Investors were given a reminder this week on just where the consumer is. Retail sales dropped 1.1% last month, with receipts declining almost across the board. Data for October was revised down to show sales slipping 0.1% instead of rising 0.3%…
Core PCE Inflation at 2.0% to 2.50% is something that Fed aggressively targets. However, for a decade it’s been stubbornly below its objective. And until we see this target level be achieved (and sustained for a period) – I see no reason why the Fed is about to tighten or withdraw its support.
This posts makes the case for gold. If I’m correct (and I may not be) – we will see massive fiscal deficits from government enabled by Federal Reserve bank money creation as a result of the long-term damage inflicted. And that’s a bullish scenario for gold…
Two things worth watching this week:
(1) possible “bridging” deal (partial stimulus) from Congress; and (2)
sentiment from the Fed’s last meeting for the year. Both could be market moving…
The market’s can’t put a foot wrong…
Hot on the news of Pfizer’s and Moderna’s vaccines – today it was AstraZeneca’s turn. The COVID-19 cavalry is certainly on the way…
However, what’s better than a vaccine? From the market’s view – perhaps Biden’s nomination of Janet Yellen as Treasury Secretary.
For anyone who thinks the real economy is in ‘good’ shape… then you are at odds with the Federal Reserve.
The world’s largest central bank told us today that interest rates are to stay at zero in nominal terms (negative in real terms) at least through 2023.
My guess what at least through 2022…. not 2023.
The Fed is tightening its gaze on inflation…
Not happy with sub 2% for 14+ years – today Chairman Jay Powell unveiled a new framework – unveiling a formal policy of “average inflation targeting”
Put another way – the Fed will let inflation run above its 2% target for “some time” – after struggling to achieve that level for over a decade
The world’s largest central bank concluded its two-day meeting yesterday and held interest rates steady. But it wasn’t interest rates the market was interested in…. it knows they are staying at zero for at least another 12 months (and likely longer).
Chairman Powell told the market mostly what they wanted to hear today… i.e., export more fiscal and monetary support until the economy recovers (which he suggested might be years). Equities and gold rallied on the news..
Hands up if you think we will have V-shape recovery?
I don’t.
Never have.
I struggle to see how we have anything remotely like a “V” in absence of an effective (and widely distributed) proven vaccine.
