Attention please! Can Pandemic & Riots pause momentarily so we can all pay homage to the omnipotent Fed and its wise, benevolent leader. Thank you!
The Fed conducts its 2-Day FOMC meeting this week.
From the CME Group, we see there is around a 10% probability of a rate “hike”, as if 0.25 to 0.5 percent interest were some massive burden to bear:
Nobody is really expecting the Fed to do anything other than juice the markets for its bestest buddies.
That is to say, for the time being, it’s clear that if the Fed were to ever go negative, it would be clearly signaled to the “markets”, and the same can be said of the next rate hike.
Normally, the FOMC would be the dominating news of the week, but here in mid-2020, it will have to take a backseat.
It’s more like in third, or fourth, or fifth place as far as importance goes.
Moreover, let’s consider some fundamental issues which apparently have zero affect on the markets whatsoever, in no particular order:
- US Covid-19 epidemic with Main Street struggling to re-open after months of shutdowns
- Main Street burning to the ground in a nationwide wave of civil unrest, looting and riots
- Heightened geo-political tensions in general and rapidly deteriorating relations with China specifically
- US fiscal stimulus and monetary stimulus that are giving Zimbabwe a run for its money
And yet, let’s look at “reality”, also in no particular order:
- We have a stock market at record highs
- We have a booming labor market with falling unemployment
How exactly does that work again?
None the less, the US is the place to be:
The stock market could never fall again!
Because we also have to use our imaginations to believe there is not one single fear in the markets:
The recovery has begun!
Stevie’s words, not mine:
Today’s jobs report shows that Americans are returning to work. 2.5 million jobs were gained and the unemployment rate dropped from 14.7% to 13.3%. The recovery has begun! 🇺🇸— Steven Mnuchin (@stevenmnuchin1) June 5, 2020
Granted, it’s taking quite a lot of debt to fund that “recovery”:
And for less than 1.0% interest, you can Make Recoveries Great Again!
Do you even keep up with inflation, bro?
Between the geo-politics with China and Trump’s ability to “attack” the Fed at will, right up until the press-conference at 2:30 p.m. EST on Wednesday, June 10th, it will interesting to see of they continue walking down the dollar:
It’s going to get very bearish once we break-down below the early March low.
Copper, on the other hand, is undeniably bullish right now:
Yet if the charts matter, $2.60 and $2.70 will be some pretty tough resistance.
I think the crude oil bulls are a little too optimistic right now:
With just another few bucks, that gap will be filled.
Platinum’s faded it’s surge for a third time in a row:
Is the fourth surge imminent?
Palladium continues to tread water on the year:
The more the other three precious metals rally, the more progress palladium can make towards improving the look of that downright ugly daily chart.
The gold-to-silver ratio is starting the week below 95:
For now, the ratio has fallen slightly for the stacker friendly reasons of lower prices.
It sure seems there’s a whole lot of uncertainty out there, but is it priced-in:
If every ten cities in the United States under chaotic and violent “protests” corresponds to a ten dollar drop in the price of gold, then I suppose it’s priced-in.
Since bottoming in mid-March, the trend in silver looks pretty clear to me:
If that trend is our friend, it should take us to 52-week highs in very short order!
Bottom line as we find ourselves here this beautiful Monday in early June?
The contrast between Main Street and Wall Street is amazing.
On the one hand, Main Street is dying a violent death.
On the other hand, Wall Street is cashing in.
Our politicians side with Wall Street.
While “rooting” for Main Street.
Is this that “new normal”?
None of this’s normal.
In these markets.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.