Vince Lanci: Fed Acknowledges Setbacks In Inflation Battle But Says Another Hike Unlikely | Arcadia Economics
Summary
Transcript
The Federal Reserve acknowledged a recent setback in its inflation fight, but said it was more likely to keep interest rates at their current level for longer than to raise them again. Fed Chair Jerome Powell indicated that the bar to cut interest rates had gone up, but that the bar to hike rates was even higher. Welcome to the Morning Markets and Metals with Vince Lancy, where each day he brings you the precious metals in financial news to get you ready for your day.
And now, here’s Vince. Good morning, everyone. I’m Vince Lancy, and in today’s Market Run Now, we’re going to talk about the FOMC yesterday and preview a report for premium by Bloomberg about the relationship between gold and the S&P 500. I’m going to make some good points. We’re going to discuss that for a second. But first, let’s take a look at the markets. All right, here we go. The dollar is up 10 after getting hit post FOMC yesterday at 105.
73. The 10-year yield is 460, down 3, continuing on its rally yesterday. The S&P 500 is up 28 handles. Choppy yesterday, strong today. The VIX is 15 flat. Gold is $22. 99, down 20. It rallied about $30 yesterday after the FOMC. And now, it’s given back 20 of those 30. Silver is $26. 28, down 35 cents. Copper is down 8 cents. It’s pretty significant. Down 1. 8% at $4.
44. I wonder how much of this is out of China. WTI is up 32 after getting absolutely destroyed yesterday after the Fed, although it wasn’t Fed-related. Natural gas, 178, hovering in the high 165s now. 165 to 185 is the range, is what I mean. The coin is down 117, down 20 basis points of 58,000 and change. Ethereum is $29. 82. Platinum Palladium continue to enter the promised land for those of us who understand or who like to wish we understood.
PGM’s Palladium is trading $9. 39, down $9. 00. And Platinum is trading $9. 50, up $8. 00. I think we’re in a trade now with Platinum Palladium. I think people are going, oh, Platinum’s over Palladium, so there’s no reason why, what continue to think it’ll keep going that way. That’s a trade. Not necessarily fundamental, but it’s an awakening. Grades are all stronger today. Wheat is up 9 at $6.
09. Corn is $4. 41, up 5. And soybeans are $11. 69, up 12. So the whole complex is moving there. Interesting. Maybe it’s weather related. You wouldn’t see it move. I think in that unity, given a Russian thing. All right, so where are we? Here’s the homepage. Yesterday, what governs gold’s price now? That’s a original piece talking about correlations and how they are changing and why they change and why the mainstream media just really doesn’t know what to look for or doesn’t want to talk about what to look for publicly.
The FOMC, how hawked up is pal right now. That was a prep for the founders. And we threw a couple early drafts out there. All right. The main event, howls arrogance returns. Understand I’ve had three different titles for this, this tentative title. One of them I’ll probably end up saying at some point, but I didn’t want to put it in the title. All right, so what are we going to talk about today? As I said in premium, we’re going to talk about the Bloomberg beta gold and Bitcoin.
The metal may take the 2024 metal convoluted title. What he’s really saying there is the gap between commodities and stocks is probably going to narrow if his analysis is accurate. And then the other part is the commentary, the FOMC arrogance, which we think is on the rise again. So let’s start with the FOMC. The FOMC press conference. Now, well, the Federal Reserve acknowledged a recent setback in its inflation fight, but said it was more likely to keep interest rates at their current level for longer than to raise them again.
Fed chair Jerome Powell indicated that the bar to cut interest rates had gone up, but that the bar to hike rates was even higher. All right. So that’s the Wall Street Journal synopsisizing what happened. I’ll give you some bullets of, I think, key takeaways without getting too meta on it. Powell denied chances of a rate hike. That’s something new to deny. Chances of a rate hike is a long way from talking about six, up to six cuts in December of the year.
So he’s pushing back on rate hikes now. That’s new. Market interprets Powell’s speech as dovish. By that, I mean most of the marketplace reacted as if Powell was going to ease or not going to hike. So not hiking is the new easing. However, gold rallied, silver rallied, bonds rallied. Stocks were not that strong. So that would be stagflationary. And yet the Fed denies stagflation risk. Behaviorally, as I said just now, stocks chopped, the dollar weakened, gold rose, which is the definition of stagflationary behavior, which brings us to the main event.
Powell, at one point during the conversation, said he doesn’t see the stag or theflation. I’ll play that clip for you. That would be our forecast. That wouldn’t be stagflation. That would still be to a very healthy level of growth. And of course, with inflation, we will return inflation to 2%. And that won’t be. So I don’t see the stag or theflation, actually. OK. Cute, right? A little bit of a smirk at the end and the audience enjoyed it.
All right. Before, you know, that’s the return of arrogance. OK. Materially, I want to talk about materially what he’s saying before. I probably just go off the rails on this. He’s saying that with inflation slightly under 3% right now in his according to his data and the economy, the GDP over 3%, that’s not stagflation. That’s not a bad economy at all. And so therefore he doesn’t see the stag, the stagnation or the inflation.
And he also adds in there to say that he would inflation will go back to 2%. He’s talking in. Certainty again. All right. Let’s go back first and look at the last time he talked in certainty. In March 13, 2020, we are prepared to use our full range of tools to help to keep the economy strong. July 2021 at these transitory supply effects abate inflation is expected to drop.
All right. It’s at that point he said inflation was transitory as well. They don’t want to put that in the headline. I also want to remind you that at one point I have a video clip somewhere. Powell actually said inflation is half our mandate. All right. June 15, 2022, inflation has again surprised to the upside. July 26, 2023, we will do what it takes to get inflation down.
January 21, January 31, 2024, it will likely be appropriate to begin dialing back policy restraint. And here we are in April saying he’s probably not going to hike rates. So what am I what? Take it together. This is obviously my opinion here. These are my notes from this morning. Do not forget this. While the Fed has apologized and moved on for their transitory mistake, some families are currently deciding if they should eat dinner or buy medicine.
Most families are still living with the ramifications of Powell’s mistake. Powell’s family is not. Neither is the family are the families of all those people in the peanut gallery giggling at his returned arrogance. This policy error was bad enough back then. People make mistakes, but his mistake was arrogance and he’s showing arrogance again. He hasn’t learned his lesson. It’s simply it’s unbelievable. All right. Almost three years after they said inflation will be transitory, they are still fighting it and it’s done declining 18 months after the Fed started fighting inflation.
It has remained strong. Stop Jerome Powell, OK? These people, they don’t have the ability to care for you. Just fuck him. All right. OK, moving on. The arrogance is the problem, because if we have inflation, it doesn’t come back to 2%, OK? He’s going to have to raise. And if he raises, let’s say goal goes to three thousand dollars tomorrow, he’s going to have to raise. And if he raises, the yen collapses, China debases, and then he has to ease.
And either we have a depression or we have hyperinflation. He’s on the precipice of making an even bigger mistake than he did in 2021. How does he where does he come off being arrogant? You know, just to play to the audience. Pathetic. All right. Bloomberg Gold and stocks. The metal may take twenty twenty four. The twenty twenty four metal. That’s not their title. Bloomberg intelligence. Sticky inflation appears connected to speculative excesses in Bitcoin and equity prices with implications for some back and back and fill in beta before the Federal Reserve risks easing back and filming retracement.
Some key phrases I pulled out of this report. What’s this concerning about gold making record highs and the S&P 500 and Bitcoin declining is that there might be ample fuel for continuation. Yeah, at about twenty three hundred an ounce on April 30th, the highest ever month and price for gold may show the metals upper hand versus beta and Bitcoin. Now, whatever he says the word beta think stocks.
These reports, he can’t be outright bearish on stocks. He has to be bearish on beta and bearish on Bitcoin, but not stocks. That’s how it works. But he’s a very good analyst and he’s speaking truth here. Gold beating the S&P 500 this year and since twenty twenty one may suggest a U. S. recession has been delayed, but is coming. That’s right. Gold’s foundation may be firming, may be firming versus S&P 500.
He’s got many tries in here, but here’s the chart. I think that that encapsulates it. This is the S&P 500 versus the Bloomberg commodity index. And the Bloomberg commodity index has turned right. If you’re a technician, look at that yellow line there that you know, with the blue underneath it. If you’re a technician, you draw a line there. We’ve broken it and certainly is bouncing. And you know, just to you know, he’s made this point several times that gold and the S&P 500 could converge.
And frankly, you know, it’s it’s it’s gaining momentum. And I don’t mean just in price. I mean, if we have stagflation, gold goes up, stocks go down. Right. Or put it this way. Stocks go down, gold should go up. If we have inflation, right, gold goes up at an accelerated pace, as we’ve seen recently, and stocks go up, but not as much. If we have outright recession, gold goes down, stocks go down more.
So in these three scenarios that I’m giving you, which basically covers everything except Goldilocks, which is soft landing, gold and the S&P 500 narrow. And if you look at the stock market, the tech sector is really getting weak. So unless something else takes over leadership, these alligator, you know, jaws are going to close up a little bit. Anyway, that’s just my opinion. And it actually happens to be his as well.
Market news, the Federal Reserve acknowledged the recent setback in the inflation fight, but said it was more likely to keep its rates at the current level for longer than to raise them again. I said that up top. Starbucks Pizza Hut and KFC are among the chains that reported same store sales declines this quarter. All right. The consumers not consuming. That’s what’s going to happen. And China is not opening up to garbage food.
Alphabet paid Apple 20 billion in 2022 for Google to be the default search engine in the Safari browser. That’s not public information. Just became public. ExxonMobil has set the close at $60 billion mega deal for Pioneer Natural Resources following agreement with antitrust enforcers. Remember the war on big oil a year and a half ago by Biden? That war is over and ExxonMobil is being permitted to roll up the industry.
The big players are going to consolidate the industry as we strengthen our claim on oil production in the world. And in doing so, we’ll take more oil from Venezuela by hook or by crook. Just ahead of its first blowout first, its blowout first quarter earnings report, April 25th. It’s going to be a big deal. It’s going to be a big deal. It’s going to be a big deal. And at premium, we have the golden stocks. The metal may take the 20, 24 metal. I’m Vince. Gold is down 20. Let’s take a look at that chart. I’m going to say something weird here, but I’m going to say it. Gold needs to go down.
And that’s not because I’m bearish. If gold doesn’t go down a couple hundred dollars in the next, say two months, it risks going to $3,000. That’s what’s happening now. You know, like this market is catching interest globally. And if they can’t prove that gold is worthless over the next couple of months, it’s going to spike. It’s going to have that $200, $300 a day. It’s going to work its way to $3,000.
And if that happens, what’s pal going to do? It’s going to raise rates. And if that happens, you know, heaven help the rest of the world. Seriously. That’s it. Vince, have a great day. Franklin. com or calling 833-326-4653. Please note that this video is not intended as legal license, financial trading advice, and is to be used for informational purposes only. Please contact your financial advisor before making any decisions.
And thanks for watching. Thank you. .
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