Fed Funds rate still stands at the 5-5.25% range after 10 straight hikes.
And this is the first Fed pause in rate hikes in 15 months.
They raised rates by 500 basis points (5%) since last March.
But yet again, Powell was all over the place in his Q&A.
He talked about house prices dropping because of high rates and the problems that high rates imposed on businesses.
On the other hand, he said inflation pressures are still running high, and there’s still a long way to go to get inflation down to their 2% range.
He also noted that the Fed’s forecast for real GDP growth was 1% for this year, 1.1% for next year. That is well below its normal growth rate.
And he also said that the labor market remains tight, though the unemployment rate is up to 3.7%. Which, by the way, was where it was before Covid, when he didn’t care.
Powell stressed the U.S. economy faces headwinds from credit tightening and that the extent of these effects remains, as he said, uncertain.
He said the Fed will “make our decisions meeting by meeting based on the totality of data.”
All that is code for we’re going to play it by ear.
Now, the Fed’s median rate forecast did rise to 5.6%, from 5.1%, by late 2023. It dropped to 4.6% by late 2024 and to 3.4% by 2025.
But markets were lower in what they perceived to be a signal of two more rate hikes by year end after this pause. But I don’t think that’s going to happen.
Powell himself stressed that the Fed is not committed to a rate hike next meeting and that they remain, “data dependent.” Which is a catch-all Fed-phrase for we’re going to figure it out on the fly.
Well, here’s the thing…
GDP growth is slowing.
The labor market is weakening.
Inflation is dropping.
And bank and consumer debt is really high.
None of that screams rate hikes.
But the Fed do not want to look incompetent, which they are. So they had to convey the message that they might still raise rates.
So all that considered, I think we’re going to remain in Stage 2, but the market’s going to need to process this. And we could see some volatility creep higher as a result.
That’s why stocks fell after the FOMC statement came out. Bonds also slipped.
But this all presents opportunities for our distortion sectors.
First and foremost, in hard assets that preserve wealth and can be used as money, such as gold, silver, and copper.
But here’s what was really troubling to me.
The FOMC statement said the banking system is sound and resilient. Even though it also said higher credit conditions will weigh on activity.
But Powell barely touched on the state of the banking system in his Q&A. Yet certain banks remain under pressure precisely because of Fed actions, and they know it.
Just today, regulators announced more U.S. banks are scrambling for cash.
Look, the Fed doesn’t know what it’s doing. It never has.
Powell even said so much, as to not put a stake in his own forecasts.
Not only that, in the days ahead, the Fed is set to claim new and unprecedented power over American savers and investors.
The crisis that is unfolding could even feel like a new kind of bank panic.
We could see a run on dozens of banks and a mad scramble to move wealth.
And this is all set to unfold starting on July 31.
So I’m afraid that if you don’t prepare today, right now, your nest egg could be at risk.
And so that’s why I’m holding an emergency briefing on Wednesday, June 21 at 8 p.m. ET. [RSVP with one click right here.]
It’s totally free to attend. And I’m going to share more breaking details about the Fed’s next move… what it means for you and your money… and how you can prepare for it.
I look so forward to seeing you then on June 21.